Carroll’s Pyramid of Social Responsibility Source : A Carroll (1991) The pyramid of corporate social responsibility, Business Horizons , July-August, pp 39-48 Compare with the Reidenbach and Robin Model
PHILANTHROPIC Responsibilities Be a good Corporate Citizen. Contribute resources to the community; improve quality of life. ETHICAL Responsibilities Be ethical. Obligation to do what is right, just and fair; Avoid harm . LEGAL Responsibilities Obey the Law Law is society’s codification of right and wrong; Play by the rules ECONOMIC Responsibilities Be Profitable The foundation upon which all others rest Source: Carroll (1991) The Pyramid of Social Responsibility
Level 1 ECONOMIC Responsibilities Be profitable The foundation upon which all other levels rest
It is important to perform in a manner consistent with maximising earnings per share
It is important to be committed to being as profitable as possible
It is important to maintain a strong competitive position
It is important to maintain a high level of operational efficiency
It is important that a successful firm be defined as one that is consistently profitable.
Level 2 LEGAL Responsibilities Obey the Law Law is society’s codification of right and wrong; Play by the rules
It is important to perform in a manner consistent with expectations of government and the law.
It is important to comply with various national and supra-national laws and regulations.
It is important to be a law-abiding corporate citizen.
It is important that a successful firm be defines as one that fulfils its legal obligations.
It is important to provide goods and services that at least meet the minimal legal requirements.
Level 3 ETHICAL Responsibilities Be Ethical Obligation to do what is right, just and fair; Avoid harm.
It is important to perform in a manner that is consistent with the expectations of societal mores and ethical norms.
It is important to recognise and respect new or evolving ethical/moral norms adopted by society.
It is important to prevent ethical norms from being compromised in order to achieve corporate goals.
It is important that good corporate citizenship be defined as doing what is expected morally or ethically.
It is important to recognise that corporate integrity and ethical behaviour go beyond mere compliance with laws and regulations.
Level 4 PHILANTHROPIC Responsibilities Be a Good Corporate Citizen Contribute resources to the community; improve quality of life
It is important to perform in a manner consistent with the philanthropic and charitable expectations of society.
It is important to assist the fine and performing arts.
It is important that managers and employees participate in voluntary and charitable activities within their local communities.
It is important to provide assistance to public and private educational institutions.
It is important to assist voluntarily those projects that enhance a community’s ‘quality of life’.
Moral Management and Stakeholders
Three Moral Types:
managers whose decisions, actions and behaviour suggest an active opposition to what is deemed to be right and ethical
These managers care only about their or their organisation’s profitability or success
Legal issues are there to be circumvented
Strategy is to exploit opportunities for personal or organisational gain at any cost
Amoral Managers are neither immoral nor moral but are not sensitive to the fact that their everyday business decisions may have a deleterious effect on others.
These managers may lack an ethical perspective in their organisational lives.
Typically their orientation is to the ‘letter of the law’ as their ethical guide.
Sometimes we can have a sub category - the unintentional amoral manager
Un-intentional Amoral Manager
These managers are un-intentionally amoral in their behaviour. They tend to see ethical issues are for their private lives not their business lives, where different rules apply.
They tend to believe that business activity resides outside the sphere to which moral judgements may apply.
Amoral managers here may not consider a role for ethics in business.
The Moral Manager
In moral management, ethical norms that adhere to a high standard of right behaviour are employed
Moral managers not only conform to accepted and high levels of professional conduct, they also lead on issues of ethical behaviour.
The law is seen as giving a minimal guide to ethical behaviour. The ‘spirit of the law’ in more important than the ‘letter of the law’. The objective is to operate well above what the law mandates the firm to do.
The Moral Manager
Moral mangers want to be profitable and ethical.
Moral mangers will use ethical principles to base their judgements upon - justice, rights, the Golden Rule, utilitarianism etc.
When ethical dilemmas arise, moral managers and moral companies will tend to assume leadership in their companies and industries.
Compare this model with the Reidenbach & Robin Model
The Three Moral Types
Orientation towards Stakeholders:
Moral Types and Stakeholders
Our goal is to gain a fuller understanding of what it means to engage in moral management and what this implies in terms of relationships with key stakeholders.
The next four slides are in table form showing the orientation of moral types and stakeholder orientations.
Though the concept of social responsibility may change from time to time, the pyramid model gives us a framework for understanding the evolving nature of the firm’s economic, legal, ethical and philanthropic performance.
Issues, Questions and Reflections Marketing Ethics Social Responsibility Moral Management
Marketing and Ethics From Buyer Beware to Seller Beware See: Smith, N.C., (1995) Marketing Strategies for the Ethics Era, Sloan Management Review , Summer, pp. 85-97.
Marketing Ethics Continuum Producer Interests Producer Interests Favoured Less favoured Consumer Interests Consumer Interests Less Favoured More Favoured Caveat Industry Ethics Consumer Caveat Emptor Practice Codes Sovereignty Venditor Profit General business Codes of Capability Consumer maximisation practice (average individual satisfaction across all firms) firms Information Subject to Practices of Industry Choice legal constraints specific industries codes Practice of Professional best firms codes Source: N C Smith (1995)
Some Ethical Maxims
Marketers often rely on simple maxims to evaluate their marketing practices. While useful, they generally lack specific guidance.
Do unto others as you would have them do unto you.
Would you be embarrassed in front of your family/ friends/ colleagues if the media publicised your decision ?
Good ethics is in the long term interests of the firm.
Would an objective panel of professional colleagues view my actions as proper ?
When in doubt, don’t.
Read the article in the reading list entitled ‘Ethics - a view from the trenches’
Look at the ‘principles’ of key companies - Shell, Lockheed Martin and Body Shop
The new Philanthropy
Shell’s ‘principles’ can be found in the Shell folder in Readings
Some Issues to Consider
Compare the Carroll Model with the Reidenbach and Robin Model. Look at the similarities and differences.
Read the section in the Visions folder particularly on the articles by:
Malcolm McIntosh - particularly focus on the last paragraph which quotes Timberland’s mission statement. See next slide
Glazebrook and Birch
Go to the web sites of Shell, Lockheed Martin and Body Shop. Compare their ‘principles of business’.
Where would you place them on model ? Why?
Timberland’s Mission Statement
“ We do not give money to charity. Instead we try to create a return. We create values for our customers, the community and the non-profit organisations we work with. The traditional notion of philanthropy is not adequate. It is not smart or wise to approach social problems with the financial leftovers of companies.”
Consider this statement carefully, and reflect on the issues that it addresses. To what extent can this statement be be said to be ‘enlightened’? What is your position about businesses and the community and how does this relate to Carroll’s model and moral types ?
Moral Management ‘Cartel’ - 1999 Style
Vitamins Inc - A n International Cartel Featuring Europe’s Top Companies BASF - Germany Roche - Switzerland Rhone-Poulnec - France This Cartel lasted 9 years and was busted in May 1999 Members were fined $ 725m under US Anti-trust laws and a Senior Executive was jailed for 4 months and fined $100,000 See FT cuttings in Readings/Cartel Folder
Vitamins Inc: How to Run an Efficient Cartel
Hold and annual summit between ‘hot shot’ executives in late summer
Negotiate a budget for the year, covering prices and sales volumes around the world
Fix quarterly meetings between mid-level managers to watch each other’s figures
Police the cartel’s targets with regular telephone calls
Review each year’s performance at a ‘shareholders’ meeting’ of top executives
Questions for Reflection
Where would you classify these three companies on the Carroll and the Reidenbach and Robin Model ?
What would morale and attitudes of managers be in other parts of the these firms ?
Can firms like Roche and BASF be ‘moral’ and ‘ethical’ in their other SBUs, while at the same time be manipulating the market by running an illegal cartel ? Discuss.
Would you be attracted to such a firm for a managerial opportunity ?