Corporate Social Responsibility Doing Good while Doing Well * What is Ethics?Ethics (also called moral philosophy) is a system of beliefs about how to behave. Ethics vs. moralsEthics denotes the theory of right action and the greater goodMorals indicate their practiceMoral—one complies with society’s system of beliefsAmoral—one does not, acting in a fashion that is neither good or badImmoral—one does not, acting in contravention of proper behavior * General Social Expectations of EthicsSocieties dictate general systems of ethics through their culture, and their stated convictions about bad, good, and exceptional action. The ethics of societies is quite stable, but does evolve over time General social expectations affect all members of society.HonestyFairnessLegalityHigher level: acting with consistency, coherence, and reciprocityHighest level: acting with courage and sacrifice * Specific Social Expectations of EthicsSpecific expectations do vary by social role (industry, profession, social function, etc.)Example: judges versus CIA spiesExample: soldiers versus nurses So what are the social expectations of business ethics…?  * Business EthicsAt individual levelOne is progressively more ethical to the degree that oneWorks hard in a competitive environment to provide products and services, and make an incomeComplies with the laws of the land and obeys appropriate organizational rulesSeeks to meet professional norms (i.e. providing quality goods and services)Seeks to meet social norms (i.e. exercising honesty and fairness) and strives to achieve the highest standards of integrity (i.e. preventing harm and donating back to society part of the proceeds of one’s success) * Corporate Social ResponsibilityAt the organizational levelA corporation is progressively more socially responsible to the degree that itMeets basic economic needs through diligence and innovationExceeds legal requirements by fulfilling the spirit of the lawFinds ways to enhance the community and planet with mutually beneficial actionsProvides outright acts of charity * Carroll’s Progressive Levels of CSR Economic ResponsibilityLegal ResponsibilityEthical ResponsibilityDiscretionary Responsibility(must do)(have to do)(should do)(good to do)Corporate ResponsibilitySocial ResponsibilityProfit making and provide quality goods and services that are valued by consumersLaw-abiding behaviorThose that may not be required by law, but are socially accepted norms of honesty, decency, and fair-playInclude voluntary efforts to be environmentally friendly, enhance human rights, be an employer of choice, provide philanthropy and so on * Arguments for an Ethical Business CultureEven minimalists assert the importance of economic and legal responsibilitiesEconomic viability is a pragmatic reality and a responsibility of owners, employees, creditors, etc.Breaking laws puts a company at risk; exposes a com.

1. Corporate Social Responsibility
Doing Good while Doing Well
*
What is Ethics?Ethics (also called moral philosophy) is a
system of beliefs about how to behave. Ethics vs. moralsEthics
denotes the theory of right action and the greater goodMorals
indicate their practiceMoral—one complies with society’s
system of beliefsAmoral—one does not, acting in a fashion that
is neither good or badImmoral—one does not, acting in
contravention of proper behavior
*

2. General Social Expectations of EthicsSocieties dictate general
systems of ethics through their culture, and their stated
convictions about bad, good, and exceptional action. The ethics
of societies is quite stable, but does evolve over time General
social expectations affect all members of
society.HonestyFairnessLegalityHigher level: acting with
consistency, coherence, and reciprocityHighest level: acting
with courage and sacrifice
*
Specific Social Expectations of EthicsSpecific expectations do
vary by social role (industry, profession, social function,
etc.)Example: judges versus CIA spiesExample: soldiers versus
nurses
So what are the social expectations of business ethics…?
*
Business EthicsAt individual levelOne is progressively more
ethical to the degree that oneWorks hard in a competitive
environment to provide products and services, and make an
incomeComplies with the laws of the land and obeys

3. appropriate organizational rulesSeeks to meet professional
norms (i.e. providing quality goods and services)Seeks to meet
social norms (i.e. exercising honesty and fairness) and strives to
achieve the highest standards of integrity (i.e. preventing harm
and donating back to society part of the proceeds of one’s
success)
*
Corporate Social ResponsibilityAt the organizational levelA
corporation is progressively more socially responsible to the
degree that itMeets basic economic needs through diligence and
innovationExceeds legal requirements by fulfilling the spirit of
the lawFinds ways to enhance the community and planet with
mutually beneficial actionsProvides outright acts of charity
*
Carroll’s Progressive Levels of CSR
Economic ResponsibilityLegal ResponsibilityEthical
ResponsibilityDiscretionary Responsibility(must do)(have to
do)(should do)(good to do)Corporate ResponsibilitySocial
ResponsibilityProfit making and provide quality goods and
services that are valued by consumersLaw-abiding
behaviorThose that may not be required by law, but are socially
accepted norms of honesty, decency, and fair-playInclude
voluntary efforts to be environmentally friendly, enhance human
rights, be an employer of choice, provide philanthropy and so

4. on
*
Arguments for an Ethical Business CultureEven minimalists
assert the importance of economic and legal
responsibilitiesEconomic viability is a pragmatic reality and a
responsibility of owners, employees, creditors, etc.Breaking
laws puts a company at risk; exposes a company to loss of value
and revenueWidespread industry law breaking and flagrant
market manipulation leads to government intervention and
increased regulation (e.g., Sarbanes-Oxley) and Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010
*

5. Social Responsibility Arguments Increasingly ImportantSocial
responsibility is increasingly an interest and concern of public,
investors and employeesFrequently social responsibility can
provide win-win scenarios, e.g., the environment can be
protected and costs can be cutPoor social responsibility gets
more attention from “cause” organizations providing bad
pressThe moral argument is that all companies must abide by
society’s minimum standards, and that wealth and success bring
social obligations to be more responsible
*
Encouraging Ethical BehaviorEthical Reasoning
FrameworkStep one: Am I comfortable publicizing this
decision broadly?Step two: What if everyone make this type of
decision?Step three: identify stakeholders and their
interestsDirect/indirect/remote stakeholders (or internal/external
stakeholders)Interest of each stakeholder involvedStep four:
identify critical issues and the competing values involved Major
issuesRight-and-wrong vs. right-and-rightStep five: identify
solutions and their potential impactsPossible solutionsMoral
level of each solution involved
*
Encouraging Ethical BehaviorTools and Approaches
Stakeholder analysisMission and values statementsGuidelines
and codes of conduct, codes of ethicsEthical trainingEthics

6. officers and ethics hotlinesProvide and highlight role
modelsEthics awardsFor individuals in the companySeek award
for the companySocial responsibility auditSocial
initiativesStrive to be a CSR leader
*
Example: Encouraging Ethical Behavior
at Dell
Kotler & Lee 2005Cause PromotionsCause-Related
MarketingCorporate Social MarketingCorporate
PhilanthropyCommunity VolunteeringSocially Reasonable
Business PracticesDell sponsors efforts to collect used
computers for donations to local nonprofits and public
agenciesDell offers 10 percent off selected new products when
up to three used products are recycled onlineDell offers free and
convenient return of used printers for recycling or reuseThrough
Dell’s “Direct Giving” program with employees, employee
donations are made to Earth Share, which supports multiple
environmental projectsDell employees around the globe
participate in “Global Community Involvement Week” each
September, including activities such as park cleanupDell creates
product design programs with specific environmental
guidelines, policies, and goals

7. *
The Case of Big Box
*
Analytic case: Big Box Store
Big Box Corporation is a modern low-cost department store. To
keep its costs down, it has a number of standard practices that
ensure profitability.
First, it aggressively keeps costs low and does not rely
extensively on sales to build long-term rather than temporary
customer loyalty. Therefore it is a global buyer with no “buy-
American” policy. In fact, while it does ensure that its products
are legally made, it does not concern itself with non-
governmental protocols on recommendations about working
conditions or child labor.
Second, it keeps its market prices extremely low by ensuring
that the jobs of line workers are as simple and repetitive as
possible, so that workers can easily be trained and replaced. Big
Box Corporation has been largely successful at keeping unions
out of its stores in all but a few instances. This means that many
of the workers are the second or third wage earners in homes

8. and that many of its employees are parttime retired workers or
young workers seeking their first jobs. As importantly, these
wage earners, who are just above minimum wage, do not
normally have significant benefits such as health care and
retirement. Many of the workers do not need them because they
are covered by a first wage earner or do not care about them
because retirement has occurred or is a distant concern.
A small, but not tiny, percentage of the line workers qualify for
government benefits such as child health care. Middle managers
are recruited from “the floor” and get improved wages and
modest benefits, but are still paid very modestly by management
standards. Store managers are generally professionally trained
and analysis driven to examine profitability trends, cost–benefit
ratios, contingency analysis, etc., and thus rarely come from the
floor. They are largely recruited from corporate manager-
training programs populated by college business majors and
MBA graduates. After serving as an assistant store manager
with modest pay (each store has three to five assistant store
managers) for a period of three to seven years, opportunities to
become a store manager often open up. Store managers are well
paid for retail.
Third, Big Box Corporation prefers to locate its stores just
outside of cities, when they are not land-locked by other cities,
in order to avoid city taxes. This has the side advantage of
cheaper land for large parking areas. Alternatively, when
locating in an urbanized area with adjacent cities, as is common
today, Big Box always considers two or three options in
adjacent jurisdictions that will be desirous of having the store.
By doing so, the store can make the jurisdictions compete
aggressively, and can get excellent multi-year tax concessions
(sometimes up to a decade) as well as infrastructure
improvements such as road widening on the arterial to the

9. store, traffic lights, and sewer and utility extensions.
Fourth, Big Box Corporation is large enough that it can force
suppliers to maintain ownership of products until point of
customer sale. In other words, unlike smaller retailers that must
buy goods to stock shelves and then discount unsold goods,
thereby competing with their own goods not on sale, Big Box
does not pay suppliers until goods are registered as sold. In
experimenting with new products, it risks the loss of shelf space
but has no inventory cost liability. Unsold goods are simply
returned, although the supplier must pick them up or abandon
them. Fifth, because of its size, Big Box is able to stay abreast
of current trends and appeal to all but the smallest niche
markets. This means that it is able to push old fashioned stores
with less efficient practices out of business, absorb their market
share, and maintain a lock on the market environment for the
cost-conscious buyer who is impervious to all stores except
other corporations with a similar style, or stores that carry only
discontinued products that they have purchased for pennies on
the dollar but whose product lines vary enormously month by
month.
Sixth, while not immune to “green” initiatives, Big Box knows
that most of its customers place a much larger premium on
value than on environmental concerns and thus it caters to that
preference. When enough customers are perceived to be
interested and the cost differential is modest, Big Box
occasionally offers a product that can be marketed as
“environmentally friendly.” Seventh, Big Box is careful not to
dilute its efficiency and profits thrust with local charity issues.
Charity is done, but almost exclusively at the corporate level, so
that it can easily be “counted” for accounting purposes, and
easily be identified for corporate public relations.

10. Discussion
1. What are the possible ethical questions that are involved? (At
least seven are implicitly identified in the case.) This question
is often asked at the same time as the following question.
2. Who are the stakeholders who are/will be affected in this
scenario and what are their interests?
3. What are the concrete ethical issues that you feel need to be
considered? (This requires narrowing down the list of possible
ethical issues, which should be done after identifying
stakeholders and their interests.) What alternatives exist? How
do these alternatives maximize various values, given the weight
of those values?
4. What recommendations do you have in how the situations you
chose to address could be/should have been resolved or
improved? Or, state if no changes are necessary, and the reasons
why the status quo is acceptable.
Question: your opinionWhich aspect of the Big Box store
system would you address first and foremost, if you had the
power to do so? (Don’t worry about pragmatism for this
question.)
Not having a buy-American policy
Low wages and no benefits for floor-level employees
(associates)
Use of aggressive tax avoidance strategies (including tax
havens)
Indirectly forcing suppliers to use illegal labor practices in
many product lines in order to compete
Ignoring “green” and environmental issues