Chapter 3:

CORPORATE SOCIAL
RESPONSIBILITY
AND BUSINESS ETHICS

GROUP MEMBERS:
Vũ Thị Hồng Hạnh BABAIU17095
Nguyễn Kim Tuyền BABAIU17088
Nguyễn Thị Mỹ Linh BABAIU17044
Nguyễn Hoàng Thanh Trúc BABAIU17041
LEARNING OBJECTIVES
1. Understand the importance of the stakeholder approach
2. Explain the continuum of social responsibility
3. Describe a social audit
4. Discuss the effect of Sarbanes-Oxley, 2002
5. Compare advantages of collaborative social initiatives
6. Explain the 5 principles of collaborate social initiatives
7. Compare the merits of different approaches to business
ethics
8. Explain relevance of business ethics to strategic
management practice.
Stakeholder Approach:

According to the Stakeholder Approach:

• In defining or redefining the company mission,

strategic managers must recognize the legitimate
rights of the firm’s claimants.

• In addition to stockholders and employees, these

include outside stakeholders affected by the firm’s
actions.
Perceived Stakeholders:
Steps to Incorporate
Stakeholders:
1. Identification of stakeholders.
2. Understanding stakeholders’ specific
claims vis-à-vis the firm.
3. Reconciliation of these claims and
assignment of priorities.
4. Coordination of the claims with other
elements of the company mission.
Dynamics of Social Responsibility:

- Inside vs. Outside Stakeholders

- Duty to serve society plus duty to serve stockholders
- Flexibility is key
- Firms differ along:
 Competitive Position
 Industry
 Country
 Environmental Pressures
 Ecological Pressures
Inputs to the Development of
Company Mission
Types of Social Responsibility:
ECONOMIC:
The duty of managers, as agents of the company
owners, to maximize stockholder wealth

LEGAL:
The firm’s obligations to comply with the laws that
regulate business activities

ETHICAL:
The company’s notion of right and proper business
behavior

DISCRETIONARY:
Voluntarily assumed by a business organization
CSR & Profitability:

• Corporate social responsibility (CSR), is the idea that

business has a duty to serve society in general as well as the
financial interests of stockholders

• The dynamic between CSR and success (profit) is complex.

They are not mutually exclusive, and they are not
prerequisites of each other
Factors Complicating
A Cost-Benefit Analysis of CSR:
1. Some CSR activities incur no dollar costs at all. In
fact, the benefits from philanthropy can be huge.

2. Socially responsible behavior does not come at a

prohibitive cost.

3. Socially responsible practices may create savings,

and, as a result, increase profits.

4. Proponents argues that CSR costs are more than

offset in the long run by an improved company
image and increased community goodwill.
CSR Today
• Priority of American businesses
• Resurgence of Environmentalism
• Increasing Buying Power among
Consumers
• Globalization of Business
 The oil spill
Resurgence of incident in 1989
helped to revive the
environmentalism worldwide concern
for the ecological
environment.

Sustainable business takes

long-term approach to
minimizing negative impacts Its performance is
on the ecology, society, and judged by the
economy triple bottom line
 90% of Consumers are becoming more
interested in buying products
shoppers from socially responsible
companies
surveyed
switch to brands that
support a good cause,
given similar price and 90% of
quality
shoppers
surveyed
Increasing buyer power boycott companies if
they found the firms
engaged in irresponsible
business practices.
Increasing buyer power
A dramatic increase in the number of people interested in
supporting socially responsible companies through their
investment

Social investors:
Individuals, institutions, educational institutions and large
pension funds

Large-scale investing
Be broken down into guideline portfolio investing and
shareholder activism
The globalization of business:

For multinational corporate, globalization brings

more opportunities and benefits
Facing some difficulties:
• The different cultural views
• Differing corporate disclosure practices
• Inconsistent financial data and reporting methods
• The lack of CSR research organizations within
countries
The most contentious social responsibility
issue confronting multinational firm
pertains to human rights

Example: CHILD LABOUR IN INDIA

- Indian people and children are happy to
earn money.
- Multinational corporate: children are
used to keep costs low → higher profits, sell
the product for less → more attractive to
consumers.
- Customers are pleased by the lower prices
- Others believe that such firms are failing
to satisfy CSR and may lead to many
negative impacts on children & the society.
 Sarbanes-Oxley Act of 2002

• CEO and CFO must certify every report containing

company’s financial statements
• Restricted corporate control of executives, acting, firms,
auditing committees, and attorneys
• Specifies duties of registered public acting firms that
conduct audits
• Composition of the audit committee and specific
responsibilities
• Rules for attorney conduct
• Disclosure periods are stipulated
• Stricter penalties for violations
New Corporate Governance Structure

• Restructuring governance structure in American

corporations
• Heightened role of corporate internal auditors
• Auditors now routinely deal directly with top
corporate officials
• CEO information provided directly by the
company’s chief compliance and chief accounting
officers
 The new Corporate Governance
Structure
The Traditional structure The New structure
Board of Board of
Director Director

Chief Executive Chief Executive

Officer Officer

Chief Financial Chief Chief

Officer Compliance Accounting
Officer Officer

Accountants Internal Chief Financial

Auditors Officer

Compliance Internal
Accountants
Officers Auditors
 CSR’s effect on
Mission Statement
• Mission statement embodies what
company believes
• Managers must identify all stakeholder
groups & weigh their relative rights &
abilities to affect the firm’s success
Social Audit
• A social audit is an attempt to measure
a company’s actual social performance
against its social objectives.
• The social audit may be used for more
than simply monitoring and evaluating
firm social performance.
Satisfying Corporate
Social Responsibility
• Conflicting pressures on executives
• The CSR Debate: centuries old
• There are mutual advantages to using
Collaborative Social Initiatives (CSIs)
 Ex. 3.10 Continuum of Corporate Social Responsibility
Commitments

Philanthropy/ Collaborative CSR-

gift giving social initiatives dominated mission

Peripheral CSR commitment Balanced CSR commitment Excessive CSR commitment

 Assemble &
Value the Total
Package of
Obtain Benefits
Five Principles government
support or
Pursue a
long-term durable
COLLABORA mission
of Successful minimize
interference
TIVE SOCIAL
INITIATIVES

CSIs Contribute
Specialized Leverage Core
Services to a Capabilities:
Large-Scale Contribute “What
Undertaking we do”

1. Identify a Long-Term Durable Mission

2. Contribute “What We Do”*
*This is the most important principle
3. Contribute Specialized Services to a Large-Scale
Undertaking
4. Weigh Government’s Influence
5. Assemble and Value the Total Package of Benefits
 The Limits of CSR Strategies

• Some companies have embedded social responsibility

and sustainability commitments deeply in their core
strategies.
• Larger companies must move beyond the easy options of
charitable donations but also steer clear of overreaching
commitments.
• CSR strategies can also run afoul of the skeptics—the
speed of information on the Internet makes this an issue
with serious ramifications.
 The Future of CSR

• CSR is firmly and irreversibly part of the corporate

fabric
• Corporations will face growing demands for social
responsibility contributions far beyond simple cash or in-
kind donations
• The public’s perception of ethics in corporate America is
near its all-time low
• Even when groups agree on what constitutes human
welfare, the means they choose to achieve it may differ
Management Ethics
The Nature of Ethics in Business:

• Belief that managers will behave in an ethical manner is

central to CSR
• ETHICS:
The moral principles that reflect society’s beliefs about the actions
of an individual or a group that are right and wrong

→ BUSINESS ETHICS:
The application of general ethical principles to the actions and
decisions of business and the conduct of their personnel.

• ETHICAL STANDARD:
Reflect the end product of a process of defining and clarifying the
nature and content of human interaction
Approaches to Questions of Ethics
Utilitarian Approach:
Utilitarian Approach refers to judging the appropriateness of
a particular action based on a goal to provide the greatest good
for the greatest number of people.
Approaches to Questions of Ethics
Moral Rights Approach:
Moral Rights Approach refers to judging the appropriateness
of a particular action based on a goal to maintain the
fundamental rights and privileges of individuals and groups
Approaches to Questions of Ethics
Social Justice Approach:
Social Justice Approach (or Fairness Approach) includes
judging the appropriateness of a particular action based on equity,
fairness, and impartiality in the distribution of rewards and costs
among individuals and groups. It includes different principles
such as the liberty principle, difference principle, distributive-
justice principle, fairness principle, and natural duty principle.
Code of Business Ethics

→ To help ensure consistence in the application of

ethical standards, an increasing number of
professional associations and businesses are
establishing codes of ethical conduct.
→ The following all have ethics codes:
• Chemists
• Funeral directors
• Law Enforcement Agents
• Hockey Players
• Librarians
• Physicians
Major Trends in Codes of Ethics

1. Increased interest in codifying business ethics has

led to both the proliferation of formal statements by
companies and to their prominence among business
documents.
2.Such codes used to be found solely in employee
handbooks.
3.Companies are adding enforcement measures to
their codes.
4.Increased attention by companies in improving
employees’ training in understanding their
obligations under the company’s code of ethics.
• https://online.hbs.edu/blog/post/what-is-sus
tainability-in-business?fbclid=IwAR1nIi__
di1LB7O1bSfmwKVtMdYJeZgRYssBi5N
gTITh9jA_am6i3-1cWjs
• https://www.investopedia.com/terms/s/sust
ainability.asp
• https://tuoitre.vn/ubcknn-yeu-cau-cong-ty-
mai-linh-cong-bo-thong-tin-dinh-chinh-298
975.htm?fbclid=IwAR3JryZ5fEFLsQHmI
GTrAOBIHnSddje23OZd64BeAVEG5-e8c
2qC1-nHzYI
• https://www.investopedia.com/financial-ed
ge/0212/the-value-in-socially-responsible-i
nvesting.aspx
• https://www.humanium.org/en/child-labour
/?fbclid=IwAR1bERFIQ3LbbLvBkScYq_
WUpXkzcK4lWun3xC7k7ecYdoeftKAfIj
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References
Thank you for
listening