Chapter 5
Four models of corporate social responsibility
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Economic view
Integrative/strategic
Philanthropic
Social Web
Economic model / Milton Friedman
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Limits a firm’s social responsibility to the minimal economic responsibility for producing
goods and service and maximizing profits within the law
Philanthropic model
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Contribute to societies causes – do good things
With or without reputational benefits
o Positives and Negative
Right thing to do
Do you make purchases based on a company’s CSR?
o 94% say yes
o 65% say bought something associated with Cause
o 93% say would boycott
From the perspective of the economic model of CSR, only philanthropy done for
reputational reasons and financial ends is ethically responsible
Social web model
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Business exists within a web of social responsibility
Businesses must meet the “normal ethical duties & obligations”
Norman Bowie
o “Kantian theory of business ethics”
o Has a social responsibility to respect its employees
Views business as a citizen of society and so must conform to the normal range of ethical
duties and obligations that all citizens face
Stakeholder theory
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Businesses affect many people (Stakeholders)
Management must balance ethical interests of ALL affected parties
Treat all people as ends and never as means only
A model of CSR that holds that business managers have ethical responsibilities to a range
of stakeholders that goes beyond a narrow view that the primary or only responsibility of
managers is to stakeholders
Integrative model
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Integrating social and economic goals together
Social entrepreneurship
Sustainability
For some business firms, social responsibility is fully integrated with the firms mission or
strategic plan
Social entrepreneurship
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Social entrepreneurship
o Profit is not incompatible with doing good
o Triple bottom line – economic (Profit), society, and environment
A movement that seeks to address social problems through the creativity and effiency of
market forces
Sustainability (Matt’s Brundtland Commission definition)
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Meet the needs of the present without compromising the ability of the future
Double triple line
Three different meanings of responsible/responsibility
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When we say that a business is responsible, we might been that it is reliable or
trustworthy
A second meaning involves attributing something as a cause for an event or action
A third sense involves attributing liability or accountability for some even or action,
creating an obligation to make things right again.
Philosophers three levels of responsibility
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The responsibility not to cause harm to others
Prevent harm even in those cases where one is not the cause
Responsibilities to do good.
Reputation management
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A practice of caring for the “image” of the firm
Enlightened self-interest
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CSR-related activities can improve profitability by enhancing a company’s standing
among its stakeholders
Positive impact on the bottom line
Can become merely social marketing if only care about reputation
Shared value
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Requires businesses to pursue profits, and also requires businesses to value social and
environment welfare.
Perceiving social/environmental initiatives as independently valuable is thought to create
profit opportunities
Inside-out linkages and outside-in linkages
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Inside-out: involve how the company affects the society in which it operates through its
operations in the normal course of business
Outside-in: involve the ways in which external social conditions influence corporations
for better or for worse.
Generic social issues, value chain social impacts, and social dimensions of competitive context
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Generic Social issues: may be important to society but are neither significantly affected by
the company’s operations nor influence the company’s long term competitiveness
Value Chain Social Impacts: are those that are significantly affected by the company’s
activities in the ordinary course of business.
Social Dimensions Of Competitive Context: factors in the external environment that
significantly affect the underlying drivers of competitiveness in those places where the
company operates.
Responsive CSR vs. strategic CSR
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Responsive: 2 elements  acting as a good corporate citizen, attuned to the evolving
social concerns of stakeholders, and mitigating existing or anticipated adverse effects
from business activities.
o 1. Involves far more than writing a check, they specify clear, measurable goals to
track over time
o 2. Essentially an operational challenge. A check list.
Strategic: about choosing a unique position. Doing things differently from competitors in
a way that lowers costs or better serves a particular set of customer needs. Involves
inside-out and outside-in dimensions working in tandem.
Chapter 6
Severe time constraints, limited information, and pressure affect the quality of decision-making
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No information. Just memorize top
Why treat employees well: utilitarian consequences vs. as Kantian sense of duty and rights
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Utilitarian Consequences: Rewards and compensation structures can clearly impact the
emotions of workers, as can the composition of teams or the power relationships within a
workplace
Kantian sense of duty and rights: treating employees right because it is “The right thing
to do”.
Due process: legal definition and ethical definition
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The right to be protected against the arbitrary use of authority
Specifies the conditions for basic fairness within the scope of the employer’s authority
over its employees
Legal definition: no person or company will/is able to strike down someone’s life, liberty,
or justice
Ethical definition: Pre-established process that outlines steps for discipline
o Not mandatory by law
o Available to all employees
Employment at will and exceptions to the rule
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Legal doctrine that holds that, absent a particular contractual or other legal obligation that
specifies the length or conditions of employment
Free to hire and fire whenever
Exceptions:
o Bad faith, malicious or retaliatory termination in violation of public policy
o Termination in breach of the implied covenant of good faith and fair dealing
o Termination in breach of some other implied contract term
o Termination in violation of the doctrine of promissory estoppel
o Other exceptions as determined by statutes
Just cause
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A standard for terminations or discipline that requires the employer to have sufficient and
fair cause before reaching a decision against an employee
Make pre-existing list for what is against the rules
Identifying specific rights and responsibilities for each employee
Employee vs. independent contractor:
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Independent contractor – brought in from outside, employee pays taxes
Employee contractor – hired through the company, employer pays taxes
Common-law test of agency
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A persuasive indicator of independent contractor status that provides the employer the
ability to control the manner in which the work is performed.
Four values to keep in mind when making layoff decisions
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Health and safety
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The employer’s role in protecting the employee’s health and safety
Instrumental value vs. intrinsic value (e.g., Ford Pinto)
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Instrumental value: health and safety very high because part of their value derives from
the fact that we use them to attain other things of value
Intrinsic Value: the worth of a person’s life.
1. Acceptable workplace risk (but four challenges)
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1. This approach treats employees disrespectfully by ignoring their input as stakeholders
2. We assume that health and safety are mere preferences that can be traded off against
competing values, ignoring the fundamental deontological right an employee might have
to a safe and healthy workplace
3. Assumes an equivalency between workplace risks and other types of risks when there
are actually significant differences between them
4. Disregards the utilitarian concern for the consequences for an unsafe working
environment on the social fabric, the resulting product or service created, the morale of
the workforce, and the community, as well as other large-scale results of an unhealthy
workplace.
2. Market solution (lack of free choice? Lack of complete information? “first generation?”)
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Lack of free choice: labor markets are not perfectly competitive and free. Unrealistic to
presume employees always have the choices available to them to make it possible.
Lack of Complete info: if employees don’t know the risks involved in a job, they will not
be in a position to freely bargain for appropriate wages and therefore they will not be in a
position to effectively protect their rights or ensure the most ethical consequences.
First Generation: Learn by mistakes and history, so that first generation is screwed.
3. Government regulation (OSHA, feasibility)
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OSHA – Occupational safety and health administration, an agency of the federal
government that publishes and enforces safety and health regulations for US business
Sweatshops
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Some suggest all workplaces with conditions below standards in more developed
countries are because all humans have the right to equally decent working conditions
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Any workplace in which workers are typically subject to 2+ of the following
o Systematic forced overtime
o Systematic health and safety risks that stem from negligence or the willful
disregard of employee welfare
o Coercion
o Systematic deception that places workers at risk
o Underpayment of earnings
o Income for a 48-hour workweek less than the overall poverty rate for that country
Arnold/Bowie’s four requirements of MNCs regarding global factories, plus three other items
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Adhere to local labor laws
Refrain from the use of coercion
Provide decent working conditions
Provide wages about the overall poverty line for a 48-hour work week.
Minimum age for child labor
Nondiscrimination requirements
Free association – including the right to organize and to bargain collectively in contract
negotiations
Living wage
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Wages and benefits paid for a standard work week meet national legal standards or
industry benchmark standards (Whatever one is higher)
All workers shall be provided with written and understandable info about their
employment conditions in respect to wage before they start working
Deductions from wages as a disciplinary measure shall not be permitted nor shall
deductions not provided for by national law
Child labor (Forced/bonded labor, child soldiering, commercial sexual exploitation)
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Exploitative work that involves some harm to a child who is not of an age to justify their
presence in the workplace
Affirmative Action: three versions in the workplace
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A policy or a program that strives to redress past discrimination through the
implementation of proactive measures to ensure equal opportunity
1. Legal Requirements
2. Judicial: remedy the discrimination of past generations
3. Voluntary affirmative action programs.
Reverse discrimination
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Decisions made or actions taken against those individuals who are traditionally
considered to be in power or the majority.
Ethical sourcing
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ensuring that the products being sourced are created in safe facilities by workers who are
treated well and paid fair wages to work legal hours', and it also implies 'that the supplier
is respecting the environment during the production and manufacture of the products.
Confiscate personal documents, translator, false timecards, interviewee coaching, Potemkin
village
Pre-sourcing, long-term relationship, unannounced inspections, and publish the inspection results
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Pre-sourcing: inspections of labor conditions before placing an order instead of after
Long-term Relationship: long term commitments are what motivate both parties to
behave
Unannounced inspections: self-evident
Publish results: almost never done.
Chapter 7
Privacy: two definitions
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The right to be left alone within a personal zone of solitude
The right to control information about one’s self.
Reciprocal obligation
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While an employee has an obligation to respect the employer, the employer need to
respect the employee as well.
Property rights perspective
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Determination of who maintains control
o What is personal information?
The boundaries defining actions that individuals can take in relation to other individuals
regarding their personal info.
o “property” is an individual’s life and all non-procreative derivatives of her life
 Derivative – thoughts and ideas and person info
Invasion of privacy and reasonable expectation of privacy
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Reasonable Expectation of Privacy – the basis for some common law claims of invation
of privacy; where an individual is notified that info will be shared or space will not be
private, there is likely no reasonable expectation of privacy
European Union’s Directive on Personal Data Protection
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EU legislation seeking to remove potential obstacles to cross-border flows of personal
data, to ensure high level of protection within the EU, and to harmonize protections
across the European continent and with those countries with whom EU countries do
business
Safe Harbor exception
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Considered “adequate standards” of privacy protection for US based companies under the
EU Data Protection Directive
For firms that maintain a certain level of protection of info.
Work time vs. personal time
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Harder to tell the difference with new technology. An issue that businesses are dealing
with. How do you regulate?
Argandona
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Contends that if new technology is dependent on and has as its substance info and data,
significant moral requirements should be imposed on that info. Suggested following:
Truthfulness and accuracy
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Person providing info must ensure that it is truthful and accurate, at least to a reasonable
degree
Respect for privacy
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Person receiving or accumulating info must take into account the ethical limits of
individual’ privacy
Respect for property and safety rights
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Areas of potential vulnerability, including network security, sabotage, theft of info and
impersonation are enhanced, and must be protected
Accountability
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Technology allows for greater anonymity and distance, requiring a concurrent increased
exigency for personal responsibility and accountability
Employee monitoring
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Email Monitoring: the maintenance and either periodic or random review of email
communications of employees or others for a variety of business purposes
Internet use monitoring: maintenance and either periodic or random review of the use of
the internet by employees or others based on the time spent or content accessed for a
variety of business purposes.
Drug testing
HIPAA, PHI, and GINA
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HIPAA – Health Insurance Portability and Accountability Act – stipulates that employers
cannot use “protected health info” in making employment decisions without prior
consent. Protected health info includes all medical records or other individually
identifiable health info
PHI –
GINA – Genetic Info Non-Discrimination Act – bar genetic discrimination in health care
and employment
Hawthorne effect
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Workers are found to be more productive based on the psychological stimulus of being
singled out, which makes them feel more important
Regulation of off-work acts
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Interesting issue
NY’s lifestyle discrimination statute
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Prohibits employment decisions or actions based on 4 categories of off duty activity
o Legal recreational activities
o Consumption of legal products
o Political activities
o Membership in a union
Dating someone at the same company
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Can be fired because not a recreational activity so it is not protected
Bona fide occupational requirement (BFOQ)
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Rule that is reasonably related to that particular position
Facebook and other social networks
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Ethical issue. Can ruin a reputation of a company, but do they have the right to monitor?
Genetic monitoring vs. genetic screening
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Genetic Monitoring: less controversial. Monitor and protect employee health; tests for
genetic damage that may have resulted from exposure to workplace toxins or radiation
Genetic Screening: used to detect either genes associated with hereditary diseased or
genes associated with heightened susceptibility to workplace toxins
Chapter 8
The four Ps of marketing
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Price
Product
Place
promotion
The three concerns to keep in mind when approaching an ethical issue in marketing
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Intrinsic value vs. Extrinsic value:
o The rights-based ethical tradition would ask to what degree the participants are
respected as free and autonomous agents rather than treated simply as means to
the ends of making a sale
Utilitarianism, actual vs apparent benefits:
o The utilitarianism tradition would want to know the degree to which the
transaction provided actual as opposed to apparent benefits
What is at stake:
o Every ethical tradition would also wonder what other values might be at stake in
the transaction
Informed consent
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Specifically a concept that when it comes to privacy and personal info, need to be well
informed and voluntarily give their info for use.
Affluenza
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The more stuff you buy, the more unhappy you are.
Three meanings of responsibility
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Cause (who caused harm)
Accountability (who is responsible for damages)
Liability (who is at fault)
Strict liability
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Certain things where you are completely responsible for all damages that occur
Liability without fault
Forces manufacturer to go crazy about safety
Because some things have higher risks
A legal doctrine that holds that an individual or business accountable for damages
whether or not it was at fault. No matter how careful a business is in its product or
service, if harm results from use, the individual or business is liable
Caveat emptor
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“Buyer beware”
Approach suggests that the burden of risk of info shall be placed on the buyer
Assumes that every purchase involves the informed consent of the buyer and therefore it
is assumed to be ethically legitimate.
Social contract
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Agreement
Common ground
General understanding and honest
Implied warranty
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Implied assurances by a seller that a product is reasonably suitable for its purpose
Even if not specific in the contract
Negligence (definition) and application (design, production, and sale)
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Definition: unintentional failure to exercise reasonable care not to harm other people.
Considered to be one step below “reckless disregard” for harm to others and two steps
below intentional harm
Foreseeability
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Whether or not the manufacturer could guess or ‘foresee’ the possible problems
Reasonable person standard
Reasonable person standard
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Every person should act responsible and in reasonable ways
Target marketing and marketing research
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Marketing to each age group
Identify what happens when product is released
Promotion/Advertising
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Can be a good thing
Ethical challenges arise when persuading, asking, informing, coercion, deception,
manipulation, and lying
Persuading, asking, informing, advising vs. threats, coercion, deception, manipulation, and lying
Dependence effect (and its three implications)
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Businesses create the needs and wants of consumers
Implications
o Creating wants, advertising was standing the “law” of supply/demand on its head
o Advertising and marketing tend to create irrational and trivial consumer wants
and distorts entire economy
o By creating wants, advertising and other marketing practices violate consumer
autonomy
E-lining
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Play on words with redlining
Electronic redlining
Charge rich people more money and poor people less money for the same product
Marketing to vulnerable populations (e.g., Welcome to Ordinary, stealth marketing)
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Kids
Elderly
Minorities
Disabled or sick
Low income
immigrants
Supply chain responsibility (e.g., respondent superior)
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Company being responsible for its product in all aspects from beginning to end.
Sustainable marketing (e.g., take-back legislation, greenwashing)
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Sustainable or green marketing is the marketing of products on the basis of their
environmentally friendly nature