Crane & Matten, Business ethics, 4th Edition, Chapter 2

Suggested answers to the Think Theory exercises

associated with the Ethics in Action boxes

THINK THEORY 1

Theories of CSR suggest there are both business and moral reasons for engaging in
social initiatives. Go to the website of one or two companies of your choice and find the
section dealing with social issues (the page may be headed CSR or sustainability, or
perhaps corporate citizenship) and see what kinds of reasons the corporations give for
their involvement in CSR. Is there a balance of business and moral reasons, or does one
type of reason predominate? How do you explain this?

The specific kinds of reason given will depend on the exact nature of companies whose
websites students visit. For this question, two car company websites were considered.
Both give mostly business reasons for their social initiatives, and both companies clearly
hope to profit from their CSR initiatives. Consider the words of one chief executives note
to readers: lasting business success is possible only if environmental and social concerns
arent neglected. * Other companies may choose to give mostly moral reasons for their
actions, but as the textbook argues, corporate motives are difficult, sometimes
impossible, to determine.

THINK THEORY 2

Think about the theory of CSR in the context of a multinational. To what extent can a
multinational corporation operate a global CSR programme, or is it necessary for such
companies to operate CSR on a more national or regional basis?

It is difficult to see how a company could credibly run a CSR programme either entirely
centrally (given regional differences in customs and social expectations) or entirely locally
(given existence of some global responsibilities). A multinational corporation may
therefore choose to have a CSR programme with both global and national/regional
elements.

Globally-defined elements could include attention to the economic and legal

responsibilities (following Carrolls model), and instructions to national/regional managers
to develop ethical and philanthropic programmes that were locally appropriate, and these
would then comprise the national/regional element of the companys CSR programme.
Examples of such approaches: going beyond the existing laws to provide employees with
good health-care benefits in the United States (ethical) or providing educational facilities to
local communities in parts of sub-Saharan Africa (philanthropic).

Andrew Crane and Dirk Matten 2016. All rights reserved.

 Crane & Matten, Business ethics, 4th Edition, Chapter 2

THINK THEORY 3

Explain how BNY Mellon is implementing a contemporary CSR approach across its
various initiatives

BNY Mellon can be said to be predominantly contemporary because:

They are adopting a generally proactive stance towards the ethical issues of their
industry, specifically market integrity.
They are placing ethical concerns at the centre of their business model; see how
they are creating new services that help to mitigate clients risk, thus creating
resiliency.
There is no strong sense of profit and responsibility being separate. The executive
does mention that responsiblity goes beyond pure economics, but responsible
business is conceptualized as essentially good business practice as it protects the
firm and better serves consumers.

THINK THEORY 4

The network model of stakeholder theory suggests that firms have indirect relationships
with a whole range of constituencies via their immediate stakeholders. To what extent
should corporations also have to respect the rights of these indirect stakeholders? Think,
for example, about the case of a companys supply chain and all the different tiers of
supplier stakeholders that are involved. Does a company have responsibilities to suppliers
at all tiers?

Following Evan & Freemans (1993) principles of corporate rights and corporate effects,
the company does have a responsibility to respect the rights of indirect stakeholders, at
least to the extent that its actions have a bearing on those stakeholders. A company
therefore does have responsibilities to suppliers at all tiers. In practice, this could find
expression in (e.g.) not setting a manufacturing target for an immediate supplier that that
supplier could only meet by engaging in actions that your firm would not countenance. To
paraphrase a well-known corporate motto, the responsibility is: dont be evil and dont let
evil be done on your behalf.

THINK THEORY 5

Think about the concept of globalization that was discussed in chapter one, and our
characterization of globalization as deterritorialization, namely the progressive eroding of
the relevance of territorial bases for social, economic and political activities, processes
and relations. How might this influence the failing of government and increasing power of
corporations?

Andrew Crane and Dirk Matten 2016. All rights reserved.

 Crane & Matten, Business ethics, 4th Edition, Chapter 2

As globalization continues, companies become increasingly independent of national

territory for their continued survival. This makes it easier for companies to relocate their
operations to territories with lower operating costs, or even to move their head office.
Problems like unemployment are territorially-bounded, however, meaning that the benefits
of such a move are disproportionately felt by the company and the costs by the local
government whose territory is being abandoned. This gives companies a great deal of
bargaining power vis--vis governments (on, e.g., tax rates, subsidies for factories, or
contractual arrangements under public-private partnerships). At the same time,
governments have ever-more-limited powers to hold companies accountable for their
actions.

THINK THEORY 6

In which way are the companies in Kenya and Russia mentioned in this case
implementing the extended view of corporate citizenship? What are the new
responsibilities arising from this role and what are the limits of this approach?

In both cases, the companies were involved with local communities social rights the
freedom to participate in society. In both cases, it could also be argued that they were
involved to some extent in political rights enabling individuals to participate in the
process of governance beyond their private sphere. In the Magadi case, the company was
government like providing the services directly. In the case of the Russian aluminium
producer, the role was more a facilitating one the company did not provide services
directly, but rather helped the local community to help itself by facilitating NGOs.

The new responsibilities are government-like in nature. When they take on such a role,
firms become responsible for providing the sorts of services that a government would
traditionally have provided and the local communities come to expect such services to
continue. Part of the problem is that the companies are not governments: they are private
companies whose primary expertise is the business sector they operate in. They also
have limited funds, and cannot be relied upon to provide government-like services for
ever: indeed, shareholders may be unhappy with the amount of local investment. Their
accountability to the local population is also limited. The Magadi case is salutary: it
recognized these limits and helped set up a county council that minimized Magadis long-
term involvement.

Andrew Crane and Dirk Matten 2016. All rights reserved.