 Moral agents- moral responsibility

Corporations
Can Corporations be considered as moral
agents?
1
 Conducting business in an ethical way and in the
interest of wider community.
 Responding positively to emerging societal priorities
and expectations.
 Making contribution to civic and charitable
organization
 Providing benefits to employees
 Using corporate resources to operate a program that
addresses some major social problem
 Not a charity
1. Carroll- four-stage continuum

Philanthropic ( not legally required or even demanded by

ethics, but corporations accept them to meet societal
expectations)

Ethical
Legal
Economic

2. Stakeholder theory (Freeman)- corporations ought to be

operated for the benefit of all those who have a stake in the
enterprise.- cooperative endeavour

3. Humanistic approach- CSR as moral responsibility

 With the philanthropic approach it is not necessary
for the organization to fulfill its responsibilities
toward those who work in and for the
organization, its customers and to the ecological
system in general. Achieving both organizational
growth and social development requires a shift
from a philanthropic approach to a humanistic
approach on the part of companies and the
government, accommodating all its stakeholders.
 (Need for a shift from a philanthropic to a humanistic approach to Corporate Social
Responsibility, 2016, Annals of Public and Cooperative Economics , Cheruvalath, R.)
The major difference between a philanthropic view and a
humanistic view regarding CSR
Philanthropic view
CSR is implemented as charity.
Implemented voluntarily or involuntarily (required by law or
done with the motive of increasing profit).
Done to accomplish strategic business goals.
Focusing on environmental or educational programs.
Humanistic view
CSR seen as moral responsibility.
Implemented voluntarily with the motive of promoting the
wellbeing of all stakeholders.
Based on the desire to serve the great cause of human
progress.
Follow holistic approach to ensure justice to those who work in
and for the organization, the surrounding community and
ecology.
What are the arguments for and against
CSR?
(James W. McKie)- economic organizations-
Economic behavior is distinct, economic efficiency
and growth in production, profit
 Restricts the free market goal of profit
maximization / Dilutes the primary aim of
business
 Business is not equipped to handle social
activities
 Limits the ability to compete in a global
marketplace
Milton Friedman: Executives have an obligation to
make decisions in the interest of employers
 The moral minimum of the market

 Giving helping hand to government

 Power and responsibility

 The New Companies Act (2013)
The New Companies Act (2013) makes it mandatory for
companies for companies who have a turnover of 500 crores
and above to spend at least 2% of their three-year average
annual profit on social welfare activities for implementing a
Corporate social responsibility (CSR) strategy.

Thus the Act makes it compulsory to form a CSR

committee (of board members consisting 3 or more
directors out of which at least one is an independent
director), formulate a CSR policy , allocate the amount to
different activities and monitor the implementation from
time to time. Further, the CSR policy is to be disclosed on
the company website.
Setting up of hostels for women and orphans as well as
efforts that benefit armed forces veterans, war widows and
their dependents, setting up old age homes, day care
centres and such other facilities for senior citizens,
livelihood enhancement and rural development projects,
promoting preventive health care and sanitation as well as
making safe drinking water available will come under the
‘Corporate Social Responsibility’ spending ambit.

The CSR activities will have to be within India, and the

new rules will also apply to foreign companies registered
here.
funds given to political parties and the money spent for the
benefit of the company’s own employees (and their
families) will not count as CSR. ( 2014)
 What are the benefits of CSR?
 It aids the attraction and retention of staff.
 It attracts green and ethical investment
 It attracts ethically conscious/more satisfied
customers

 **** (Boatright, J. Ethics and the Conduct of

Business)
Weaknesses of CSR Act

1.Making CSR mandatory leads to MNCs devise

strategies/policies which comply with the legal
framework. They may bypass the law.
2.Companied do unethical activities, but do CSR
3.Do CSR to divert the attention of consumers
4.Benefits given to employees are not considered
as CSR.