1 Ethics and Social Corporate Responsibility

2 Social Responsibility A corporate’s responsibility to a community where it conducts operations. -Community: 1. Primary responsibility to employer --- executive makes sure that the company is making profits aligned with the objectives of employer 2. Others: customers, suppliers, customers and the communities in which they are located

3 Revolution of Corporate responsibility Values Profit Maximization ( ) Second Stage People (1930-early1960) Third Stage Quality (after 1960) Basic Personal interest maximization 1.Personal interest 2.interest of stockholders 1.Self Interests 2.Stockholders interests 3. Interests of society Economics 1.Good to me = Good to the country 2. Profit maximization 3.Importance of monetary rewards 1.Good to the management & organization = Good to country 2. Reasonable returns 3.Monetary reward & human assets are equally important 1.Good to the society = Good to organization 2.To maintain profit is not as important to maintain human assets. Technology Highly importantBoth technology and human assets are important Human asset is important than technology Society Employees’ personal issues should not be involved at work Reorganization fact that employees need both work and personal life Take about employee’s whole development (We hire the whole person)

4 Social Responsibility What it implies for whom??? - Corporate/business itself does not have responsibility corporate executives - Only people can have responsibility--- individuals who are to be responsible are businessmen=>corporate executives

5 Corporate Social Responsibility CSR is more than the stakeholder impacts, but many CSR advocates and will often include charitable efforts and volunteering The concept of social responsibility is often expressed as the voluntary assumption of responsibly that go beyond the purely economic and legal responsibility Corporate goal and evaluation of outcomes of performance of company should not just base on profitability

6 Corporate Social Responsibility Also need to consider ethical standard or judgement of social desirability The exercise of social responsibility must be consistent with corporate objective of earning a satisfactory profit but also be willing to forgo a certain profit in order to achieve non-economic end

7 Corporate Social Responsibility CSR may be based within the HR, marketing, or public relations departments of an organisation, or may be given a separate unit reporting to the CEO or directly to the board. Some companies may implement CSR-type values without a clearly defined team or programme.

8 Examples of CSR Choosing to operate on a ethical level that is higher than the law requires. Charity work Providing benefits for employees and improving quality of life in the workplace beyond economic and legal requirement Taking some decision which is judged to be less profitable but more socially desirable Using corporate resources to operate a program that addresses some major social problems

9 Debates and criticisms of CSR For: Corporations benefit in multiple ways by operating with a perspective broader and longer than their own immediate, short-term profits: 1) Build up Better reputation -Companies often favour suppliers who demonstrate responsible policies, as this can have a positive impact on how they are perceived by customers. -CSR can benefit to recruitment and retention of quality staff. Potential competitive candidates often concern firm's CSR policy during an interview, and having a comprehensive policy can help to attract good employees. Employees may stay longer, reducing the costs and disruption of recruitment and retraining.

10 Debates and criticisms of CSR For: 2) Enhance risk management -Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. -CSR can make the company more competitive and reduces the risk of sudden damage to its reputation (and sales). Investors recognize this and are more willing to finance company with CSR. -Building a genuine culture of 'doing the right thing' within a corporation can offset these risks or at least to develop an develop early warning system before it is too late.

11 Debates and criticisms of CSR For: 3) Build up brand image To develop differentiated brand image is important to business organizations as it can separate them from the competition in the minds of consumers. -Activities such as involvement with the local community are ideal opportunities to generate positive press coverage. -CSR can play a role in building customer loyalty based on distinctive ethical values. Several major brands, e.g. The body shop, Starbucks, are built on ethical values. Business service organizations can benefit too from building a reputation for integrity and best practice.

12 Debates and criticisms of CSR For: 4) License to operate Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps, they can persuade governments and the wider public that they are taking issues such as health and safety, diversity, or the environment seriously as good corporate citizens with respect to labour standards and impacts on the environment.taxationregulationshealth and safety

13 Debate and criticism of CSR Against: -The questionable motives- It is nothing more than superficial window-dressing; -Another concern is when companies claim to promote CSR and be committed to sustainable development while at the same time engaging harmful business practices. E.g. since Ronald McDonald House => relationship marketing; McDonald's employees worldwide was viewed as suffering from pay and conditions; McDonald food and fat and heart disease, etc. It is an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations

14 Debate and criticism of CSR Against: CSR distracts from the fundamental economic role of businesses -Misallocation or inefficiency. "socially responsible" activity entails diverting resources best used for economic purposes to advance purposes for which those resources are poorly suited. Managers may misappropriate corporate resources by diverting them from their rightful claimants, whether those are the firm's owners or, employees. Corporations can contribute best to society if they do what they do best: employ a workforce to provide goods and services to the marketplace and, in so doing, fulfill people's needs and create wealth. Engaging in socially responsible activities is not what companies do best and, thus a poor allocation of corporate resources.

15 Debate and criticism of CSR Against: Pre-empt role of Government: -It is an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations -Corporate hypocrisy and insincerity generally suggest that better governmental and international regulation and enforcement, rather than voluntary measures, are necessary to ensure that companies behave in a socially responsible manner.

16 What are your points of view?