LESSON 4

STUDY UNIT NUMBER IOP4862

TITLE OF STUDY UNIT Managerial and Organisational Psychology

TITLE OF LESSON Theme 1: A holistic perspective on organisations and their

environmental context is obtained

Lesson 4 – Corporate social responsibility and ethics

NOTIONAL STUDY HOURS

NUMBER OF PLANNED
SELF-REFLECTIVE ACTIVITIES
& DISCUSSION ACTIVITIES

NUMBER OF ASSESSMENT-
LINKED ACTIVITIES

NOTIONA DESCRIPTION COMMENTS

L STUDY (Insert relevant icons)
HOURS

As an organizational phenomenon, CSR has become increasingly prevalent (dominant) and visible within corporations as a
mechanism to energize and motivate stakeholders, as well as manage societal perceptions and expectations on the role
and utility of businesses in societies and communities beyond the core function of producing and selling goods to a defined
consumer market.
(Wang et al., 2016)

Learning outcomes:

On completion of lesson 4, you should be able to:

 discuss and explain the application of corporate social responsibility (CSR) and ethics

Introduction

Organisational culture has the potential to influence workers’ engagement as it encourages or

discourages employees to behave authentically at work. Employees who feel authentic are likely
to work in activities that fit their core values or at least perform their jobs in ways that are more
congruent with their core selves (Reis, Trullen & Story, 2016). However, a good organisation will
be guided by ethical standards that promotes good conduct between individuals within the
organisation as well as between the organisation and its key stakeholders and its environment.
The next section will focus on the specifics of ethics and how they play out within the
organisational context.

HOLISTIC PERSPECTIVE – Organisations

and their environment

Lesson 4: Ethics and social corporate

responsibility

Ethics
In the framework of this chapter on the environmental context for today’s organisations, ethics
also has an impact on the way employees are treated and how they perform their jobs. In other
words, like globalisation and diversity, ethics can affect the well-being of employees and their
performance.
Ethics involves moral issues and choices and deals with right and wrong behaviour. It is now
realised that not only individuals and groups but also a number of relevant factors from the
cultural, organisational and external environment determine ethical behaviour. Cultural
influences on ethical behaviour come from family, friends, neighbours, education, religion and
the media. Organisational influences come from ethical codes, role models, policies and
practices, and reward and punishment systems. The external forces having an impact on ethical
behaviour include political, legal, economic and international developments. These factors often
work interdependently in shaping the ethical behaviour of individuals and groups in
organisations. For example, minimum wage jobs may lock people into an economic existence that
prevents them from bettering their lives. Is it ethical to pay people only a minimum wage? Or
what about Nike initially denying charges of sweatshop labour conditions in its overseas factories,
then trying to justify its low wages on the basis of different living standards? What about unsafe
products or the tobacco chief executive officers denying the addictive properties of nicotine?

Ethical issues are very much at the forefront of organisational behaviour in today’s environment.
Ethics is a challenging issue in terms of what may seem a legal obligation or a normative way of
conducting business. However, there are simple guidelines for employees to follow in doing the
authentic, right thing in ethical grey areas. There is a quick test offered to employees. You will
find that people will most of the time seek comfort in and want to be exposed to the usual and
obvious situations. Familiarise yourself with the simple guidelines for employees to follow on
page 49 in your prescribed textbook.
One controversial issue concern monitoring employees. Technology has now made it easy and
inexpensive for employers to closely monitor the behaviours of employees.

Visit the website http://www.legalethics.com for information on ethics and laws relevant to the
current workplace. It may be helpful for you to test your knowledge and understanding of the
ethical climate by going to:
httl://www.mhhe.com/business/management/buildyourmanagementskills/ethics/
exercise.html.

Then, going from these, search to see if you can come up with other perspectives on employee
monitoring as an ethical issue.

Self-reflective activity 4.1

Please answer the following questions:
1. Do you believe employers should be allowed to electronically monitor workers? Would you
like to be monitored in this fashion? Explain.
2. Summarise the different perspectives that you found on the internet. Be specific as to where
you found this information.
3. Discuss other ethical issues that surfaced when looking at the suggested websites or others
that you found.

Discussions activity 4.2: Case study

Read the case study on page 57 of the prescribed book, The ethics of downsizing. Upon your
reading, answer the following questions:
1. What is meant by ethics, and what types of factors influence ethical behaviour? Discuss.
2. Do you agree that downsizing is an ethical issue? Explain.
3. Do you agree with the five guidelines for downsizing ethically? Would you add any others?
Explain.
4. What if you do not agree with the reason for the downsizing? Ethically, how would you
respond? Would you be willing to resign? Explain.

Lastly, organisations are expected to conduct themselves in a responsible manner that

contributes to the well-being of its immediate environment. Acting responsibly and making a
contribution by the organisation to its environment can be realised through the corporate social
responsibility (CSR). What is meant by corporate social responsibility? How can and does it affect
the “bottom-line” of today’s organisations? The following section will give an overview of
corporate social responsibility and related activities to facilitate understanding of the concept.

Corporate social responsibility (CSR)

Early notions of CSR on an academic level can be traced back to the 1960s. In 1991, Carroll
presented CSR as a multi-layered concept that consists of four interrelated aspects: economic,
legal, ethical and philanthropic (big-hearted/humanitarian/generous) responsibilities. Carroll
proposed a pyramid that analyses the dimension of CSR. It starts with economic responsibilities;
companies are created to provide goods and services to the public and to make a profit. This is
the foundation upon which the other three responsibilities rest. The second layer consists of the
legal responsibilities of a company. The ethical responsibilities are practices that have not been
codified into the law. Societal members expect a company to do what is right and fair. Lastly, at
the top of the pyramid companies have a philanthropic responsibility. Business organisations are
expected to be good corporate citizens and to improve the quality of life.

Transparency in corporate practices seems desirable for stakeholders. However, nowadays

leading multinationals voluntarily prepare sustainability reports based on the Global Reporting
Initiative (GRI) Guidelines. The GRI Guidelines are a set of guidelines for businesses created to
stimulate socially-responsible corporate behaviour. The GRI was initiated in 1997 by the UN
Environment Programme (UNEP) and CERES. The GRI has developed reporting guidelines for
companies to assist them in disclosing non-financial information about the way they pursue their
activities. The guidelines address environmental and social conduct, but also include other
subjects, for example, corruption and human rights.

Case study

Facebook – Cambridge Analytica data scandal

ABSTRACT

The case discusses the data breach scandal involving the world’s largest social media
network, Facebook, its impact on the company, and the challenges facing the social
media giant. Designed with the vision of connecting people with their friends and family
to discover what’s going on in the world and to share and express what matters to them,
Facebook became a popular social media company with about 2.19 billion monthly active
users as of the first quarter of 2018. However, the company's continuous growth was
marred by security concerns. In March 2018, Facebook was caught in a major data breach
scandal in which a political consulting firm – Cambridge Analytica – pulled out the
personal data of more than 87 million Facebook users without their consent. The data
was allegedly used in favour of the US Presidential candidate, Donald Trump, during the
2016 elections. Further, it was found that the data was also misused to influence the
Brexit referendum results in favour of the Vote Leave campaign. The tech giant’s reaction
to the scandal was reportedly clumsy, defensive and confused. When Facebook got to
know about the data breach, it allegedly did not do anything and waited for months to
send orders to Cambridge Analytica to delete all the data. Further, the company did not
follow up to check whether the illegally acquired data had been deleted. The scandal put
 Facebook in a situation where it was left facing the ire of millions of Facebook users,
lawmakers and advertisers. Further, the company’s share value also dropped after news
of the data breach broke out. There were several challenges facing Facebook, including
hate campaigns running against it and lawsuits filed for the breach of users’ privacy
protection. After the data debacle, analysts believed that it would take a few years to fix
the problems caused by the leakage of users’ private data. Though the company took
several initiatives to prevent such data leaks in future, it remained to be seen whether it
could fix its reputation. Facebook founder and CEO Mark Zuckerberg (Zuckerberg)
apologised for the “major breach of trust”, but was that enough to reassure users?

Discussions activity 4.3: Case study

• Analyse the ethical issues arising out of the Facebook data breach scandal.
• Understand the role of security in social networking.
• Study the impact of the data scandal on Facebook.
• Identify the various challenges Facebook is likely to face post the data scandal.
• Analyse the steps taken by Facebook to prevent such incidents in the future.

Case study: Planned Obsolescence: Undermining Apple`s Commitment to Sustainability?

ABSTRACT

The case focuses on global tech giant Apple’s supposed planned obsolescence strategy
and its social, environmental and economic implications. Apple was accused of
deliberately slowing down its iPhones through software updates and designing its
products to be
short-lived in order to encourage customers to buy its new models and boost sales.
Moreover, a number of devices from Apple were increasingly being designed in ways that
made it difficult for users to fix them, thereby shortening their lifespan. Though Apple
admitted to throttling older iPhones, it said that it had done so for a purely altruistic
reason – allegedly to prevent them from crashing due to aging batteries. To make up for
its lack of transparency, Apple eventually discounted the price of replacing batteries in
older iPhones. The case explores how Apple’s planned obsolescence leads to a short life
cycle of the products, which has a negative impact on sustainability. By encouraging a
culture of consumption, Apple is contributing to the overuse of energy and resources,
which increases the risk of global warming. Discarded devices produce large quantities of
electronic waste (e-waste) that pollute ecosystems and contribute to climate change. In
addition, mining for essential raw materials endangers workers by fuelling armed conflict
in countries like the Democratic Republic of the Congo (DRC). Also, workers who
assemble iPhones in Chinese factories endure sweat shop like condition. As one of the
most valuable companies in the world, Apple is environmentally focused and is
 continuously working to reduce its environmental footprint by focusing on climate
change, resources and safer materials. However, the company’s commitment to
protecting the people and the planet is increasingly being diluted due to allegations of
planned obsolescence. Analysts wondered whether Apple’s planned obsolescence is just
a public perception or whether the company is really guilty of built-in obsolescence.
Going forward, the questions before Apple are: How can it tackle the issue of planned
obsolescence? How can it assure stakeholders that it places sustainability before profits?
Should the company take a clear stance on this issue, given its global scale and influence?
If so, how should Apple go about it?

Discussion reflective activity 4.4.

Answer the following questions:

1. Explain the concept of planned obsolescence, its various forms and purposes as an
ethics issue.
2. Explain the culture of planned obsolescence at Apple as an ethics issue.
3. Discuss the relationship between planned obsolescence and sustainability as an
ethics issue.
4. Discuss the implications of planned obsolescence as an ethics issue.
5. Explore the ways by which Apple can tackle the issue of planned obsolescence as an
ethics issue.

Recommended articles

SUMMARY

Lesson 4 covered ethics and corporate social responsibility. In this learning unit, you were
introduced to the ethical behaviour of individuals and groups in organisations and organisations
themselves. Corporate social responsibility was also explained to the role of organisations in
making contribution to the well-being of its stakeholders including its environment.

Other related references for the lesson

 Agudelo, M. A. L., Jóhannsdóttir, L., & Davídsdóttir, B. (2019). A literature review of the
history and evolution of corporate social responsibility. International Journal of
 Corporate Social Responsibility, 4(1), 1.
 Ali, W., Frynas, J. G., & Mahmood, Z. (2017). Determinants of corporate social
responsibility (CSR) disclosure in developed and developing countries: A literature
review. Corporate Social Responsibility and Environmental Management, 24(4), 273-294.
 Aguinis, H., & Glavas, A. (2019). On corporate social responsibility, sensemaking, and the
search for meaningfulness through work. Journal of management, 45(3), 1057-1086.
 Crane, A., & Glozer, S. (2016). Researching corporate social responsibility communication:
Themes, opportunities and challenges. Journal of management studies, 53(7), 1223-1252.
 Glavas, A. (2016). Corporate social responsibility and organizational psychology: An
integrative review. Frontiers in psychology, 7, 144.
 Gürlek, M., Düzgün, E., & Uygur, S. M. (2017). How does corporate social responsibility
create customer loyalty? The role of corporate image. Social Responsibility Journal. Vol.
13 Issue: 3, pp.409-427, https://doi.org/10.1108/SRJ-10-2016-0177
 Ferrell, O. C., Harrison, D. E., Ferrell, L., & Hair, J. F. (2019). Business ethics, corporate
social responsibility, and brand attitudes: An exploratory study. Journal of Business
Research, 95, 491-501.
 Freeman, R. E., & Dmytriyev, S. (2017). Corporate social responsibility and stakeholder
theory: Learning from each other. Symphonya. Emerging Issues in Management, (1), 7-
15.
 Frynas, J. G., & Yamahaki, C. (2016). Corporate social responsibility: Review and roadmap
of theoretical perspectives. Business Ethics: A European Review, 25(3), 258-285.
 Halkos, G. and Skouloudis, A. (2018) Corporate social responsibility and innovative
capacity: intersection in a macrolevel perspective. Journal of Cleaner Production, 182. pp.
291300.
 John, A., Qadeer, F., Shahzadi, G., & Jia, F. (2019). Getting paid to be good: How and when
employees respond to corporate social responsibility?. Journal of cleaner
production, 215, 784-795.
 Mert Gürlek, Ertugrul Düzgün, Selma Meydan Uygur, (2017) "How does corporate social
responsibility create customer loyalty? The role of corporate image", Social Responsibility
Journal, Vol. 13 Issue: 3, pp.409-427, https://doi.org/10.1108/SRJ-10-2016-0177
 Park, E. (2019). Corporate social responsibility as a determinant of corporate reputation
in the airline industry. Journal of retailing and consumer services, 47, 215-221.
 Reis, G., Trullen, J., & Story, J. (2016). Perceived organizational culture and engagement:
the mediating role of authenticity. Journal of Managerial Psychology.
 Tilt, C. A. (2016). Corporate social responsibility research: The importance of
context. International journal of corporate social responsibility, 1(1), 1-9.
 Torres, C. A. C., Garcia-French, M., Hordijk, R., & Nguyen, K. (2012). Four Case Studies on
Corporate Social Responsibility: Do Conflict Affect a Company's Corporate Social
Responsibility Policy. Utrecht L. Rev., 8, 51.
 Wang, H., Tong, L., Takeuchi, R., & George, G. (2016). Corporate social responsibility: An
overview and new research directions: Thematic issue on corporate social responsibility.
 Academy of Management Journal. 59, (2), 534-544.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/4942
 Yasser, Q. R., Al Mamun, A., & Ahmed, I. (2017). Corporate social responsibility and
gender diversity: insights from Asia Pacific. Corporate Social Responsibility and
Environmental Management, 24(3), 210-221.