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请保持安静
qing an jing
Lecture 10
Ethics and Corporate Social
Responsibility
Hamilton and Webster (2015) chapter 11
also DL Pack unit 10
 LEARNING OUTCOMES
These lectures on Ethics and Corporate Social
responsibility will enable you to:
• Understand what is meant by ethics and to appreciate
various ethical principles
• Define Corporate Social responsibility
• Assess the free market case against Corporate Social
Responsibility
• Explain the business and normative cases for Corporate
Social Responsibility
• Identify corporate social responsibility issues in the
global economy
• Propose ways in which business can respond to global
inequalities
 Ethics
Ethical issues

Ethical theories

Ethical codes and principles

Corporate social responsibility

 Ethics
Businesses and managers face many
Ethical issues ethical problems!

E.g. to pay a bribe and save jobs or not

Ethical theories to pay a bribe?

What is the right thing?

Ethical codes and principles
Corporate social responsibility
What ethical principles
and theories can help us
to decide on the right
thing to do?
 Ethical principles
Deontological
– the ‘means’ is more important than the ‘end’.
Teleological / utilitarian
– The ‘end’ justifies the ‘means’.
Virtues - decisions based on the previous actions of virtuous people e.g.
“What would Socrates, Confucius (Kong Fu Zi), Jesus, Buddha or Mohamed
do?” http://plato.stanford.edu/entries/confucius/
Justice
– treat similar cases similarly and treat unlike cases differently.
Rights-based
– decide on the basis of a person’s rights and duties
A Dictionary of Philosophy, Pan Reference, 1984
Fairness e.g. Rawles’ “Veil of Ignorance”
 Deontological
“The right is independent of the good.”
“The means is more important than the end.”

From the Greek “dei” right / right thing

What is the right thing?

 Teleological / utilitarian
“telos” is ancient Greek for ‘purpose’ or ‘end’
“The end justifies the means.”

Jeremy Bentham’s ‘utilitarianism’

– “the greatest good for the greatest
number”
Mao – "You have to break a few eggs to
make an omelet."
 Teleological / utilitarian
“The end justifies the means.”

Jeremy Bentham’s ‘utilitarianism’

– “the greatest good for the greatest
number” http://plato.stanford.edu/entries/consequentialism/
Mao – “You have to break a few eggs to
make an omelet.”
“您必须打破一些个鸡蛋做煎蛋卷”
“Nin bi xu da po yi xie dan zuo jian dan juan”
 Virtues
Decisions based on the previous actions of
virtuous people
e.g.
“What would Socrates, Aristotle, Confucius
(Kong Fu Zi), Jesus, Buddha or Mohamed do?”
http://plato.stanford.edu/entries/confucius/
http://plato.stanford.edu/entries/socrates/

The Golden Rule of reciprocity – “Do to others

only as you would want to be done to”.
 Justice, rights and fairness
Justice
– treat similar cases similarly and treat unlike cases
differently. “legalism”(?)

Rights-based
– decide on the basis of a person’s rights and duties
A Dictionary of Philosophy, Pan Reference, 1984

Fairness e.g. Rawles’ “Veil of Ignorance”

 What is fairness?

Rawls’s “veil of ignorance”

Rawls, John, A Theory of Justice,

The Belknap Press of Harvard University Press,
1971

Notes on Rawls’s “veil of ignorance” can be found at

http://www.iep.utm.edu/rawls
 A code of ethics
• Social standards
• Religious or philosophical principles
• Professional standards e.g. Hippocratic oath
• Individual ethical principles and standards

Businesses may produce their own codes of

conduct for their employees.
 CORPORATE SOCIAL
RESPONSIBILITY (CSR)
The notion that corporations have wider
obligations to society (social and
environmental) not merely to benefit their
owners. Do ethical principles apply to
Other terms business organization?

• The triple-bottom-line People, planet and profit

• Sustainable development
Intergenerational fairness?
• Corporate citizenship
Duties and responsibilities to the rest of society?
 DEBATES ABOUT CSR
Shareholder or stockholder approach
– The purpose of a business is to make money for its
owners

Stakeholder approach
– The purpose of a business is to benefit all of its
stakeholders not just its owners Society as a whole

• Customers • Government
• Suppliers • The local community
• Employees • Shareholders
 The Purpose of Corporations
Shareholder or Stockholder Approach

To Maximise Shareholder Value!

‘In a free enterprise, private property system, a

corporate executive is an employee of the owners of
the business. He has direct responsibility to his
employers. That responsibility is to conduct the
business in accordance with their desires, which
generally will be to make as much money as
possible…’
(Friedman, 1970, p.1)
 The Purpose of Corporations
(continued)

Stakeholder Approach
To Meet the Needs of Stakeholders?

Stakeholders are those individuals or groups that

affect or are affected by the achievement of an Society as
organization’s objectives. Freeman, R.E. (1984) a whole
• Customers • Government
• Suppliers • The local community
• Employees • Shareholders
 Power
Low Low High

John Hall

Local community
Women and public
Customers
Local TV
Interest

Employees
Fans
Pressure group

Hall & Shephard

High

A power-interest matrix (adapted from Mendelow, 1991)

 CASE AGAINST CSR
• ROLE SPECIALISATION
– managers are not social experts
• CSR IS THEFT
– reduces profits at the expense of shareholders
• UNDEMOCRATIC
– social ends are better promoted by democratic means
• CORPORATIONS are not moral beings

Social problems should be tackled by government, if

necessary through regulation and are not the
responsibility of businesses!(?)
 THE MORAL CASE for CSR
(‘the right thing to do’)
• MORAL AGENCY
• CORPORATIONS ARE CREATIONS OF SOCIETY
• EMBODY A SET OF VALUES
• OBLIGATIONS TO SOCIETY
• POWERFUL ECONOMIC AND SOCIAL
INSTITUTIONS
• DECISIONS HAVE ECONOMIC AND SOCIAL
IMPACT
• PAYBACK FOR PAST SOCIAL COSTS
 The size of companies and countries

)
Source: Fortune Magazine , 23 July 2007 available at http://money.cnn.com; CIA World Factbook (2007
 THE BUSINESS CASE
FOR CSR
1. INCREASED SHAREHOLDER VALUE

2. INCREASED REVENUE

3. OPERATIONAL EFFICIENCY

4. ACCESS TO CAPITAL

5. CUSTOMER ATTRACTION

Sustainability Ltd report “Buried Treasure , Uncovering the case for

corporate sustainability” available at www.sustainability.co.uk
 THE BUSINESS CASE
FOR CSR (continued)
6. BRAND VALUE AND REPUTATION

7. HUMAN AND INTELLECTUAL CAPITAL

8. RISK PROFILE

9. INNOVATION

10.LICENCE TO OPERATE
A comparison of shareholder/stockholder
and stakeholder theories
Stockholder theory Stakeholder theory
Main players Principles (shareholders, Employees, customers,
owners), agents suppliers, local community,
(managers) government, etc.
Key objectives Value maximisation to Multiple objectives to
benefit shareholders benefit all stakeholders
Strengths Clear and achievable Recognises that long term
success depends on all
stakeholders
Weaknesses Maximising shareholder Multiple objectives are
value may alienate other unclear and difficult to
stakeholders achieve
Key protagonists Milton Friedman (1962, R.E. Freeman (1984)
1970)
 Lecture Review
What is meant by ethics?

What are some of the main ethical principles?

What is meant by Corporate Social Responsibility (CSR)?

What are the free market arguments against CSR

What are the ethical arguments for CSR?

What are the business arguments for CSR?