M.S.

CELICA PINEDA- CORONADO GOOD GOVERNANCE

BSA 4 TTH 7:30-9:00AM

ETHICS AND CORPORATE SOCIAL RESPONSIBILITY

A. CONCEPT OF CORPORATE SOCIAL RESPONSIBILITY

“Corporate social responsibility means seriously considering the impact of the company’s actions on
society” –Bauer

“The obligation of decision makers to take actions which protect and improve the welfare of the society
as a whole along with their own interests” –Davis and Bomstrom

“The idea of social responsibility supposes that the corporation has not only economic and legal
obligations, but also certain responsibilities to society which extend beyond these obligations” –McGuire

“The response of the corporation to issues beyond its narrow economic, technical and legal requirements.
It is the obligation of the corporation to evaluate the effects of its decisions on the external environment”-
Prof. Keith Davis of Arizona State University

CSR is the process by which businesses negotiate their role in society

B. CORPORATE SOCIAL RESPONSIBILITY FROM HISTORICAL PERSPECTIVE

THE ANCIENT AND THE MEDIEVAL PERIOD

 People believed that businessmen and wealthy people should do business to community as part of
public or social service.
 Criticism against the evil of business came far and wide during the medieval period when the
Catholic Church became the most powerful institution in Europe.

PERIOD OF MERCANTALISM

 This period showed several violations of social responsibility

 No moral issue was raised in Europe
 The power of Catholic Church as the most influential body in Europe did not only diminish
because European governments became active due to the influence brought about by the
philosophy and doctrines

THE INDUSTRIAL REVOLUTION

 The time when machines were introduced, thus contributing to improved production and business
growth
 The emergence of big corporations also happened during this time
 CSR was totally absent as big corporations acted above law
AFTER THE PERIOD OF depression

Business have started to involve internal and external stakeholders to collaborate and participate in
the improvement of the standards of their corporate social responsibility policies, procedure and practices.

C. HISTORICAL PHASES OF CORPORATE SOCIAL RESPONSIBILITY

PHASE 1: Profit maximizing Management (1800s to 1900s)

 Management must maximize profit

 Individual drive for profit maximization would ultimately create wealth for the nation
 Business systems as a profit maximize are used as a tool for the elimination of economic scarcity
 Business ignored unsafe working conditions, paid starvation wages, and used child labor in order
to maximize profit.
 Problem of cultural minorities, unsafe products , unfair advertising and urban poor problems were
given little if no attention at all.
 Abuses of capitalism are extremely rampant and the government tolerates these deplorable
business practices

PHASE 2: Trusteeship Management (Early 1900s)

 Management was considered both as an instrument of stockholders and as a trustee for all groups
who contribute to the business enterprise
 Aside from profit aximization, management’s concern is also to maintain a fair balance in the
interests of emloyees, customers, creditors, stockholders, and the community

PHASE 3: Quality of Life Management (1930s)

 Security of basic goods and services was no longer a principal problem

 Social and economic problems brought about by the economic growth expanded the concept of
social responsibility of management
 Society demanded management’s active participation in helping solve social and environmental
problems in view of the vast resources of business.
 Business is expected to contribute to the improvement of the quality of life, which involves
cultural, social, educational, political factors and economic security.
 Society is unstable if the quality of life of the people is poor. Businesses contribute to a good
quality of life and society
 A prosperous society is the best environment for a business to thrive in. business will benefit
from its self-investment in society
 D. PERSPECTIVES ON CORPORATE SOCIAL RESPONSIBILITY

People’s attitude, values and management culture differ. Consequently, each has a social responsibility in
society since every individual, body or institution makes up a society.

Business have different viewpoints on social responsibility as well

CLASSICAL VIEW

“The only social responsibility of business is to maximise profits”– Friedman’s frequent saying.

In reference to Friedman’s classical view, the purposes for business to exist are for distributing products
and services to society, and thereafter, for creating economic value which subsequently generate profits
for shareholders. Keinert (2008) trusts that the mangers are in control to maximise these revenue for
shareholders, obligate by the employment contract as an agents for the shareholders of the firm, the
principals. It is also emphasised by Zu (2008) that for classical management corporation has no interest in
looking beyond profit maximization, with the exception of profit benefit activity. In another words, the
primary goal of business is profit, while corporate social responsibilities and ethical custom deem
secondary. Nestle, Walmart, FordMotor, and Microsoft, sadly, are one of those big companies who
practice this.

MANAGERIAL VIEW

Christian Thauer looks inside the firm to illustrate the internal drivers of the social conduct of business.
He argues that corporate social responsibility (CSR) assists decision-makers to resolve managerial
dilemmas. Drawing on transaction cost economics, he asks why and which dilemmas bring CSR to the
fore. In this context he describes a managerial dilemma as a situation where the execution of
management's decisions transforms the mode of cooperation within the organization from a hierarchy to
one in which managers become dependent on, and vulnerable to, the behavior of subordinates. Thauer
provides empirical illustration of his theory by examining automotive and textile factories in South Africa
and China. Thauer demonstrates that CSR is often driven by internal management problems rather than
by the external pressures that corporations confront.

PUBLIC VIEW

Public Image. Businesses are striving to develop their public image to increase their sales, access to
financing better employees etc. Since the public consider social goals important, business can create a
favorable public image by pursuing public goals.

Better Environment. If the business involve itself socially can help to solve difficult social problems,
which help to create a better quality of life in which to attract and keep skilled employees.

Public Expectation. Public opinion supporting business pursuing social as well as economic goals.

Long run Profit. Socially responsible business tend to have more secure long run profits. It is the result of
better community relations and improved business image.
CHRISTIAN VIEW

To achieve the common good, all social spheres must assume subsidiary responsibilities, where the
principle of subsidiarity represents an expression of the inalienable human freedom, a specific
manifestation of charity and a ruling criterion for cooperation. It is, above all, help for people through
intermediary organizations; and business is one of these intermediaries. As such, Pope Francis’
exhortation is a call for subsidiarity to work as a guiding principle to outline and define corporate
responsibilities and to promote those that are inclusive.

However, the principle of subsidiarity is closely linked to the principle of solidarity: a solidarity
understood as the firm and persevering determination to devote oneself to the common good. That is to
say, for the good of all and each of us, for all of us to be truly responsible for each other. Without
solidarity, there is the risk of subsidiarity degenerating into social privatism. However, at the same time,
without subsidiarity, solidarity gives way to paternalist social assistance that is demeaning to those in
need . Pope Francis’ exhortation is a call for all, within the framework of the company, to feel a sense of
responsibility for all; responsible for the integral development of others, thus eradicating inequality.

In this way, Pope Francis’ exhortation is ultimately a call for entrepreneurial humanism; and for a CSR
focused on human beings, where the core principle is a respect for everyone’s dignity. It is a call for
businesses to never consider “human beings as consumer goods to be used and then discarded

REFERENCE

https://prezi.com/aab3hcvyf4kj/chapter-8-ethics-and-corporate-social-responsibility/

https://prezi.com/zvmdqtzrx8gr/3-phases-of-corporate-social-responsibility/

https://cadmus.eui.eu/handle/1814/34439

http://www.studylecturenotes.com/management-sciences/management/69-what-is-social-
responsibility