Ethics and the conduct of business 8th by john boatright and smith 2017 chapter 12

Ethics and the Conduct of Business
Eighth edition

Chapter 12
Corporate Social
Responsibility

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Modules
• Introduction: Corporate Social Responsibility
• 12.1: The CSR Debate
• 12.2: Normative Case for CSR
• 12.3: Business Case for CSR
• 12.4: Implementing CSR
• 12.5: Business with a Mission
• 12.6: Case Studies
• Conclusion: Corporate Social Responsibility
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Learning Objectives (1 of 2)
•

•

•

12.1: Recognize the significance and implications of
corporate social responsibility for businesses, how CSR is

commonly demonstrated, and its related concepts
12.2: Describe the dominant moral arguments against the
concept of CSR and the counterarguments and
justifications for CSR as a requirement of companies
12.3: Analyze the arguments that a market for virtue makes
CSR a profitable strategy and a source of competitive
advantage

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Learning Objectives (2 of 2)
•

•

•

12.4: Summarize the important aspects of successful CSR
programs, the difficulties with measuring the social
performance of companies, and various attempts at
measurement
12.5: Compare how nonprofit and for-profit social
enterprises operate and can compete successfully in the
marketplace
12.6: Compare how nonprofit and for-profit social
enterprises operate and can compete successfully in the
marketplace

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Introduction: Corporate Social
Responsibility
• Basis for social responsibility
• Requirements to implement CSR programs
• Benefits of CSR programs
• Social enterprises

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12.1: The CSR Debate (1 of 2)
Objective: Recognize the significance and implications of corporate social responsibility
for businesses, how CSR is commonly demonstrated, and its related concepts

• 12.1.1: Meaning of CSR
– Concept of CSR

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Figure 12.1

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12.1: The CSR Debate (2 of 2)
Objective: Recognize the significance and implications of corporate social responsibility
for businesses, how CSR is commonly demonstrated, and its related concepts

• 12.1.2: Examples of CSR
– General agreements

• 12.1.3: Related Concepts
– Corporate social responsiveness
– Elements of corporate social performance
– Corporate citizens

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12.2: Normative Case for CSR
Objective: Describe the dominant moral arguments against the concept of CSR and the
counterarguments and justifications for CSR as a requirement of companies

• 12.2.1: Classical View
– Expression of classical view

• 12.2.2: Friedman on CSR
– Fiduciary argument
– Taxation argument

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12.3: Business Case for CSR (1 of 2)
Objective: Analyze the arguments that a market for virtue makes CSR a profitable strategy
and a source of competitive advantage

• 12.3.1: The Market for Virtue
– Factors that induce managers to take on CSR activities
– Power of virtue

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Table 12.2: A Watch List of Industries
and Companies
Industries

Issue(s)

Companies

Consumer goods: shoes, apparel, and
household products

Goods are manufactured in contract
factories overseas.

Nike, Gap, Walmart

Petroleum, timber, and mining

Environment issues

Shell, Home Depot, Rio Tinto

Food and beverage

Raw materials are sourced from lessdeveloped countries.

Starbucks, Nestlé, Coca-Cola

Tobacco and fast foods

Tobacco-related deaths and obesity

Altria (Philip Morris), Kraft, McDonald’s

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12.3: Business Case for CSR (2 of 2)
Objective: Analyze the arguments that a market for virtue makes CSR a profitable strategy
and a source of competitive advantage

• 12.3.2: Competitive Advantage
– Strategic CSR

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12.4: Implementing CSR
Objective: Summarize the important aspects of successful CSR programs, the difficulties
with measuring the social performance of companies, and various attempts at
measurement

• 12.4.1: Program Selection and Design

– Guidelines

• 12.4.2: Reporting and Accountability
– Social reporting

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12.5: Business with a Mission
Objective: Compare how nonprofit and for-profit social enterprises operate and can
compete successfully in the marketplace

• 12.5.1: Social Enterprise
– Definition
– Forms

• 12.5.2: Competing Successfully
– Overview

• 12.5.3: Mission and Trust
– For-profit organization

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Table 12.3: Nonprofit versus For-Profit
Social Enterprises
Categories

Nonprofit SE

For-Profit SE

Definition

A nonprofit whose main source of revenue is
earned income, not donations

A business created for a social purpose, that operates in
a socially-beneficial manner

AKA

Enterprising nonprofits, commercial nonprofits

Possible forms:
• subsidiary of a hybrid nonprofit
• benefit corporation (community interest company)
• Certified B Corporation

Example(s)

Benetech (technology to aid global literacy)

Patagonia (environmentally-sustainable clothing)
Toms Shoes (donates shoes to the needy)

Available
funding

Sales, donations, loans

Sales, equity capital, impact investment

Advantages

Tax benefits
Income from donations
People have more confidence in nonprofit causes

Equity capital allows faster growth, more effective use of
resources
Ability to make a profit

Challenges

Need for innovation
Pressure to use donations for given purposes
Limits on spending

Sales, equity capital, impact investment
Need for innovation
Pressure to give some control to outside investors
Difficulty keeping focus on social mission over profit
Loss of public trust

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12.6: Case Studies (1 of 2)

Objective: Compare how nonprofit and for-profit social enterprises operate and can
compete successfully in the marketplace

• 12.6.1: Case: Starbucks and Fair Trade Coffee
–
–
–
–

Mission
Issue
Fair trade coffee
Starbucks response

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Table 12.4: Requirements for Fair Trade
Certification
Condition

Description

Fair prices

Democratically organized farmer groups receive a guaranteed minimum floor price
and an additional premium for certified organic products. Farmer organizations are
also eligible for pre-harvest credit.

Fair labor conditions

Workers on Fair Trade farms enjoy freedom of association, safe working conditions,
and living wages. Forced child labor is strictly prohibited.

Direct trade

Importers purchase from Fair Trade producer groups as directly as possible,
eliminating unnecessary middlemen and empowering farmers to develop the
business capacity necessary to compete in the global marketplace.

Democratic and transparent
organizations

Fair Trade farmers and farmworkers decide democratically how to invest Fair Trade
revenues.

Community development

Fair Trade farmers and farmworkers invest Fair Trade premiums in social and
business development projects such as scholarship programs, quality-improvement
training, and organic certification.

Environmental sustainability

Harmful agrochemicals and GMOs are strictly prohibited in favor of environmentally
sustainable farming methods that protect farmers’ health and preserve valuable
ecosystems for future generations.

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12.6: Case Studies (2 of 2)
Objective: Compare how nonprofit and for-profit social enterprises operate and can
compete successfully in the marketplace

• 12.6.2: Case: Timberland and Community Service
–
–
–
–

Commerce and justice
City Year nonprofit organization
Community service program
Change in economic situation

• 12.6.3: Case: Coca-Cola’s Water Use in India
– Groundwater depletion case

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Conclusion: Corporate Social
Responsibility
• Meaning of CSR
• Arguments for CSR
• Normative case for CSR
• Virtual industry
• Strategic CSR

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