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CSR and Ethics

This document discusses the concept of corporate social responsibility. It begins by defining a corporation as a legally recognized entity that is separate from its owners. While corporations have legal responsibilities, the document explores whether they can also have moral responsibilities. It presents Milton Friedman's view that corporations only have an obligation to increase profits for shareholders. However, it also argues that corporations can be morally responsible due to their decision-making structures and organizational cultures. The document then defines corporate social responsibility as a company's sense of responsibility towards the community and environment where it operates. It presents models for understanding the nature of a corporation's social responsibilities.

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Kaushka Sunari
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35 views

CSR and Ethics

This document discusses the concept of corporate social responsibility. It begins by defining a corporation as a legally recognized entity that is separate from its owners. While corporations have legal responsibilities, the document explores whether they can also have moral responsibilities. It presents Milton Friedman's view that corporations only have an obligation to increase profits for shareholders. However, it also argues that corporations can be morally responsible due to their decision-making structures and organizational cultures. The document then defines corporate social responsibility as a company's sense of responsibility towards the community and environment where it operates. It presents models for understanding the nature of a corporation's social responsibilities.

Uploaded by

Kaushka Sunari
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 23

CORPORATE SOCIAL

RESPONSIBILITY AND
BUSINESS ETHICS
BY MS. JAYANI PERERA
WHAT IS A CORPORATION?

• Firm that meets certain legal requirements to be recognized as having a legal


existence, as an entity separate and distinct from its owners. Following
characteristics can be seen in a corporation;
• Corporations are regarded as ‘artificial persons’ in the eyes of the law (Having
certain rights and responsibilities in society).
• Corporations are owned by shareholders but exist independently of them (Have
limited liability).
• Managers and directors have a “fiduciary” responsibility to protect the
investment of shareholders.
• Corporations have perpetual succession. (survival of individual investors,
employees, customers etc-)
Due to the above characteristics a corporation is legally responsible for its
actions.
Is it the same as assigning a moral responsibility?
CAN A CORPORATION HAVE SOCIAL
RESPONSIBILITIES? HOW?
• Milton Friedman’s article “The social responsibility of business is to increase its profits”
makes the below points –

1. Only human beings have a moral responsibility towards their actions.


2. It is managers’ responsibility to act solely in the interests of
shareholders.
3. Social issues and problems are the proper province of the State rather
than corporate managers.
CAN A CORPORATE BE MORALLY RESPONSIBLE
FOR ITS ACTIONS?
• Is a corporation only a legal one?
• Can’t a corporation hold moral responsibilities as well?
• Is a corporation only an entity where a collection of individuals work together?
BUT
• Corporations normally have an organized framework of decision making.
• Organizational culture of a corporation
CONT.

• Legal Identity
• Agency
• Organizational culture
• Functional Identity
CONCLUSION

Corporations have a moral responsibility to some


level than just the level of the individual’s
contribution to the corporation.
WHAT IS CORPORATE SOCIAL RESPONSIBILITY?

A company’s sense of responsibility towards the community and


environment (both ecological and social) in which it operates. In
other words Corporate Social Responsibility (CSR) refers to the
obligations of business to pursue policies that make decisions or
follow actions which are desirable in terms of the objectives and
values of our society.
SYSTEMATIC APPROACH TO A FRAME WORK OF
CSR

1. Why might it be argued that corporations have social as well as


financial responsibilities?
2. What is the nature of these social responsibilities?
WHY DO CORPORATIONS HAVE SOCIAL RESPONSIBILITY?

• The externalities argument


• The power argument
• The dependency argument
WHY DO CORPORATIONS HAVE SOCIAL RESPONSIBILITY?

• To have a better brand reputation. Ex. NIKE


• To attract employees to work and retain committed employees with the organization.
(Through Fair employee treatment)
• To have great corporate independence from the government.
• To gain sustainable competitive advantage over other rivals with the safer long-term
investments and better educated community.
• Moral principles (To reduce social problems like environmental pollution, limited use of
natural resources, responsibility for stakeholders)
THE NATURE OF CORPORATE SOCIAL RESPONSIBILITY

ARCHIE CAROLL’S FOUR-PART MODEL OF CSR


Philanth
ropical /
voluntar
y
Respons Desired by Society
ibility
being a
good
Ethical Responsibility
corporat
being ethical;e doing
citizenwhat is right;
avoiding harm Expected by Society

Legal Responsibilities Required by society


obeying the law(society's codification of right and wrong)

Economic Responsibilities
Required by Society
being profitable
REFER TO BUSINESS ETHICS BY ANDREW
CRANE AND DIRK MATTEN
• Economic –
• Legal -
• Ethical -
• Philanthropic -
CRITICISMS AGAINST THE MODEL

1. What happens when two or more responsibilities are in conflict?


2. The concept is largely US based?
CSR IN AN INTERNATIONAL CONTEXT

• It is evident that countries have different meanings to corporate social


responsibility activities and their contribution also different from one country
to another. For an example United States has more responsibility to
maximize the company profits over and over again than other objectives.
But, European and Asian countries are willing to contribute more on CSR as
an influential subject to their business success. Therefore, it is important to
understand the Carroll’s four-part model in an international context.
• Economic Responsibility: US is strongly focused on the profitability of companies and
looks at the responsibility to shareholders. However, Asian MNCs like TATA has more
than 100 years old tradition of giving back to the society through educational and
social projects.

• Legal responsibility: US like developed countries believe government is the key for
rules and regulations over unethical activities of organizations. But, developing
countries with low economic and political stability believe government legislations are
not important for business operations.
• Ethical responsibility: Developed countries are on more ethical way with the
government support and by following rules and regulations. However, developing
countries are contributing to CSR activities to increase the ethical behaviors.
• Philanthropic Responsibility: US has a long standing tradition of donating money
to higher education and local community services. (Ex. Microsoft). European
government’s tax rates are higher to collect more money to give them back as
public goods and other services. Asian countries are expected to share their wealth
with local communities (Ex. China, India)
• Donna Wood (1991) presents a model using which corporate social performance can be
observed as the principles of CSR, the processes of social responsiveness (or ‘CSR
strategy’ as we have called it), and the outcomes of corporate behaviour.
• These outcomes are delineated in three concrete areas:
• Social policies—explicit and pronounced corporate social policies stating the company’s
values, beliefs, and goals with regard to its social environment.
• Social programmes—specific social programmes of activities, measures, and instruments
implemented to achieve social policies. For example, many firms have implemented programmes
to manage their environmental impacts, based around environmental management systems such as
ISO 14000 and EMAS (Environmental Management and Auditing Scheme) that include measures
and instruments that facilitate the auditing of environmental performance, or ISO 2600 the
international CSR standard.
• Social impacts—social impacts can be traced by looking at concrete changes that the corporation
has achieved through the programmes implemented in any period.
For example: policies aimed at benefiting local schools can examine literacy rates and exam grades
OUTCOMES OF CSR (MEASURING THE
PERFORMANCE OF CSR BY USING CSP –
CORPORATE SOCIAL PERFORMANCE)

Social
Programmes

Social
Policies
• Through this lesson we learnt what the corporations are responsible for.
• Using Stakeholder theory, we are going to observe to whom these corporations are
responsible for.
TASK

• Select one organization of your choice and see what kind of


reasons the corporations give for their involvement in CSR. Is
there a balance between business and moral principles of only
the business concern (Profit maximization)?
• Thank you!

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