introduction

1. UNIVERSITY OF GHANA BUSINESS SCHOOL
SOCIAL RESPONSIBILITY AND ETHICS
UGBS 207
PROFESSOR R. E. HINSON

2. Introduction
• CSR is central to a whole range of concepts and issues
relating to businesses and their role in society.
• The term has become very popular in recent years and
thereby vulnerable to suffering the same fate as other
popular terms in management literature.
• Because of this, it is useful to briefly consider where the
idea of corporate social responsibility came from and how
it has developed.
• In understanding corporate social responsibility, it is
important to examine the genesis of the term, its meaning
and its application to business activities.

3. Emergence of Corporate Social Responsibility
• Various texts in ancient times included material suggestion
that moral obligations existed for those engaging in trade
and commerce.
• In modern times, the first substantial publications on the
role of business in society can be traced to as early as
1930s, but corporate social responsibility emerged as an
area of general concern for companies only in the 1960s.
• This reflected increasing pressures on placed on companies
to assume a greater responsibility for correcting the
harmful impacts of their operations, a role traditionally
performed by society as a whole.

4. Emergence of Corporate Social Responsibility
• In this context, corporate social responsibility was seen as
method self-regulation distinct from both government
legislation and managerial ethics.
• By the 1980s governments had introduced legislation on
many of the issues that had lead to the emergence of corporate
social responsibility in the 1960s.
• The most recent wave of interest in corporate social
responsibility has been marked by some new development.
First, the debate is now more about how to make substantial
commitments rather than whether to make them at all.
Secondly, there has been an increasing interest in the topic in
Europe initiatives on corporate social responsibility.

5. Defining Corporate Social Responsibility
• Corporate social responsibility can be defined as the
accommodation of corporate behavior to society’s
values and expectations.
• According to Howard Bowen, CSR is an obligation that
arises from the impact corporate decisions and actions
have on the lives of people.

6. Defining Corporate Social Responsibility
• CSR concerns the acceptance of voluntary or additional
responsibilities beyond those motivated by economic interest
and the law.
• Davis defined CSR as ‘the firm’s consideration of, and
response to, issues beyond the narrow economic, technical,
and legal requirements of the firm.

7. DEFINITIONS OF CORPORATE SOCIAL
RESPONSIBILITY ( CSR)
Forstater et al. (2002) define CSR as:
“ a company’s actions that contribute to sustainable development through the
company’s core business activities, social investment and public policy
debate.”
McWilliams and Siegel (2001) define CSR as: “actions that appear to further
some social good beyond the interest of the firm and which are required
by law.”

8. KEY CONCEPTS
Some key words appear in these definitions:
 Stakeholder
 Concerns/ needs
 Voluntary

9. Approaches to social responsibility
Several views have been developed of the responsibilities of businesses e.g.
 Milton Friedman,
 Archie Caroll, and
 Andrew Carnegie

10. Friedman’s View
 Friedman is of the view that the social responsibility of business is to
increase profit within the requirements of the law.
 If a business person acts “responsibly” by cutting the price of the firm’s
produce to prevent inflation, by making expenditures to reduce pollution,
or by hiring the hard-core unemployed, that person is spending the
shareholders’ money for a general interest.

11. Carroll’s View
Archie Carroll is of the view that managers of business organisations have four
responsibilities:
 Economic responsibilities involve the production of goods and services of value to
society so that the firm can repay its creditors and stockholders.
 Legal responsibilities are defined by government in laws that are expected to be
obeyed.
 Ethical responsibilities require that a firm follows the generally held beliefs about how
one should act in society.
 Discretionary responsibilities are the purely voluntary obligations a corporation
assumes, i.e. philanthropic contributions.
– The difference between ethical and discretionary responsibilities is that few people expect an
organisations to fulfil ethical ones.

12. Carnegie’s View
 Andrew Carnegie, the founder of US Steel Corporation, views
corporations’ social responsibilities on two main principles: The Charity
Principle and The Stewardship Principle.
 The charity principle requires that more fortunate members of society
assist its less fortunate members, including the unemployed, the
handicapped, the sick and the elderly.
 The stewardship principle requires businesses and wealthy individuals to
view themselves as the stewards, or caretakers, of their property. Carnegie
holds the idea that the rich hold their money “in trust” for the rest of
society and can use it for any purpose that society deems legitimate.

13. Arguments for And Against CSR
 Profit maximization
Milton Friedman and other activists advanced the idea of shareholder
value being in conflict with CSR. According to their view, companies
are misusing the resources that are entrusted to them if they engage in
CSR. In contrast, others have argued that it is the interest of business
and its owners to comply with the societal values and take an active
role in society as this is in line with the long-term interest of business.
Furthermore, CSR has a positive effect on reputation, through which
companies can gain more customers, employees and other benefits.

14. Arguments for And Against CSR
 Resource fit.
A second area of dispute is the role of business in addressing social
problems. It may be argued that business has valuable resources that
could be used to tackle social problems, for example by helping with
the management of operational performance. It has however been
argued in opposition to this that while companies may possess
significant competencies, they lack the specific knowledge, skills and
experience needed to deal with societal problem – knowledge such as
the particular technical expects to communicate effectively with
highly disadvantage clients.

15. Arguments for And Against CSR
• Lack of accountability.
Because of their structure, companies are mainly accountable to their
shareholders rather than to society at large. This is why some have argue
that companies should not engage in social activities and why business
should focus on pursuing economic profit rather than performing other
roles in society. The proponents of this view have therefore argued that
CSR undermines democracy – part of this argument being that in the case
of unethical or irresponsible practice by business, it is the responsibility of
the prevailing government to reform those regulations that have allowed
companies to misbehave in the first place. According to this view, CSR is
somehow bad because it diverts attention from government , which is the
body that should control the market for the benefit of society.

16. CRITICISMS /ARGUMENTS AGAINST CSR
Friedman (1962) argues that the only social responsibility of business is to
make profit within the law. Some arguments against CSR are based on the
following issues:
 “The business of business is business.”
 Useless PR exercise
 The idea of theft
 Lack of Regulation of CSR
 Imposes unequal cost to organisations

17. CRITICISMS/ARGUMENTS FOR CSR
Arguments in favour of firm CSR engagements are based on:
 Interdependence of firms and the society
 Stakeholder interest may transcend financial benefits
 Benefits of CSR-
 Helps attract qualified staff
 Minimizes government intervention

18. ARGUMENTS FOR CSR
 Improves Corporate Image – Goodwill
 Leads to improved financial performance

19. THE PRINCIPLES OF CSR
There are three principles serving as justification for CSR engagements by
firms:
1. Sustainability
2. Accountability
3. Transparency

20. PRINCIPLES OF CSR
Sustainability
 Sustainability implies that society must at all times use no more of its
resources than can be generated. It is concerned with how the actions of
the present have recurring effects upon the opportunities of the future.

21. PRINCIPLES OF CSR (CON’T)
Accountability
 Here an organisation must recognise that its actions generally affect the
external environment and therefore assume responsibility for the effects of
its actions.

22. PRINCIPLES OF CSR
Transparency
 Transparency, in principle, means that all acts are obvious or
communicated to all concerned.
 As a principle of CSR, transparency indicates that organisations make
clear all reports of their actions and that those reports, whether in facts or
figures, give accurate and detailed information of the relevant
information.

23. PROMINENCE OF CSR
Key drivers of CSR engagements in recent years have been identified as:
 Sustainable development
 Globalization
 Governance ( UN, OECD, Signing of Compacts)
 Corporate sector impact
 Communications (Technological Advancement)
 Ethical consumerism
 Finance (pressure from investors)
 Strategic Business Tool
 Social awareness and education
 Crises management

24. FORMS OF CSR ISSUES
Areas of Social Responsibility Concerns:
Concern for Consumers
 Are products safe and well designed?
 Are products priced fairly?
 Are advertisements clear and not deceptive?
 Are credit terms clear?
 Is adequate product information available?
 Are customers treated fairly by salespeople?

25. FORMS OF CSR ISSUES(CON’T)
Concern for Employees
 Are employees paid fair wages?
 Are employees provided safe work environment?
 Are workers hired, promoted, and treated fairly without
regard to sex, race, colour, or creed?
 Are employees given special training and educational
opportunities?
 Are handicapped people given employment
opportunities?
 Does the business help rehabilitate employees with
physical, mental, or emotional problems?

26. FORMS OF CSR ISSUES(CON’T)
Concern for Environment
 Is the environment adequately protected from unclean air and water,
excessive noise, and other types of pollution?
 Are products and packages biodegradable or recyclable?
 Are any by-products that pose a safety hazard to society (such as nuclear
waste or commercial solvents) carefully handled and properly treated or
disposed of?

27. FORMS OF CSR ISSUES(CON’T)
Concern for Society in General
 Does the firm support minority and community enterprises by purchasing
from them or subcontracting to them?
 Are donations made to help develop and support education, art, health,
and community development programmes?
 Is the social impact of plant locations or relocations considered by
managers who make those decisions?