Corporate Social Responsibility
Ethics is caught more that taught
Dr. Dorothy Paun, [email protected]
What Are Ethics?
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The standards of moral behavior
Behaviors that are accepted by society as
right versus wrong
Right: integrity, respect for life, self control,
honesty, courage, self-sacrifice
Wrong: cheating, cowardice, cruelty
Ethics Start at the Top
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Ethics is caught more that taught, meaning
organizational ethics begin at the top.
Managers can help instill corporate values in
employees
Trust between workers and managers should
be based on fairness, honesty, openness, and
integrity
Factors influencing managerial ethics are
individual (values, personality),
organizational (management philosophy,
firm’s reward system), and environmental
(competition, social and cultural institutions)
Ethics Codes
An increasing number of companies have
adopted written codes of ethics
 Compliance-Based Ethics Codes:
Emphasize preventing unlawful
behavior by increasing control and by
penalizing wrongdoers
 Integrity-Based Ethics Codes: Define
the organizations guiding values and
create an environment that supports
ethically sound behavior and stress a
shared accountability
Deceptive Business Practices
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Deceptive Pricing: Falsely advertising prices
Deceptive Promotion: Misrepresenting a product’s features or
performance, or luring consumers to store for out-of-stock item
Deceptive Packaging: Exaggerating package contents, using
misleading labelling, etc.
High Pressure Selling: Salespeople who use high-pressure selling
tactics to persuade people to buy products they had no intention of
buying (often to earn a commission)
Poor or Unsafe Products: Products not made well or services not
performed well; that are unsafe due to manufacturer indifference and
poor quality control; products that deliver little benefit or are harmful
Product Obsolescence:
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PLANNED. Causing products to become obsolete before they
actually need to be replaced; using materials that will break, wear,
rust, or rot sooner than they should; holding back functional
features, and introducing them later to make older models
obsolete
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PERCEIVED: continually changing consumer concepts of acceptable
styles to encourage more and earlier buying
How to Improve Business Ethics
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Top management should adopt and unconditionally
support an explicit corporate code of conduct
Employees should understand that senior
management expects all employees to act ethically
Managers and others should be trained to consider
the ethical implications of all business decisions
An ethics office should be set up with which
employees can communicate anonymously.
Whistleblowers are company insiders who report
illegal or unethical behavior
Involve company outsiders such as suppliers,
subcontractors, distributors and customers
The ethics code should be enforced
Reflect on Your Muddiest Point
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Take a moment to reflect on what we have
discussed
Write down what you find the most unclear
or confusing — your “muddiest point”
Identify one or two things that you can do to
improve your understanding of this muddy
area
Corporate Social Responsibility
Defined
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Corporate Social Responsibility (CSR) is
a business’s concern for the welfare of
society
CSR is based on a commitment to
integrity, fairness and respect
CSR proponents argue that businesses
owe their existence to the societies that
they serve, and cannot exist in societies
that fail
CSR Dimensions
Corporate
Philanthropy
Corporate
Social
Initiatives
Corporate
Responsibility
Corporate
Policy
Corporate Philanthropy CSR Dimension
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Includes charitable donations to non-profit
organizations
E.g., the Bill and Melinda Gates Foundation is
the largest philanthropic foundation, and
focuses on global health and education
(http://video.ted.com/talk/podcast/2014/No
ne/BillGates_2014-480p.mp4
Take a moment to reflect on examples from
our three case study companies
Corporate Philanthropy Examples
Corporate Social Initiatives CSR
Dimension
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Enhanced form of corporate
philanthropy that utilizes a firm’s core
competencies
Take a moment to reflect on examples
from our three case study companies
TOMS Shoes Corporate Social Initiatives
Corporate Responsibility CSR Dimension
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Internal CSR policies like hiring minority
workers, making safe products, providing a
safe working environment, and using energy
responsibly
Take a moment to reflect on examples from
our three case study companies
Nestlé's Corporate Responsibility
Subaru’s Corporate Responsibility
Reflect on Your Muddiest Point



Take a moment to reflect on what we have
discussed
Write down what you find the most unclear
or confusing — your “muddiest point”
Identify one or two things that you can do to
improve your understanding of this muddy
area
Corporate Policy CSR Dimension
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External CSR positions or positions a firm
takes on social and political issues
Take a moment to reflect on examples from
our three case study companies
Intel Corporate Policy
H & M Corporate Policy
Responsibility to Customers
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A recurring theme in business is the
importance of pleasing customers by
offering them real value
A company that operates with a high
degree of CSR can attract new
customers who admire the company’s
social efforts
Consumer behavior studies show that a
socially conscious company is likely to
be viewed more favorably by the public
and gain more business
Responsibility to Investors
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Nickels says that ethical behavior
actually contributes to the bottom line
Unethical behavior can lead to
increased risk for investors
Insider trading – An unethical activity in
which insiders use private company
information to further their own fortune
or those of friends and family
An important ethical consideration for
companies is transparency, or
disclosure to the public
Responsibility to Employees
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Employees look to their employers to:
 Create jobs and provide a chance for
upward mobility
 Treat their employees with respect
 Offer salaries and benefits that help
employees reach their personal goals
Research shows that companies that
operate in a socially responsible
manner have reduced rates of
employee turnover and higher
productivity
Responsibility to Society and the
Environment
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1ST BULLET NEW FOR NEXT TIME. One of business's major
responsibilities to society is to create new wealth. Businesses are also
partly responsible for promoting social justice. Businesses are also
taking responsibility for helping to make their own environment a
better place. Environmental efforts may increase the company's costs,
but they also may allow the company to charge higher prices, to
increase market share, or both. Businesses who show a concern for
the environment may increase their costs, but customers are willing to
pay higher prices if they know that the business is environmentally
conscious.
Over a third of working Americans receive their salaries from
nonprofits, who are dependent on funding from others
The green movement has popularized as concern about global
warming has developed
Many companies are focused on minimizing their carbon footprint, the
amount of carbon released during an item’s production, distribution,
consumption and disposal (life cycle)
Reflect on Your Muddiest Point
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Take a moment to reflect on what we have
discussed
Write down what you find the most unclear
or confusing — your “muddiest point”
Identify one or two things that you can do to
improve your understanding of this muddy
area
Social Auditing
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A systematic evaluation of an organization’s
progress toward implementing socially
responsible and responsive programs
In addition to social audits conducted by
companies themselves, there are five types
of watch dog groups that monitor how well
companies are doing:
 Socially conscious investors
 Socially conscious research organizations
 Environmentalists
 Union officials
 Customers