Chapter 2 'Think Theory' answers

Framing Business Ethics: Corporate Responsibility, Stakeholders, and Citizenship

 

THINK THEORY 1

Theories of CSR suggest there are both business and moral reasons for engaging in social initiatives. Go to the website of one or two companies of your choice and find the section dealing with social issues (the page may be headed CSR or sustainability, or perhaps corporate citizenship) and see what kinds of reasons the corporations give for their involvement in CSR. Is there a balance of business and moral reasons, or does one type of reason predominate? How do you explain this?

The specific kinds of reason given will depend on the exact nature of companies whose websites students visit. For this question, two car company websites were considered. Both give mostly business reasons for their social initiatives, and both companies clearly hope to profit from their CSR initiatives. Consider the words of one chief executive’s note to readers: “lasting business success is possible only if environmental and social concerns aren’t neglected.” * Other companies may choose to give mostly moral reasons for their actions, but as the textbook argues, “corporate motives are difficult, sometimes impossible, to determine”.


THINK THEORY 2

Think about the concept of CSR in the context of a multinational with operations in a developing country context. To what extent can a multinational operate a global CSR programme, or is it necessary for such companies to operate CSR on a more national or regional basis?

It is difficult to see how a company could credibly run a CSR programme either entirely centrally (given regional differences in customs and social expectations) or entirely locally (given existence of some global responsibilities). A multinational corporation may therefore choose to have a CSR programme with both global and national/regional elements.

Globally-defined elements could include attention to the economic and legal responsibilities (following Carroll’s model), and instructions to national/regional managers to develop ethical and philanthropic programmes that were locally appropriate, and these would then comprise the national/regional element of the company’s CSR programme. Examples of such approaches: going beyond the existing laws to provide employees with good health-care benefits in the United States (ethical) or providing educational facilities to local communities in parts of sub-Saharan Africa (philanthropic).

THINK THEORY 3

The network model of stakeholder theory suggests that firms have indirect relationships with a whole range of constituencies via their immediate stakeholders. To what extent should corporations also have to respect the rights of these indirect stakeholders? Think, for example, about the case of a company’s supply chain and all the different tiers of supplier stakeholders that are involved. Does a company have responsibilities to suppliers at all tiers?

Following Evan & Freeman’s (1993) principles of corporate rights and corporate effects, the company does have a responsibility to respect the rights of indirect stakeholders, at least to the extent that its actions have a bearing on those stakeholders. A company therefore does have responsibilities to suppliers at all tiers. In practice, this could find expression in (e.g.) not setting a manufacturing target for an immediate supplier that that supplier could only meet by engaging in actions that your firm would not countenance. To paraphrase a well-known corporate motto, the responsibility is: “don’t be evil and don’t let evil be done on your behalf.”

THINK THEORY 4

Explain how Paul Polman’s vision for sustainability involves a ‘contemporary’ approach to CSR. Why does social responsibility make good business sense?

There are a number of ways in which Paul Polman’s vision for sustainability involves a contemporary approach. Firstly, Unilever has based its Sustainable living plan on the UN Sustainable Development Goals, which are based on research and evidence of the most pressing sustainability issues that the world is facing. Secondly, sustainability is ‘embedded’ within Unilever, and is not just a bolt-on; it is essential to Unilever’s entire strategy, and is pervasive throughout its operations and thinking. Thirdly, it is a contemporary vision for sustainability as it involves high stakeholder engagement and partnering. For example, as Unilever partners with its suppliers to enhance their sustainability practices, as well as NGO’s such as in the case of its partnership with Solidaridad, which is designed to increase the sustainability of key agricultural raw materials.

Social responsibility can make good business sense for a number of reasons. For example: Firstly, reputational benefits can be gained from social responsibility initiatives and can boost brand image and thus attract customers, increasing revenue. Secondly, implementing sustainability initiatives within manufacturing processes can enhance efficiency, and lower costs. Thirdly, highly socially responsible businesses have been found to attract and retain talented employees. Fourthly, socially responsible practices can open up new markets and whole new products, for example, in the case of ‘eco’ or ‘green’ products.

THINK THEORY 5

Think about the concept of globalization that was discussed in Chapter 1, and our characterization of globalization as ‘the ongoing integration of political, social and economic interactions at the transnational level’. How might this influence the failing of government and increasing power of corporations?

As globalization continues, companies become increasingly independent of national territory for their continued survival. This makes it easier for companies to relocate their operations to territories with lower operating costs, or even to move their head office. Problems like unemployment are territorially-bounded, however, meaning that the benefits of such a move are disproportionately felt by the company and the costs by the local government whose territory is being abandoned. This gives companies a great deal of bargaining power vis-à-vis governments (on, e.g., tax rates, subsidies for factories, or contractual arrangements under public-private partnerships). At the same time, governments have ever-more-limited powers to hold companies accountable for their actions.