Name: Rikat Setyabudi

NPM: 1706056906
No. SIAK:
UNIVERSITAS INDONESIA
FAKULTAS EKONOMI DAN BISNIS
DEPARTEMEN MANAJEMEN
PROGRAM STUDI S1

MID-TERM EXAMINATION
ODD SEMESTER 2020/2021
CORPORATE SOCIAL RESPONSIBILITY AND BUSINESS ETHICS

LECTURER : LECTURER TEAM

SYSTEM : OPEN BOOKS
DATE : 9 NOVEMBER 2020
DURATION : 180 minutes / 2,5 hours with 30 minutes for e-mail/submission

Instructions:
General Instructions:
1. Student must fill out Integrity Statement (attached)
2. Ensure a smooth internet connection to ensure answers are sent via email or other media
according to mutual agreement
3. The examination time is 2.5 hours (13.00-15.30) with an additional 30 minutes for
sending answers via e-mail (the sent email to the lecturer is by no later than 16:00). Delay
in sending answers will be subject to a penalty or even disqualified.
4. The examination will be distributed 15 minutes before 13.00 by the teaching assistants
through determined platform.

Class Lecturer Platform/E-mail

Reg A Adi Waskito, S.E., M.M., CFP Google Classroom /
adiwaskito@gmail.com
Reg B Kanti Pertiwi, S.E., M.App.Comm, Ph.D EMAS
Reg C Dr. Rizal M.M. Google Drive kelas
Reg D Imbuh Sulistyarini, S.E., M.Ak. Imbuh.febui@gmail.com
Reg E Dwi Widiastri, S.E., M.M. dwiastri13@gmail.com
Reg F Shalahuddin Haikal, S.E., M.M., LL.M id1000113707@gmail.com

Special Instructions:
1. Format: Times New Roman 12, spacing 1.0 (following this document).
2. Type the answer directly under each question in this document.
3. Answer sheet file name: Tajasos 2020_Name_No. NPM.doc
4. Students have to submit two files in the email;
a. The answer sheet (Word),
b. Integrity statement (PDF).
5. There are 4 questions in this document, make sure you have answered all of them.
Maximum of 10 A4 pages for all answers (exclude instructions page)
6. Make sure the email has been sent (check in the sent folder and photo / print screen as
proof later)

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Name: Rikat Setyabudi
NPM: 1706056906
No. SIAK:
PROBLEMS I (Weight: 10%)
In the 1970s, there was a debate about the virtues and fallacies of CSR. One of the well-
known people who oppose CSR is Milton Friedman, while others defend the need for CSR.
Explain the logical arguments of these two thoughts.

Answers:
According to the Milton Friedman, social responsibility (CSR) is one of the company's
strategies in maximizing profit (profit), so the concept of CSR can be interpreted into two
things, namely:

 The first interpretation is that managers can enter the political realm by carrying out
philanthropic activities to the public, which the government should be doing. This is
because the government is the party that must perform public service by utilizing
taxes from the public.

Based on this interpretation, Milton Friedman considers social responsibility policies to be

the duty of the government, not of the company. This is because the company has paid taxes
to the government and the government should use these taxes for social responsibility.
Because of this opinion, Milton Friedman does not think companies should be socially
responsible.

 The second interpretation is that the manager acts as the principal or the main role
holder not the shareholder and social responsibility should be financed by the
shareholders

Based on this interpretation, Milton Friedman considers social responsibility to be the role
and duty of the company's shareholders. This means that social responsibility cannot be
burdened to the managers, whose main focus is to work to generate profits.

Arguments against CSR are listed as follows:

 CSR is an additional burden to the business
 Quantifies social benefits gained by CSR activities which is relatively subjective in
nature
 Cost generated by CSR activities may affect the development of the business
Arguments for CSR are listed as follows:
 CSR promotes company’s responsiveness towards environment
 CSR activities protect the interests of various stakeholders
 CSR facilitates long term sustainability of the environment

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Name: Rikat Setyabudi
NPM: 1706056906
No. SIAK:
PROBLEMS II (Weight: 30%)
a. Based on various ideologies of a country, the relationship between the state to the
business world and society is defined. How many possibilities are there for the
relationship construction between the state to the business world and society?
Describe each of these constructs!
b. Based on those constructions, explain how the various relationships construction
plays a role in the conceptualization of CSR.

Answers:

a. Interaction between government and business is called as the business to government

(B2G) construct. It refers to the marketing and sales of goods and services to state or
the government. B2G is one essential portion of business, since a part of the business
is expected to be spent on small business suppliers. Goods and services are provided
by B2G to the government agencies at various levels and it has two important pillars
which are ‘bids’ and ‘tenders.’ B2G is one of the essential relationship between
business and government as it shows direct relation between those two.

There are six types or possibilities for relationship constructs that are connecting the
state and the companies and also the society, those are:  conservative embeddedness;
entrepreneurial embeddedness; inclusive embeddedness; network embeddedness;
captive/repressive embeddedness; and fragmented embeddedness. 

In a conservative embeddedness, the government is connected to one party called

landowners, while monitoring other parties at certain distance. In this situation, the
state prevents any alliances to be formed between classes. Even though the level of
embeddedness is high regarding the landowners, the level of shared identity between
state officials is also high.

In entrepreneurial embeddedness, the main characteristic is the presence of close

alliance regarding the state and capitalists elite, accompanied by the suppression of
subordinate classes through coercive ways.

In inclusive embeddedness, the state has an autonomy regarding the dominant elite
group, and it features a high level centralization.

In network embeddedness, a state that continues to be mildly embedded in capitalists

elite groups, but also linkages with a multitude of other social groups developed.

In fragmented embeddedness, there are several elite factions aim for influence and
power within the state, but no one actually able to predominate at any given time.

In captive/repressive embeddedness, it happens due to a gain in extensive influence of

a radical group within state apparatus and successfully blocks attempts of the other
elite groups which aim to gain position and prestige of it all.

b. Different types of constructions would bring great impact on CSR. Regarding

conservative embeddedness, CSR would be designed by a designated receiver that is
being chosen by internal elite group. It means that the elite group have the luxury of
choosing the party which will receive the CSR since they have more power and trust
of the state. In Inclusive embeddedness, CSR would be greatly disturbed more equally

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Name: Rikat Setyabudi
NPM: 1706056906
No. SIAK:
because the previously powerless social groups are slowly gripping to get social and
political rights. In inclusive embeddedness, the low social groups will slowly receive
the benefits of CSR and for the better. For captive/repressive embeddedness, the only
class that receives enough amount of CSR is the upper class of society and the lower
classes would not be receiving any benefits of CSR.

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Name: Rikat Setyabudi
NPM: 1706056906
No. SIAK:
PROBLEMS III (Weight: 30%)
a. Explain the various conceptual definitions of CSR and its development from the
1950s to the present by explaining the similarities and differences between these
conceptual definitions. (Note: in these definitions, there are differences in
terminology, you must include the following two concepts: (1) corporate social
responsiveness and (2) corporate social citizenship).
b. Based on the similarities and differences that you have identified, find and explain the
main characteristics of the various concepts!

Answers:
A.
 1950-1960 Through his writing, “Social Responsibilities of the businessmen”, Howard
R. Roben stated that:
a. Business world has not recognized the shape and the state of corporate
industries as today.
b. Bias gender is still a thing, especially in US.
By definition CSR refers to entrepreneur’s obligation to follow, decide, or act on
behalf of society’s value and goals.
At 1960s, Keith Davis added another dimension aside from the social responsibility,
which are the decision and the action of the businessman should take at least on
behalf of other parties but economic or productiveness aspect of the company.
 1970-1980 Leaders of US established The Committee for Economic Development
(CEO) which stated that social contract between society and businessmen have been
through substantial and essential changes. Later on businessmen are expected to
contribute more in the society and companies are also expected to bring more goods
towards the citizen living in the US, not only providing goods and services.
CEO divided corporate social responsibilities into three circles which are:
a. Inner circle of responsibilities: the responsibility of the company to carry out
economic functions related to the production of goods and the efficient
implementation of work and economic growth.
b. Intermediate circle of responsibilities: responsibility for carrying out economic
functions while at the same time having a sensitivity to awareness of changing
values and social priority priorities such as attention to environment, employee
relations, obtaining clear product information, etc.
c. Outer circle of responsibilities: the company's obligation to be more active in
improving the quality of the social environment.
 1990-now Konsep pembangunan berkelanjutan (sustainability development)
didefinisikan oleh The Brundtland Comission sebagai berikut : “Pembangunan
berkelanjutan adalah pembangunan yang dapat memenuhi kebutuhan manusia saat ini
tanpa mengorbankan kemampuan generasi yang akan datang dalam memenuhi
kebutuhan mereka”
The concept of sustainability development contains 2 main ideas, namely:
a. To protect the environment, economic development economic development is
needed. Where in this day and age many people abuse natural resources just
for the purpose of survival without seeing the impact.

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Name: Rikat Setyabudi
NPM: 1706056906
No. SIAK:
b. Nevertheless, economic development must pay attention to sustainability,
namely by protecting the earth’s resources for future generations.
c. The concept of sustainability development is built on 3 pillars that are
interconnected and mutually supportive of one another, namely social,
economy, and environment, which was confirmed in The United Nations 2005
World Summit Outcome Document.

B. Based on the description explained above, the emergence of the above concepts
has similarities and differences that are observable. In summary, these concepts still
have things in common where all concepts are based on the company’s ability to have
a positive impact on the wider community. However, it can be seen in each concept
that there are differences that can be observed in how the experts see the ideal form in
implementing CSR. For example, in the 1970s to 1980s, what saw CSR as appropriate
was to respond to social pressures that occurred and in the 1990s to 2000s saw the
right CSR was to implement sustainable development, especially on environmental
topics.

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Name: Rikat Setyabudi
NPM: 1706056906
No. SIAK:
PROBLEMS IV (Weight: 30%)
a) Pay attention to the Andrew Ghillyer (AG) e-book and 3 (three) journals on Business
Ethics that have been discussed in the first three meetings. Describe your critical
thinking, what is the perspective of "Organizational Ethics" in every function of
business/organization, namely R&D; Manufacturing/Operations; Human Resources;
Marketing; Finance and Audit functions.
b) Write down the examples of pros and cons that occur from the application of business
ethics in Indonesia.
Notes:
• The examples you provide are mandatory for each of the business / organizational
functions so that there are at least 5 examples (one example of each function).
• Write down case sources and references.
Answers:
a) Research and Development
This business function has an obligation to the future of the company. Together with
this obligation, it requires a high commitment to consumers to produce the highest
quality, safe, and reliable products.
For the R&D business function ethical dilemmas come with decisions on product
quality. In essence, R&D is about the design of the new products they make for the
market. The product design made must be able to include the expected quality,
product safety and also, a reliable product.
Manufacturing
Similar to what is experienced by the R&D business function, an ethical question that
arises is “Do you want to build it fast, or do you want it built right?” This goes into
consideration that the competitors of a business also aim to produce new products to
the market. After a product design leaves the R&D business function, it falls into the
hands of manufacturers to implement the design by following the appropriate
specifications. Problems that often arise are related to the operations of the business,
from supply, suppliers, and material quality.
Human Resources
Ideally involved in the relationship between the business and its employees. In every
corporate cycle there is a potential for ethical violations. Due to its direct relationship
with other human beings, HR has an obligation as a main business function that
maintains ethical obligations. Several things that HR employees can do about ethical
obligations are as follows,
 Help ensure ethics is the top priority of the organization
 Help ensure that leadership choices and development processes contain an
ethical component
 Obliged to make sure programs and policies fall in the right place
 Must be able to keep abreast of ethical issues
Marketing
The role of marketing in business is to deliver products to consumers. From an ethical
point of view appears a utilitarianism point of view, which deals with a good result
justifying the method used to obtain the result no matter how the process is used to
mislead consumers in the message or the fact that the product is not needed. The

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Name: Rikat Setyabudi
NPM: 1706056906
No. SIAK:
position is increasingly complex with the calculation of the responsibility to generate
profits for the business. Marketers must therefore follow the existing ethical code.
Finance / internal audit
The financial function is divided into several areas, as follows:
 Financial transactions, the process of circulating money in the organization
 Accounting function, recording all financial transactions in the organization
 Audit, checking the certainty of books and business processes
Internal audit certainly must be able to follow a professional code of ethics, in the
form of an ongoing law.
b)
 Research and Development
 Manufacturing
Uniqlo (source:https://goodonyou.eco/how-ethical-is-uniqlo/#:~:text=While
%20Uniqlo%20has%20set%20some%20decent%20environmental%20policies%20in
%20place,See%20the%20rating.
Pros: It traces most of its supply chain including all of the final stage.
Cons: It does not publicly list all of its suppliers.

 HR
Garuda Indonesia (https://id.linkedin.com/in/pt-garuda-indonesia-tbk-
02630b120)
Pros: Good and ethical recruitment
Cons: No significant support for the employee
 Marketing
 Finance

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Name: Rikat Setyabudi
NPM: 1706056906
No. SIAK:
ATTACHMENT

INTEGRITY STATEMENT

In this course exam (Corporate Social Responsibility and Business Ethics)

Name: Rikat Setyabudi
NPM: 1706056906

I honestly state that:

1. I do not accept and / or do not provide assistance in any form to other students in
doing exam questions.
2. I do not plagiarize other people's work and recognize it as my job
3. I understand that all acts of fraud will be punished according to the academic rules
that apply to the Faculty of Economics and Business, Universitas Indonesia

Depok, 09/11/ 2020

(Rikat Setyabudi)

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