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Managing Business Ethics
Chapter 9
Treviño & Nelson – 5th Edition
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Chapter 9 Overview
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Introduction
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Why Corporate Social Responsibility?

Types of Corporate Responsibility
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Triple Bottom Line and Environmental Sustainability
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Is Socially Responsible Business Good Business?
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Conclusion
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Corporate Social Responsibility
Responsibility
beyond economic and
legal obligations – to act ethically and
to contribute in a positive way to
society
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Why Corporate Social
Responsibility?
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Pragmatic

To maintain legitimacy, protect reputation, viability
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We must use power responsibly or risk losing it
Ethical
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As a part of society, we have the responsibility to behave ethically
and to contribute to the greater good
Strategic

Being socially responsible creates shared value and can
differentiate one from competitors

When society prospers, business prospers – they are partners
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Stakeholder Perspective
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Types of Corporate Social
Responsibility
Philanthropic Responsibilities
Ethical Responsibilities
Legal Responsibilities
Economic Responsibilities
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Triple Bottom Line
Economic
Social
Environmental
The Merck Case
Economic Responsibility
 In the Merck case, how might we think
about the firm’s economic
responsibility?
 The potential costs/benefits of the
investment?
 Must Merck justify the investment to
shareholders? Financially, Ethically?
Legal Responsibility
Companies have a responsibility
to obey the law.
 Is there any legal responsibility
for Merck here?
Any legal penalty for not doing
so?
Ethical Responsibility
Does Merck have an ethical
responsibility to develop the drug?
 Think stakeholders, harms and
benefits, greater good
 Think duties, obligations, ethical
values
Do Merck’s Philosophy/Values
Play a Role?
“We try never to forget that
medicine is for people. It is not
for profits. The profits follow, and
if we have remembered that, they
have never failed to appear”
George W. Merck & www.merck.com
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Stakeholder Perspective
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Duties, obligations?
Do ethical duties differ by industry?
Does it matter that it is a
pharmaceutical company?
Philanthropic Responsibility
Is philanthropy a social
“responsibility” of business?
Executive Decision-Making
 If you were CEO, what would you
decide?
 What would be the major bases for
your decision?
Case Takeaways
• Decisions are not single events
Decision to pursue research led to…decision to
provide drug for free forever…to decision to
develop logistics plans…to expertise in
providing drugs in developing world (currently
used in AIDS drugs)
• Organizational values can and should guide
social responsibility decisions
• Employees’ values should be taken into
account.
• Organizations can be ethical leaders and
other firms will often follow
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Case
You have a long-standing consulting relationship with a large
consumer products company. This company represents 50
percent of your consulting revenues and is clearly your most
important client. The CEO has called to ask you to commit a
significant amount of time over the next couple of months to
assist with a large merger project. The company is merging with
a large conglomerate whose primary business is the sale and
distribution of tobacco products. The CEO is relying on you to
assist in facilitating a smooth integration of the two companies.
You promised yourself that because your father died of lung
cancer, you would never work for a tobacco company. Is there a
way that you can accept the consulting assignment and still keep
your promise to yourself? How will you handle this dilemma if
you decide that you cannot work for the tobacco company?