1 chapter seven canadian business and society: ethics & responsibilities
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ChapterSeven
Canadian Business and Society: Canadian Business and Society: Ethics & ResponsibilitiesEthics & Responsibilities
Chapter Outline
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Corporate Social Responsibility Debate: The role of business is to make
money vs. It’s more than that Social Responsibility Theories Pyramid of Corporate Social Responsibility Corporate Sustainability (CS) Reputation Management Social Impact Management Triple-E Bottom Line (TBL) Good Corporate Citizenship
Corporate Social Responsibility: Definition
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The way a corporation achieves a balance among it economic, social, and environmental responsibilities in its operations so as to address shareholder and other stakeholder expectations.
Key Elements of CSR
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Corporations have responsibilities beyond the production of goods and services.
These responsibilities involve helping to solve social problems.
Corporations have a broader constituency than just stockholders.
Corporations have impacts beyond simple marketplace transactions.
Corporations serve a wider range of human values than just economic values.
Debate: Case for Involvement
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Business must satisfy society’s needs and expectations.
CSR prevents public criticism and government regulation. McDonald’s Clam Shells
Business and society are interdependent. Boom towns
Case for Involvement
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CSR is good for the bottom line. Insurance companies
Investors and consumers support CSR. Green mutual funds
Addressing social problems can become financial opportunities (e.g., pollution abatement). Playgrounds surfaces made from recycled
tires
Case for Involvement
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Business should take long-term CSR approach. MEC
Social actions improve public image and goodwill.
Business can solve problems as well as government. African countries
Case for Involvement
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Proactive approach is better than reactive. Home Depot
Businesspeople are also concerned citizens. Apotex Inc. (Bernard and Honey Sherman)
Debate: Counterarguments
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Profit maximization is the primary purpose of business. Milton Friedman, Nobel Prize winner in Econ
omics Business is responsible to shareholders.
It should be their decision
Counterarguments
Social policy is role of government. Business lacks training in social issues.
It is not competent CSR would give too much power to
business. Take over a community Impose business values
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Counterarguments
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Business involvement in social matters increases costs. Someone is paying for it Mistakes can be made
No reliable guidance for business in CSR matters. PR vs. real action Needed vs. waste of time Charity accountability
Counterarguments
Business cannot be held accountable unlike social institutions. To what standard? Whose responsible to hold them
accountable? There is divided support in business
community for social involvement. No competition to get involved
The concept is unclear, so business action is uncertain.
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Social Responsibility Theories
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Amoral view “Amoral” (not immoral) – an activity
without moral quality Traditional view of business profit-making entity Laws governing incorporated businesses
make them legitimate Milton Friedman
Source: Klonoski, 1991
Social Responsibility Theories Personal view
Corporations are like people and can therefore be held accountable for their actions. There is a ‘right thing to do’ and corporations
can be punished for acting immorally. Counterarguments: Corporations are legal
entities not persons and can not be held accountable. Only the people running the organization can
be held accountable for the actions of the corporation.
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Social Responsibility Theories Social view
Corporations exist within a social context Corporations are social institutions with
social responsibilities The Amoral view is incomplete There are many examples of the social view
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Examples of the Social View
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Pyramid of Corporate Social Responsibility
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Economic
Legal
Ethical
Philan-thropic
“Be profitable”
“Obey the law”
“Be ethical”
“Be a good corporate citizen”
Desired
Expected
Required
Required
Source: Archie Carroll, 1991
Corporate Sustainability (CS)
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Most prominent term after CSR Definition: Corporate Sustainability
refers to corporate activities demonstrating the inclusion of social and environmental as well as economic responsibilities in business operations as they impact all stakeholders.
Corporate Sustainability (CS) Marrewijk ‘s five levels of CS
Compliance-driven CS: follow regulations Profit-driven CS: focus on bottom line Caring CS: go beyond legal compliance Synergistic CS: well balanced solutions Holistic CS: fully integrated CS
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Reputation Management
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Definition: Reputation management is an effort to enhance a corporation’s image
Previous focus on media and public relations as well as crisis management
Today, focus is on relationships with all stakeholders
Reputation Management
Reputation Management can: Enhance financial performance Improve competitive positions Increase public approval
Reputations take a long time to be established, but can be destroyed quickly
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Social Impact Management
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Field of inquiry at the intersection of business needs and wider societal concerns that reflects and respects the complex interdependency between the two.
Interdependency of business and society Two directional:
Society’s influence on corporations Corporation's influence on society
Social Impact Management
Evaluates 3 aspects of business: Purpose of business Social context of business Metrics: how performance is measured
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Triple-E Bottom Line (TBL)
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Evaluates a corporation’s performance according to a summary of the economic, social, and environmental value the corporation adds or destroys.
Now forms the basis for corporate reporting of economic, ethical, and environmental responsibilities.
Corporate Citizenship
Definition: The demonstration by a corporation that it takes into account its complete impact on society and the environment as well as its economic influence.
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Good Corporate Citizenship: Benefits
Reputation management
Risk profile and risk management
Employee recruitment, motivation, and retention
Investor relations and access to capital
Learning and innovation
Competitiveness and market positioning
Operational efficiency
Licence to operate Greater leeway
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Copyright © 2008 McGraw-Hill Ryerson Ltd. Source: World Economic Forum
New Approach to Corporate Citizenship
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Limited Focus on corporate giving
Equivalent Emphasis on sustainability
Extended Defined as a set of individual, social, civil,
and political rights
Source: Matten and Crane, 2005