Business Ethics and Social Responsibility Essay

Searching for business ethics and social responsibility essay? This reflection paper discusses the importance of corporate ethics and social responsibility.

Introduction

The importance of business ethics.

  • Corporate Ethics & Social Responsibility
  • Relevant Practices

Ethics and social responsibility play an important role in business management. Organizations, both public and private, feel the need to incorporate corporate responsibility in their organizational culture. Ethics deals with knowing what is wrong and what is right. Business ethics encompasses analyzing ethical decisions, beliefs, and actions inline with business activities. Organizations are expected to show ethical values and operate socially responsible.

The major issue is that business ethics integrates different sets of ethics. This is the reason as to why organizations should employ good individuals as workers. Social responsibility deals with business conduct in respect to the broader social values. It questions the duties of business to the entire society (Sims, 2003). In this light, this paper discusses the importance of ethics and social responsibility and various practices and theories employed in different organizations.

Businesses operate in such a way that their owners can realize some benefits. Business owners are also known as shareholders. Though, other stakeholders are part of critical components of decision making because businesses have to act in a liable and ethical manner and reflect on the potential effects of any choices made. Stakeholders such as dealers, customers, staff, owners, and communities are the integral part of business operations.

Customers, who are also citizens, require quality products which are affordable. Likewise, other stakeholders expect fair business engagements from organizations. Citizens need to know that right things are being done for the right reasons. This is because organizations target citizens in their plans for making profits and it is imperative that citizens observe the conduct of businesses in order to make the right choices (McNamara, 2010).

Knowing ethical and social norms help citizens to keep organizations in tandem with the society’s expectations. Businesses should work in a way that is lawful, beneficial, ethical, and inline with social commands (Johnson, n.d). Ethics in business enable organizations to maximize profits, utilize business resources, and create support in the market. Ethical values should command what is suitable to pay employees as well as to charge consumers.

An organization is therefore required to have a culture that enhances strong values. This will also attract good employees in the company. For example, companies strive to be included in the list of the top 100 firms in the United States issued frequently in Fortune magazine. The most common criteria used are analyzing profit sharing, bonuses, and stock markets. The list also incorporates policies and rewards that refer to work and enhance social responsibility (Griffin, 2008).

In the health sector, patients are supposed to trust physicians because hospitals are normally governed with good ethical conducts. This trust ensures that good medical care is offered to patients. Studies have found that trust is mostly related to patient satisfaction and therefore vital in selecting and applying treatment that is essential to patients (Thom & Campbell, 1997). Moreover, such trusts are essentials because in many cases patients require long-term or ongoing management in chronic cases.

Reflection about Business Ethics and Social Responsibility

Social responsibility is an element of ethical conduct. It is improving the community in general. Areas of social responsibility include business giving, ecological and environmental quality, consumerism, government relation, and labor relations. Social responsibility improves the public image of an organization and enhances the local economy.

Trust and excellent reputation are among the most important assets in any business that can only be realized through social responsibility. Social responsibility also attracts and retains employees who are committed to their task, hence improved performance. By doing so, companies can reduce the cost of recruitment.

Moreover, social responsibility increases the customer base and attracts investors. Being a social responsible organization enable a business to gain competitive advantage. Developing products that are friendly to the environment adds value and increases sales in business. Investors prefer social responsible businesses because it is an indication of proper management and a good reputation (The Economist, 2009).

However, if a company produces products that are detrimental to the environment, there is high chance that the company’s image can be destroyed.

The effect of pollution on air, water, and land calls for the need to observe ecological and environmental quality. Companies should clean up the existing pollution, start processes to reduce pollution, control noise, recycle materials, and perform aesthetic improvements. Consequently, social responsibility determines how children behave and thus there is need to educate children about social responsibility in order to put a sustainable investment in the future. Children are the potential business stakeholders in future.

Practicing social responsibility such as training children and improving health and education broadens their view and persuade them to help others. Teenagers can be asked to take part in volunteer programs in nursing homes, heath centers, and schools. This helps to heighten the idea that we are accountable for the state and quality of our societies (Griffins, 2008).

Practices of Corporate Social Responsibility

Ethics and social accountability in the context of business have changed over the last decades. This is due to various ethics scandals that have captured the interest of people. It is vital to talk about some of these scandals. The Salmon Brothers, a sponsor of security, defied Treasury policy in 1990s by purchasing more than thirty five percent of a Treasury copy of securities at auction. This business scandal forced three top executives to resign, including other effects.

The crime contributed in the effort of setting the U.S. Sentencing Commission in 1991 which was responsible for ensuring that companies are accountable for any unlawful behavior (Brenner, 1992). In the mid 1990, many ethical scandals were inline with sexual harassment and racial prejudice.

Coca-cola, Mitsubishi, and Texaco are some of the companies that received such accusations. At the start of the new century, scandals were persistent in the news. In 2001, Firestone and Ford expressed regret to their customers for a continued tire failures. Business ethics crimes are still common in the present days and therefore there is a possibility of changing ethical and social responsibility practices and theories in the future.

From the inference of public interest in social responsibility during the last forty years, two implications can be made. Attention in social responsibility has increased throughout the past three decades. Consequently, attention in ethics and social responsibility appears to have been driven by business scandals. In essence, the society has constantly changed their view on the issue with different tastes; some take it seriously and others take it lightly.

Because of the increasing ethical missteps, companies have been undergoing an intensive analysis from the public with regards to their performance. Due to many allegations, such as unfavorable care for the customer and environmental degradation, social responsibility has changed dramatically and thus companies are required to offer back to the community. It is believed that individual corporations are like citizens so they should contribute to the society (Henn, 2009).

The current organizations in many aspects are part of the society made up of many persons with different views and expectations. This implies that there is new demand for all stakeholders to reorganize their relationships.

For example, according to the President of McDonald’s, Don Thompson, the enduring success of the company relies on customers’ trust and loyalty – in the value and safety of food, in the business processes, and in the firm’s commitment to solving issues presented by the customers (personal communication, June 13, 2010). Those businesses expected to last for long will be concerned with making certain that the evolving requirements are met.

These companies will need to observe legal, ethical, and social requirements while being able to operate in tandem with changing economic conditions. In the past, social responsibility was seen as a practice that can decrease profits and thus contradicting the reason for the firm’s existence (Griffin, 2008).

Likewise, most organizations applied the utilitarian principle in solving ethical problems. The utilitarian principle argues that an action should be taken if it brings greater value to the whole organization. Modern organizations take into consideration the rights of every individual. This is known as the moral rights principle of solving ethical problems. It is imperative that modern firms observe and preserve the rights of employees, customers, and the whole society.

In future, ethics and social responsibility will have a new meaning in the context of business operations. From the current happenings, it is possible that businesses will be required to be adoptive and interactive. Future organizations will need to observe the changing laws that govern business operations.

As pressure increases from the outside environment, companies will be able to anticipate environmental changes and blend their own goals with those of the society. This is an interactive approach that reduces the difference between society’s viewpoint and business routine.

Social responsibility is part of business ethics that require managers to be open in their business engagements. Observing ethics and social responsibility improves the company’s image and result to profit maximization.

The whole world would benefit from social responsibility because companies are required to take part in the following aspects: improve environmental quality, provide truthful advertisement, start industries in marginal areas, provide equal employment rights, develop quality products, and enable freedom of participation in company’s affairs.

As explained in this paper, ethics and social responsibility requires constant changes in organizational conduct and performance. Since internal and external requirements change, it is imperative that firms likely to survive in future observe the changing needs from the society and regulations imposed by the government. In essence, since businesses create some problems they should help solve them.

Brenner, S. N. (1992). “Ethics Programs and Their Dimensions”. Journal of Business Ethics , 11, 391-399.

Griffin, A. (2008). New Strategies For Reputation Management: Gaining Control of Issues, Crisis & Corporate Social Responsibility. Philadelphia, USA: Kogan Page Limited.

Henn, K. (2009). Business Ethics: A Case Study Approach. New Jersey: John Wiley & Sons, Inc.

Johnson, K. W. Integrating Applied Ethics and Social Responsibility . Ethical Complexity or Ethical Chaos? . Web.

McNamara, C. (2010). Complete Guide to Ethics Management: An Ethics Toolkit for Managers . Free Management Library. Web.

Oneal, M. (Interviewer) & Thompson, D. (Interviewee). (2010). McDonald’s on a Roll, But Still Not at Top of its Game . Chicago Tribune. Web.

Sims, R. (2003). Ethics and Corporate Social Responsibility: Why Giants Fall. United States: Green wood Publishing Group, Inc.

The Economist. (2005). The Importance of Corporate Responsibility . Economist Intelligence Unit. Web.

Thom, D. H. & Campbell, B. (1997). Patient-Physician Trust: An Exploratory Study. BNET. Web.

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  • Some social responsibility practices

From there to here: 50 years of thinking on the social responsibility of business

It has now been 50 years since economist Milton Friedman asked and answered a fundamental question: What is the role of business in society?

Friedman’s stance was plain: “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits.” That view has long influenced management thinking, corporate governance, and strategic moves. But more recently, many leaders have sought to expand that definition to consider all the stakeholders who stand to gain—or lose—from organizations’ decisions.

In 2019, Business Roundtable released a new “Statement on the purpose of a corporation,” signed by 181 CEOs who committed to lead their companies for the benefit of all stakeholders—customers, employees, suppliers, communities, and shareholders. The statement outlined a modern standard for corporate responsibility.

On the 50th anniversary of Friedman’s landmark definition, we look at how the conversation on corporate purpose  has evolved.

The pre-1970 conversation

Even before Friedman’s essay published, the social responsibility of business was a topic of discussion. McKinsey, for example, was part of the early conversation about corporate purpose, which centered on the idea of improving performance and a belief that healthier corporations meant a healthier society. The firm’s earliest formal expression of its objectives spoke of the value of “advancing the profitableness and welfare of American business and hence the welfare of the country as a whole” (1937).

The discussion of corporations’ role in society continued to unfold in the 1950s and 1960s, when Columbia University and McKinsey presented a lecture series in which executives discussed the challenges of large organizations. Many of those talks became books that addressed the issues Friedman would soon take on.

Friedman’s seminal 1970 essay

On September 13, 1970, when Friedman published his landmark piece, “The social responsibility of business is to increase its profits,” in the New York Times , he wrote:

In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom.

Like many businesses and thinkers, McKinsey has grappled with such ideas over the years. A 1971 statement of the firm’s goals highlights the role of profitability but acknowledges that it isn’t the sole social responsibility of business; consultants can also “do worthwhile things for society as well as to earn substantial financial rewards.”

Marvin Bower—McKinsey’s managing director from 1950 to 1967, who remained a vocal leader even after stepping down—also continued to emphasize the importance of enduring business values, which could be translated into societal as well as business impact:

Outside the service for which we are compensated, each of us has an opportunity, through the firm, to serve the society of which [we are] a part. Our knowledge of the problem-solving process enables us to contribute disproportionately to the welfare of our communities.

The 1980s and 1990s: An expanded global view

Management attention started to go global in the 1980s. The business world examined how Japanese companies in particular were revolutionizing manufacturing to compete against once-dominant Western players. Political and social changes were also afoot, and the shift toward globalization took hold.

McKinsey managing director Fred Gluck (1988–94) called on the firm to raise its sights and expand its horizons:

Beginning with a memo not two weeks before the Berlin Wall came down, he urged his partners to expand their vision beyond their usual business clients. As the world’s best problem solvers, he argued, McKinsey should aspire to advise national and world leaders on global issues like poverty, European integration, and the environment. It should help design and implement the reforms that were certain to follow in the wake of the revolutions unfolding in Eastern Europe, the Soviet Union, and Asia. Though not universally shared, Gluck’s call to action struck a chord with many firm leaders. … They were being challenged to help change the world.

The McKinsey Global Institute was founded in this era, looking to generate fresh insights through serious research that integrated the disciplines of economics and management. And although work continued to prize financial impact for clients, the thinking around future impact continued to expand.

The 2000s and 2010s: A focus on longer-term, inclusive growth

Technological advances may have facilitated globalization, but the dot-com crash of the early 2000s and ensuing changes—to say nothing of the global financial crisis of 2008—brought discussion on the social responsibility of business into the zeitgeist.

In a 2006 interview, McKinsey’s former London office manager Peter Foy reflected:

I have real misgivings about the way that [business] changed. Because the minute the world … changed from building great companies and keeping shareholders happy to serving shareholders on a quarterly delivery, wealth-creation basis … you changed everything in the business system. The motivation of the CEO, and the organization, and the time you spend on it all.

The conversations also entered the realm of public ideas. One particularly powerful statement in the March 2011 Harvard Business Review article “ Capitalism for the long term ,” penned by McKinsey managing partner Dominic Barton, called for business-led reform to go beyond quarterly capitalism:

This shift is not just about persistently thinking and acting with a next-generation view—although that’s a key part of it. It’s about rewiring the fundamental ways we govern, manage, and lead corporations. It’s also about changing how we view business’s value and its role in society.

Barton later helped found the not-for-profit Focusing Capital on the Long Term, which encourages long-term investing and business decision making.

Additionally, the McKinsey Quarterly marked its 50-year anniversary  with a special edition on the future of management. One key theme: Corporate longevity and a long-term view of performance.

2019, the Business Roundtable statement, and what lies ahead

On August 19, 2019, the Business Roundtable issued its latest statement on the purpose of a corporation :

Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services. Businesses make and sell consumer products; manufacture equipment and vehicles; support the national defense; grow and produce food; provide health care; generate and deliver energy; and offer financial, communications and other services that underpin economic growth. While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.

The statement was endorsed by 181 CEOs (along with McKinsey global managing partner Kevin Sneader ), each committing to leading their companies for the benefit of all stakeholders—customers, employees, suppliers, communities, and shareholders.

Echoes of that statement continue to resonate today, even as leaders navigate crises and contemplate the next normal beyond coronavirus . As Marc Goedhart and Tim Koller note in “ The value of value creation ”: “Long-term value creation can—and should—take into account the interests of all stakeholders.” And Sneader and his coauthors underscore it as a top-management ethos in a new article on the CEO moment :

[The] COVID-19 pandemic has laid bare the profound interconnectedness between businesses and the broader world in which they operate. … Employees, customers, and stakeholders expect a CEO to articulate where the company stands on critical issues.

What lies ahead on this topic? Write to us .

This article was conceptualized, illustrated, and edited by McKinsey Global Publishing colleagues Mike Borruso , Torea Frey , Gwyn Herbein ,  Philip Mathew , Janet Michaud , and Nathan Wilson , with Paul Lasewicz , our archivist, guiding us on this walk through history.

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Article contents

Corporate social responsibility.

  • Abagail McWilliams Abagail McWilliams College of Business Administration, University of Illinois at Chicago
  • https://doi.org/10.1093/acrefore/9780190224851.013.12
  • Published online: 28 February 2020

Corporate social responsibility (CSR) is a legitimate responsibility to society, based on the principle that corporations should share some of the benefit that accrues from the control of vast resources. CSR goes beyond the legal, ethical, and financial obligations that create profits.

In the research literature, corporate social responsibility is defined in a variety of ways, depending on the aspect of CSR being examined. An inclusive definition is that social responsibility requires the firm to take into account the interests of all stakeholders, where stakeholders are defined as everyone who affects or is affected by the firm’s decisions and actions. A firm-focused definition holds that social responsibility includes actions that further a social goal, beyond what is required by ethics, law, and profitability. A political economy–oriented definition posits that firms have a responsibility to correct market failures such as negative externalities and government failures such as limits to jurisdiction that result in worker rights violations.

When implemented, altruistic CSR implies that firms provide a social good unrelated to the firms’ business that does not benefit the bottom line. Strategic CSR implies that firms are simultaneously profitable and socially responsible. To achieve this, CSR must be a core value of the firm and must be integrated into processes and products. When employed strategically, CSR can be an element of a differentiation strategy, leading to premium prices, enhanced brand and firm reputation, and supportive community relations. Corporate environmental responsibility often takes the form of overcompliance with regulation, improving the environment more than is required. A primary benefit of this is to stave off further regulation.

To capture the benefits of being socially responsible, the firm must make stakeholders aware of its record. This has led to triple bottom line reporting—that is, reporting about firm performance in terms of profits, people, and the planet. Social enterprises go a step further and make social responsibility the primary goal of the organization.

  • corporate environmental responsibility (CER)
  • corporate social performance (CSP)
  • greenwashing
  • overcompliance
  • political corporate social responsibility
  • psychological benefits
  • stakeholders
  • strategic CSR
  • sustainability
  • triple bottom line

Historical Perspective

Corporate social responsibility (CSR) can be thought of as legitimate responsibility to society that goes beyond the legal, ethical, and financial obligations that create profits, based on the principle that corporations should share some of the benefit that accrues from the control of vast resources. Or, more plainly, in market economies corporations can amass great wealth because society protects their right to do so, therefore the corporations owe something back to all of society, not just those engaged in market exchange with the corporations. The world’s resources should benefit the poorest in addition to the wealthiest, and corporations can be the conduit through which resources are befittingly distributed.

When resources are not equitably distributed, the disadvantaged look first to the government for help and support. But when the government hasn’t the resources, the will, or either, it cannot provide adequately for those in need and may engineer public policy to require businesses to be responsible.

The idea that corporations should act responsibly dates back to the inception of industrialization. With industrialization, the poor were often driven off the land and into cities to look for employment. The available employment, however, did not pay a living wage for an individual, let alone a family. This led to crushing poverty, ill health, and short lives for the working poor. Some industries employed young children, and low pay and inhumane working conditions were common (Marx & Engels, 1967 ). In general, governments didn’t have the will to require firms to act responsibly toward exploited groups. However, in 1833 , the English Parliament passed Lord Althorp’s Factory Act, which effectively regulated child labor in the textile industry in England. Responsible behavior was forced upon rich industrialists, but more importantly the act established the right of government to regulate industry for a clear social purpose (Marvel, 1977 ).

A hundred years after the passage of the first effective industrial regulation, the plight of the disadvantaged was not much improved. The Great Depression highlighted the resource disparities inherent in industrialized economies and triggered attention to the lack of social responsibility displayed by wealthy corporations. But World War II intervened, and the focus turned away from social needs and toward supplying the military. After the war ended and throughout the 1950s, economies turned to modernization and, in much of the world, replacement of lost industrial capacity. It was a time of great prosperity in industrial nations, but, as before, the benefits of prosperity were not equally distributed. The politically weak, including women and minorities, didn’t garner much of the benefits.

In the 1960s there was intense focus on social problems, including disparity of opportunity as well as disparity of resources. It was clear that disadvantaged groups did not have equal access to resources, many of which were controlled by corporations for the benefit of their shareholders. As women and minorities gained political power, calls for corporations to be socially responsible became more direct and visible.

Definitions

There are myriad definitions of corporate social responsibility, a few of which follow. In a managerial context, McWilliams and Siegel ( 2001 , p. 117) define corporate social responsibility as “actions that appear to further some social good, beyond the interests of the firm and that which is required by law.” From an economic perspective, Lundgren ( 2011 , p. 70) defines corporate social responsibility as “actions that, to some degree, imply corporate beyond-compliance behavior in the social and/or the environmental arena,” and Bénabou and Tirole ( 2010 , p. 2) define corporate social responsibility as “sacrificing profits in the social interest.” From a political economy viewpoint, Heal ( 2005 , p. 387) defines corporate social responsibility as “a programme of actions to reduce externalized costs or to avoid distributional conflicts.” The examples go on, with Dahlsrud examining 37 of them and concluding that “Although they apply different phrases, the definitions are predominantly congruent, making the lack of one universally accepted definition less problematic than it might seem at first glance ( 2008 , p. 6).” In a discussion of why there is no definitive definition of corporate social responsibility, McWilliams, Rupp, Siegel, Stahl, and Waldman ( 2019 , p. 3) speculate that “Targeted definitions allow researchers to focus on an area of study such as the environment or stakeholders, or on processes such as operations or strategy, while broad definitions allow interdisciplinary discourse on the motivations and ramifications of CSR.”

Beyond defining what corporate social responsibility is, it is helpful to clarify related terms that are sometimes confused with corporate social responsibility.

Compliance, Ethics, and the Triple Bottom Line

The terms compliance, ethics, and corporate social responsibility are often used interchangeably, but mistakenly so. Carroll’s pyramid of responsibilities is a good guide for separating the concepts. According to Carroll, compliance is a legal requirement, while ethics is the requirement to do no harm, and corporate social responsibility is the expectation for corporations to go beyond compliance and ethics and do good for society, creating social value (Carroll, 1991 ).

But being socially responsible and being irresponsible are not mirror images of each other. That is, being socially responsible is not just the absence of irresponsibility, and neither is social irresponsibility simply the absence of being responsible. Failing to meet any of the three explicit requirements of fiscal responsibility, laws, and ethics is irresponsible management. But meeting all three of these responsibilities does not rise to being socially responsible. Between irresponsible and socially responsible is the state of meeting fiscal, legal, and ethical responsibilities while not going the extra mile to create social good. This can be called socially neutral.

Corporate social responsibility is sometimes referred to as balancing the triple bottom line: profits, people, and the planet. The triple bottom line incorporates the idea of economic, social, and environmental concerns for which a corporation may have responsibility. A corporation that measures its performance against a triple bottom line explicitly promotes a broader responsibility than that of profit maximization and uses triple bottom line performance to convey to internal and external stakeholders that the corporation is being socially responsible in its decisions and operations.

Theoretical Perspectives

Conventional exclusionary view.

Nobel Prize–winning economist Milton Friedman argued that the responsibility of business is to maximize profits for the benefit of the owners (shareholders), within ethical and legal boundaries. Responsibility for social programs, he argued, rightfully adheres to elected officials (Friedman, 1970 ).

Arrow ( 1973 ) challenged Friedman’s broad conclusion that corporations have no responsibilities beyond profit maximization on two counts. Count one is that production often generates negative externalities (such as air and water pollution) that are not appropriately priced in the market. Count two is that there is asymmetric information between producers and consumers. Producers have more knowledge about the true quality (and therefore true value) of products than do the consumers who purchase them. Arrow concludes these two market imperfections create a social responsibility for corporations because, while externalities are sometimes regulated by government, asymmetric information is not, and both can be addressed more efficiently by corporations than by governments.

Heal ( 2005 ) offers an updated perspective of corporate social responsibility that builds on Arrow, adding the risk of protests, such as Occupy Wall Street, to Arrow’s challenge of Friedman. Heal proposes that corporate social responsibility programs (such as corporate environmentalism) can reduce externalities and also ward off conflicts and demands for distributive justice, such as Black Lives Matter (Schulz, 2017 ). Arrow and Heal’s arguments also provide a basis for stakeholder theory.

Inclusive View

Stakeholder theory challenges the assumption that shareholders have the only valid claim on the resources controlled by corporations. Freeman and Reed ( 1983 ) argue that any group that affects or is affected by the behavior of the corporation is a stakeholder whose interests should be considered in corporate decision-making. As corporations increasingly acknowledged responsibilities beyond profit maximization, stakeholder management became a means of enhancing firms’ reputations and improving community relations, and stakeholder theory became a dominant logic in corporate social responsibility. Incorporating stakeholder theory into strategic management has resulted in stakeholder analysis being directed at helping managers identify stakeholders and prioritize claims on corporate resources (Chandler, 2017 ).

Carroll ( 1991 ) repudiates Friedman’s conclusion that corporations have no social responsibility. He proposes a normative model of corporations as organizations with multiple responsibilities: economic/fiscal, legal, ethical, and philanthropic. The economic responsibility is necessary for survival, legal responsibility is required for legitimacy, ethical responsibility is required to do no harm, and philanthropic responsibilities are expected of a good corporate citizen. Carroll depicts the responsibilities as a pyramid, with profitability as the base, followed by legal, then ethical and finally philanthropic as the pinnacle. Carroll’s characterization of corporate responsibility is that it includes all four categories, including the philanthropic contributions to the community to promote social good. However, philanthropy differs in being expected, but not required.

Economic View

To explain the link between corporate social responsibility and profitability, McWilliams and Siegel ( 2001 ) take a micro-economic–based theory of the firm perspective. From this perspective, they assume that corporate managers seek to maximize profits and ask the question: How can managers determine the optimal amount of investment to make in corporate social responsibility, that is, how can they determine the amount of investment in corporate social responsibility that is consistent with profit maximization? They propose that corporate social responsibility can be a component of a differentiation strategy. Consumers demonstrate a demand for socially responsible products (e.g., LED lights, free trade coffee, hybrid vehicles) and production processes (e.g., animal-free testing, green production, organic farming), and firms respond by adding the demanded socially responsible characteristics, thereby creating a differentiated product. The added costs of differentiating the product lead to premium prices. McWilliams and Siegel ( 2001 ) therefore conclude that, because the investment in corporate social responsibility supports the firm’s differentiation strategy, it should be treated the same as any strategic investment. To maximize profits, the corporation should invest up to the point where the additional cost of corporate social responsibility is equal to the additional revenue generated by corporate social responsibility.

Lundgren ( 2011 ) provides a formal, mathematical model of corporate social responsibility at the firm level based on micro-economic theory. He proposes that the costs of socially responsible programs can be offset by the increased revenues from consumers who value corporate social responsibility and the increased market value generated by investors who value corporate social responsibility. He explicitly models goodwill capital, an intangible asset, as a primary benefit of corporate social responsibility, tying corporate social responsibility explicitly to firm value and potential profitability.

Corporate social responsibility can also be conceptualized as a form of reputation insurance that protects the firm’s reputation when adverse events occur (Minor & Morgan, 2011 ). Adverse events, such as the 2010 Deepwater Horizon oil spill, are especially costly because they include both direct cost—such as fines, legal costs, and compensation to injured parties—and the indirect costs associated with loss of corporate reputation (Mejri & DeWolf, 2013 ). Loss of reputation can affect stock price, financing terms, and future revenue far into the future. When an adverse event occurs, external stakeholders will make judgments about what went wrong. They may decide that the adverse event was the result of poor management and downgrade the reputation of the firm or they may decide that the event was just bad luck and not recalibrate the reputation of the firm. Being known for corporate social responsibility can sway external judgments in favor of management and the firm, protecting the firm’s reputation and significantly lowering the indirect costs of such an event.

Political View

Bagnoli and Watts ( 2003 ) characterize corporate social responsibility as the private provision (by the corporation) of a public good (such as pollution abatement). Building on this, Scherer and Palazzo ( 2011 ) propose that globalization of business has resulted in political, rather than normative or economic, corporate social responsibility. They point out that laws and regulations are enforced within national boundaries, while social problems know no boundaries and negative externalities (such as air pollution) cross boundaries. The void in global governance may be (perhaps by necessity) addressed by businesses, especially multinational corporations. According to Scherer and Palazzo ( 2011 ), political corporate social responsibility suggests that corporations will contribute to global regulation (such as sustainability or workplace safety) and provide public goods (such as human rights protections and community wellness programs).

Bénabou and Tirole ( 2010 ) characterize corporate social responsibility as a response to government failure. They discuss three ways in which governments fail: capture by special interest groups, limits to jurisdiction, and poor information and inefficiency.

In addressing the problem of limited jurisdiction, Christmann ( 2004 ) suggested that multinationals will embrace a global strategy so that they can transfer best practices of social responsibility across boundaries, effectively creating global standards. Multinational corporations that enforce the same standards everywhere they operate may be merely complying with regulation in their home country but being socially responsible in countries with lower standards. Implementing the same standards globally allows multinational corporations to be more efficient by taking advantage of scale economies and also benefiting from reputation insurance.

McWilliams and Siegel ( 2011 ) reject Baron’s view that motivation determines what is socially responsible behavior and, in contrast, argue that social responsibility that is motivated by profitability can reconcile Friedman’s view of the profit maximization responsibility of the firm with that of social responsibility. That is, by being socially responsible, firms can attend to the bottom line (profits) while also creating social good. This is known as strategic corporate social responsibility, a term introduced by Burke and Logsdon ( 1996 ). To the extent that corporations are meeting expectations of stakeholders, strategic corporate social responsibility disputes Friedman’s view that social responsibility adheres to public officials. According to the Organisation for Economic Co-operation and Development, “Strategic behaviour is the general term for actions taken by firms which are intended to influence the market in which they compete. Strategic behavior includes actions to influence rivals to act cooperatively so as to raise joint profits, as well as non-cooperative actions to raise the firm’s profits at the expense of rivals” (OECD, 2007 , p. 751).

McWilliams and Siegel ( 2001 ) concluded that firms can respond to demands for corporate social responsibility by incorporating social responsibility into a differentiation strategy. The firm differentiates its products/services to include CSR attributes, as well as incorporating CSR into firm processes. Differentiation should allow the firm to charge premium prices to cover additional costs of providing the socially responsible attributes.

However, when asymmetric information allows firms that do not engage in corporate social responsibility to position their products as similar to those that do embody corporate social responsibility, the socially responsible firm may face a competitive disadvantage. The socially responsible firm invests in corporate social responsibility but cannot charge more than the firms that do not. In this situation, the socially responsible firms may be forced to lobby their government for legally enforceable standards that apply to all firms in the industry (Heslin & Ochoa, 2008 ). Conversely, some firms will lobby for standards that cost their competitors more to meet than they cost the lobbying firm. The lobbying firm can create a competitive advantage by masking competitive behavior as social responsibility (McWilliams, Van Fleet, & Cory, 2002 ).

An important distinction of strategic corporate social responsibility is that it is embedded in the corporation’s operations, processes, and core competencies (Aguinis & Glavas, 2013 ), regardless of whether it is implicit as was more conventional in European companies or explicit as in U.S. companies (Matten & Moon, 2008 ). Embedding corporate social responsibility allows for synergistic effects, such as when a steel company uses its core competency in plant design and construction to build plants that are more efficient and use less energy (i.e., are environmentally responsible). Linking the corporation’s social responsibility to its core competencies can produce maximum social benefit. Being explicit and transparent about its corporate social responsibility also enables and enhances positive effects on firm reputation (Servaes & Tamayo, 2013 ).

Corporate social responsibility can be a long-term strategic asset that enhances reputation and brand image. As such, it can lead to customer loyalty and repeat sales and, in some industries, premium prices. Originally thought to only support a differentiation strategy, we now see corporate social responsibility prominently reported by low-cost-leader companies in business-to-business and commodity industries (Nucor, 2018 ). This indicates that while corporate social responsibility can support premium pricing, it also can result in lower costs, such as lower financing costs, lower legal costs, or lower turnover costs, as well as a higher-quality, better-motivated workforce (Sprinkle & Maines, 2010 ). Therefore, strategic corporate social responsibility can support a low-cost-leader strategy when embedded in the core competencies that create low-cost advantage.

However, corporate social responsibility activities will create benefits for the corporation only if they are effectively and honestly communicated to internal and external stakeholders (Lee, Oh, & Kim, 2013 ). When the corporation appears to be claiming to do more than it actually does, employees and consumers quickly become jaded and remain skeptical of future corporate social responsibility claims. Therefore, corporations must be forthright about their social responsibility so as to not generate or escalate skepticism.

Environmental

Environmental responsibility is one of the fastest growing areas of corporate social responsibility worldwide. Because compliance with environmental standards is a legal responsibility, being socially responsible means overcompliance. Corporate environmentalism is sometimes referred to as corporate environmental responsibility.

In the United States, the Environmental Protection Agency (EPA) was created by executive order in 1970 and made responsible for enforcing environmental laws. Early regulation was command and control: the EPA set standards and mandated how corporations complied. Over time, more attention was paid to gathering and disseminating information, and corporations moved to design solutions that met standards in more efficient/cost-effective ways, providing a springboard for corporate environmentalism.

Maxwell, Lyon, and Hackett ( 2000 ) couched corporate environmentalism as strategic self-regulation to preempt political action. They find that the threat of increased regulation is sufficient to prompt corporations to overcomply with existing environmental regulation. Because political action is costly for the firm and for the activists, it makes sense for firms to overcomply to fend off political action, benefiting both the corporation and the environment.

Voluntary environmental reporting such as the Global Reporting Initiative of 1997 encourages corporations to overcomply with environmental regulations and to actively engage in corporate environmentalism (Sheehy, 2019 ) to enhance firm reputation and brand. A reputation for environmentalism can result in many benefits, including attracting environmentally conscious consumers and investors (Lyon & Maxwell, 2008 ), the aforementioned preemption of regulation, and lower legal and financing costs. This last is a result of the lower probability that the firm will incur legal costs as a result of violating environmental standards, such as those tied to oil spills and poisonous gas leaks, since the internal target exceeds the legal regulation (Sheehy, 2019 ).

Environmental laws and regulations differ around the globe, requiring firms to be aware of local regulations but also providing them with opportunities to search for favorable (presumably less stringent) standards. However, Dowell, Hart, and Yeung ( 2000 ) found that firms that enforce the most stringent regulations worldwide are most successful. Additionally, Nidumolu, Prahalad, and Rangaswami ( 2009 ) found that corporations that innovate ahead of increasing standards have time to experiment and test new solutions and that corporations that enforce a single standard worldwide can take advantage of scale economies.

Conversely, corporate environmentalism branding can have serious negative consequences if not designed and implemented properly. Firms that fail to deliver on their environmental claims can be charged with “greenwashing,” that is, overstating their environmentalism. A particularly insidious form of “greenwashing” takes place when a corporation masks its true environmental performance by engaging in selective disclosure of benign impacts rather than full disclosure (Marquis, Toffel, & Zhou, 2016 ). In an empirical study of “greenwashing,” Walker and Wan ( 2012 ) demonstrated that claiming to be green (i.e., environmentally responsible) without actual green behavior negatively affects a corporation’s financial performance.

Sustainability

Corporate environmentalism increasingly embraces sustainability, which is a more comprehensive program of environmental stewardship. Sustainability requires attention to global and intergenerational effects of corporate operations.

According to the 1987 UN Brundtland report (World Commission on Environment and Development, 1987 ), “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” is sustainable. From this, one can extrapolate a definition of corporate environmental sustainability that incorporates a universal dimension—not just a clean environment where the corporation operates now, but a global and intergenerational one. That is, socially responsible corporations must consider the effects of current operations on the environment both now and in the future. They must also balance current and future economic and equity responsibilities.

Sustainability implies more than environmental impact management: all resources must be managed to ensure sustainability. Corporations must be mindful of how they manage farm land, forests, ocean fish stocks, animal and plant breeding, and valuable minerals, as well as how they can support sustainable development in developing economies. Hart ( 2010 ) coined the phrase “sustainable global enterprise” to label multinational enterprises that deliver economic, social, and environmental benefits across all their global operations. An example of a sustainable global enterprise is a multinational food company that “has implemented living wage standards for all of its farm workers in every country in which it harvests fruit, and which has introduced state-of-the-art environmental practices throughout its supply chain” (Aguilera, Rupp, Williams, & Ganapathi, 2007 , p. 838).

Nidumolu et al. ( 2009 ) studied sustainability initiatives of multinational corporations and found that embracing sustainability led to innovation that creates better products and new businesses, increases brand loyalty, and reduces costs—contributing to both the top line (revenue) and bottom line (profitability) of the corporation. Consumers perceive that products that are produced sustainably or have sustainable characteristics are better products and, therefore, worth more. New revenue streams can come from businesses created by recycling and reusing products that have exhausted their original purpose. Additional revenue is generated when consumers develop brand loyalty through their experience with sustainable products. Cost reductions come from using fewer inputs in all parts of the value chain (from raw materials, through production and distribution to final sales). Additionally, firms that anticipate increasing environmental regulation can innovate ahead of their competitors and reap first-mover advantages. All of these increase the bottom line as well as being socially responsible.

Social Enterprise

The simplest type of corporate social responsibility is philanthropy, where a corporation donates part of its profits to programs that address social problems. The inner workings of the firm, its organization, its mission, its strategy, etc., are unaffected by the goals of the programs that receive financial support.

The social goods produced by the financially supported programs can be peripheral to the corporation. Some corporations that engage in strategic corporate social responsibility explicitly align social goods produced with other strategic components of the firm. For example, firms may have “buy one–give one” program where customers buy a branded product (e.g., a pair of shoes) and the firm gives one (pair of shoes) to a child in need. The social mission is less peripheral to profit-making.

Social enterprises go one step further than that and make their social mission part of the firm’s core. Defourny and Nyssens ( 2008 , p. 202) define social enterprises as “not-for-profit private organizations providing goods or services directly related to their explicit aim to benefit the community.”

One type of social enterprise is a benefit corporation, which is a legal business entity that is required to have a social mission at its core (Hiller, 2013 ). In the United States, the need for a new legal form of for-profit that explicitly recognizes a social mission led to laws in some states that allow for benefit corporations. These corporations must declare themselves as such in their articles of incorporation and are required to submit to review by an independent third party to confirm that they are fulfilling their social mission. It should be noted that the independent review of the impact of benefit corporations is holistic—that is, it comprises all of the effects of the corporation on society, not merely its effect on selected areas such as profitability and environmentalism (B Lab Company, 2017 ). This is in contrast to standard corporations, which can legally engage in “greenwashing,” promoting corporate social responsibility activities while simultaneously obfuscating socially irresponsible actions (Marquis et al., 2016 ; Walker & Wan, 2012 ).

Another type of social enterprise is social entrepreneurship, which is an “innovative, social value creating activity that can occur within or across the nonprofit, business, or government sectors” (Austin, Stevenson, & Wei-Skillern, 2012 , p. 371). While the social mission is always core to social entrepreneurship, it is not always obviously so, because it may be either explicit or implicit. In social entrepreneurship for the disadvantaged the social mission is explicit, that is, benefits (such as jobs) are provided to the disadvantaged. In social entrepreneurship by the disadvantaged, there is an implicit social mission of improving the (disadvantaged) entrepreneur’s circumstances, irrespective of whether there is an explicit social mission, such as providing jobs for others who are disadvantaged (Renko & Freeman, 2019 ).

The implicit social mission of entrepreneurship by the disadvantaged provides a conduit for social good created by corporate social responsibility programs, making support of entrepreneurship an attractive option for firms that engage with disadvantaged populations. For example, multinational corporations in Africa are adding to their corporate social responsibility portfolios the support of entrepreneurship in disadvantaged economies through education, training, and skills development initiatives (DeBerry-Spence, Torres, & Hinson, 2019 ).

The Business Case

The business case for corporate social responsibility refers to the belief that there is a causal link between being socially responsible and achieving profitability. It is argued that firms that do good (for society) will do well (be more profitable and have higher market value). In the context of corporate social responsibility, “doing well” can be the result of many advantages, such as premium pricing, repeat sales, higher employee productivity, lower cost of capital, or lower legal costs, all of which may translate into higher profitability and firm value in either the short run or the long run. Determining if firms “do good” is more problematic but is generally referred to as corporate social performance, which Wood defines as “a business organization’s configuration of principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to the firm’s societal relationships” ( 1991 , p. 693). Two widely used measures of corporate social performance are the Fortune Corporate Reputation Index and the Kinder, Lydenberg and Domini (KLD) index of reputation (Fombrun, Gardberg, & Sever, 2000 ).

In the 1990s the business case for corporate social responsibility (doing well by doing good) became a dominant theme in academic research. Countless empirical studies attempted to show a causal link between corporate social responsibility and corporate financial performance. These studies were hampered by difficulties in defining and measuring corporate social performance, often leading to inconsistent results (Margolis & Walsh, 2003 ) and sometimes suffering from lack of methodological rigor (McWilliams & Siegel, 2000 ). Barnett ( 2007 ) concludes that there is no universal evidence of doing well by doing good, because doing well is contingent upon the corporation, the timing, and the particular socially responsible investment. He suggests that academic research should focus on figuring out when, where, and what type of social responsibility will allow corporations to do well by doing good. Carroll and Shabana ( 2010 , p. 101) support Barnett’s findings and conclude that “the benefits of CSR are not homogeneous, and effective CSR initiatives are not generic.”

Although meta-analyses have been conducted (e.g., Friede, Busch, & Bassen, 2015 ) in an attempt to make sense of the inconsistent results of earlier studies, the inclusion of criticized empirical studies and the bias toward publishing only studies that have statistically significant results makes the results of meta-analyses problematic. Given the inherent difficulties of testing the business case for corporate social responsibility, including, “the inaccessibility, both apparent and actual, of good data” (Wood, 2010 , p. 75) and the lack of consensus on appropriate methodology, academic research has subsequently moved beyond trying to empirically verify a causal link between corporate social responsibility and profitability to accepting that corporations have social responsibilities and examining how such responsibilities can be met to the advantage of the corporation and society, ultimately arriving at the concept of strategic corporate social responsibility.

Non-Pecuniary Benefits

Although it’s difficult to separate out and quantify the effects of corporate social responsibility on firm performance, the effects on individuals can be measured directly by survey methodology. Therefore, we have better evidence of the non-pecuniary effects of corporate social responsibility than we have of corporate social performance. Corporate social responsibility is by definition about the corporation, but it is individuals who make decisions, carry out corporate social responsibility programs, and are affected by corporate actions. Stakeholders such as managers, employees, consumers, investors, and community members can shape and be shaped by corporate social responsibility activity and consequently often receive psychological benefits from their association with socially responsible corporations. The psychological benefits generated by these associations with the corporation are a component of the social value created by corporations that engage in corporate social responsibility.

Internal Stakeholders

Internal stakeholders include managers, employees, and board members, all of whom may affect or be affected by the firm’s social responsibility programs, processes, and reputation. Corporate social responsibility can be initiated by managers for personal reasons, including personal values, religious beliefs, commitment to social causes, professional image building, or a need to feel good about themselves (Hemingway & Maclagan, 2004 ). Manager-initiated corporate social responsibility can be either strategic or philanthropic, depending on the constraints of corporate governance, firm strategic orientation, and the availability of discretionary funds. Managers receive a psychological benefit when they can support their personal values, religious beliefs, or identity. It is common for large corporations to have social responsibility officers who shape the culture and reputation of the firm, maintain corporate social responsibility programs, and communicate to internal and external stakeholders. These executives have more opportunity to reap social and psychological benefits from corporate social responsibility.

In general, people desire to have meaning in their lives and often look for meaning in their work. Aguinis and Glavas ( 2019 ) explored how corporate social responsibility can help employees find meaning in their work. The closer the fit between the corporation’s identity and the employee’s identity, the more meaningful the work will seem. For example, a person who identifies as a caregiver will find meaningfulness in their work in a hospital. Corporate social responsibility programs provide additional information and experience that can help workers find more meaning in their work, that is, they may perceive that their work can serve a greater purpose.

Corporate social responsibility can affect employees’ perceptions and attitudes about their work and workplace. Gavin and Maynard ( 1975 ) tested the relationship between the employee’s perception of the corporation’s concern for the environment and the employee’s general satisfaction with their employment. They found that employees tended to report more satisfaction the greater the perceived corporate concern for the environment. Perhaps more telling, they found that the younger workers in the 1970s were most concerned about corporate environmentalism, which perhaps foretold increasing environmental awareness and activism.

Chong ( 2009 ) examined how participation in corporate social responsibility programs affect employee’s understanding and commitment to the corporation’s identity, where organization identity can be defined as “the set of meanings by which a company allows itself to be known and through which it allows people to describe, remember and relate to it” (Wheeler, Richey, Tokkman, & Sablynski, 2006 , p. 98). Chong found that participation in corporate social responsibility programs feeds off of and reinforces corporate identity, resulting in the employee experiencing higher motivation, satisfaction, and commitment to the corporation.

Mozes, Josman, and Yaniv ( 2011 ) studied the relationship between corporate social responsibility activity and both organizational identification (a driver of loyalty) and motivation to work. Workers in their study were classified as either active participants or non-active participants in volunteerism programs. Active participants demonstrated higher levels of organizational identification and motivation to work. To be most effective for external beneficiaries and most meaningful for the employees, corporate social responsibility must be embedded in the routines and processes of the organization (Aguinis & Glavas, 2013 ).

Meister ( 2012 ) found that 53% of workers surveyed by the nonprofit Net Impact reported that having a job where they can make a difference to society is important to their happiness. Further, 72% of students getting ready to enter the workforce also felt this way. According to Meister, to recruit and retain young top talent, corporations not only have to engage in corporate social responsibility, they must communicate their engagement through social media.

External Stakeholders

External stakeholders may be affected by the firm’s social responsibility programs, processes, or products, but as outsiders they do not affect these. External stakeholders include consumers, suppliers, investors, and community.

Consumers derive psychological value from purchasing socially responsible products. According to Green and Peloza ( 2011 ) there are three categories of benefit: emotional, social, and functional. Buying products from socially responsible companies allows consumers to feel good about themselves. This emotional response can be associated with companies that make charitable contributions to social causes. Consumers feels good about themselves (emotional benefit) for buying from a company that is altruistic. Alternatively, buying products from a socially responsible company can define the consumer as a good person to others and elevate their position in the community (social benefit). This social response can be associated with companies that champion a social cause such as environmental sustainability. Functional benefit comes from purchasing products that function better because of CSR attributes, such as fuel-efficient cars. The three types of benefit can work together and amplify each other. “For example, a hybrid vehicle can provide functional value (lower operating costs), emotional value (joy in saving or environmental stewardship), and social value (meeting relevant norms)” (Green & Peloza, 2011 , p. 52). For consumers to derive value from corporate social responsibility, they must be aware of it. Corporations traditionally used company reports, web pages, and advertising to make consumers aware of their corporate social responsibility but are now feeling pressure to communicate more broadly and often over social media.

Socially responsible investing provides psychological value to investors. According to Beal, Goyen, and Philips ( 2005 ), this value can take the form of “fun of participation” similar to what gamblers experience, or it can take the form of happiness similar to that generated by pleasurable activities. Psychological value augments the financial returns to socially responsible investments and helps explain the decision to invest in screened funds. According to Dam and Scholtens ( 2015 , p. 104), “consumers receive a warm-glow” when they invest responsibly.

Benefits to Investors

Investing in socially responsible firms, commonly referred to as socially responsible investing (SRI), is a way for investors to join their values and their desire for monetary gain. This has become easier for individual and institutional investors with the growth of mutual funds focused on socially responsible investing. At the start of 2018 there was over $30 trillion invested in socially responsible stock, with nearly half this amount held in Europe (Global Sustainable Investment Alliance, 2019 ). In the United States there are mutual funds that filter for social responsibility, allowing individual and institutional investors to encourage socially responsible corporations while withholding support from firms that engage in industries (such as gambling) or activities (such as genetic modification) that are not viewed as socially responsible. Because perceptions of what is socially responsible and what is not can vary, mutual fund managers develop screens to appeal to different viewpoints and choose stock of firms that meet the criteria of the screen but also meet the criteria for firm/stock performance. Several empirical studies comparing the returns to socially responsible funds and unrestricted funds have found that there is no systematic difference (e.g., Bauer, Koedijk, & Otten, 2005 ; Hamilton, Jo, & Statman, 1993 ; Sauer, 1997 ). In a meta-analysis of earlier studies, Revelli and Viviani ( 2015 , p. 158) found that “the consideration of corporate social responsibility in stock market portfolios is neither a weakness nor a strength compared with conventional investments.” On average the returns to SRI funds are the same as the returns to unrestricted funds, making SRI funds attractive to both individual and institutional investors because they combine competitive financial returns with psychological benefits (feeling good about oneself for being socially responsible).

Other avenues for socially responsible investing include individual stocks (with the opportunity to engage directly with the corporation) and community development financial institutions which engage in socially responsible investing by providing loans to small businesses in low-income, at-risk communities who otherwise would not have access to financing (Schueth, 2003 ).

Corporate social responsibility is a well-researched and thoroughly discussed topic. While there is general consensus among researchers and commentators that corporations have responsibilities to society that go beyond profit maximization, what those responsibilities are and how they should be met are still open questions. Stakeholder theory, Carroll’s pyramid of corporate responsibilities, micro-economic theory of the firm, altruistic and strategic corporate social responsibility, corporate self-regulation, political corporate social responsibility, corporate environmentalism, and sustainability all offer insights into the responsibilities of corporations and how those responsibilities may be met.

When viewed from the perspective of the firm, the evidence of corporate social responsibility has generally been about the link between corporate social performance and financial performance or firm value, with mixed results. But financial effects are not the only effects of corporate social responsibility. Individuals experience psychological effects that are also a part of the social good created by socially responsible corporations. Researchers have reported significant effects, including:

Workers find meaning in their work and experience higher motivation, satisfactionm and commitment to the firm.

Consumers feel good about themselves.

Investors get a warm glow from supporting socially responsible firms.

We have abundant information about what is and isn’t corporate social responsibility, how corporate social responsibility benefits corporations and individuals, and how investors can encourage socially responsible corporations and discourage irresponsible corporations. However, we know less about how corporations can address social problems such as human rights, justice, poverty, and environmental sustainability and next to nothing about the record of corporate social responsibility in addressing such social problems.

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5 Examples of Corporate Social Responsibility That Were Successful

Balancing People and Profit

  • 06 Jun 2019

Business is about more than just making a profit. Climate change, economic inequality, and other global challenges that impact communities worldwide have compelled companies to be purpose-driven and contribute to the greater good .

In a recent study by Deloitte , 93 percent of business leaders said they believe companies aren't just employers, but stewards of society. In addition, 95 percent reported they’re planning to take a stronger stance on large-scale issues in the coming years and devote significant resources to socially responsible initiatives. With more CEOs turning their focus to the long term, it’s important to consider what you can do in your career to make an impact .

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What Is Corporate Social Responsibility?

Corporate social responsibility (CSR) is a business model in which for-profit companies seek ways to create social and environmental benefits while pursuing organizational goals, like revenue growth and maximizing shareholder value .

Today’s organizations are implementing extensive corporate social responsibility programs, with many companies dedicating C-level executive roles and entire departments to social and environmental initiatives. These executives are commonly referred to as a chief officer of corporate social responsibility or chief sustainability officer (CSO).

There are many types of corporate social responsibility and CSR might look different for each organization, but the end goal is always the same: Do well by doing good . Companies that embrace corporate social responsibility aim to maintain profitability while supporting a larger purpose.

Rather than simply focusing on generating profit, or the bottom line, socially responsible companies are concerned with the triple bottom line , which considers the impact that business decisions have on profit, people, and the planet.

It’s no coincidence that some of today’s most profitable organizations are also socially responsible. Here are five examples of successful corporate social responsibility you can use to drive social change at your organization.

5 Corporate Social Responsibility Examples

1. lego’s commitment to sustainability.

As one of the most reputable companies in the world, Lego aims to not only help children develop through creative play, but foster a healthy planet.

Lego is the first, and only, toy company to be named a World Wildlife Fund Climate Savers Partner , marking its pledge to reduce its carbon impact. And its commitment to sustainability extends beyond its partnerships.

By 2030, the toymaker plans to use environmentally friendly materials to produce all of its core products and packaging—and it’s already taken key steps to achieve that goal.

Over the course of 2013 and 2014, Lego shrunk its box sizes by 14 percent , saving approximately 7,000 tons of cardboard. Then, in 2018, the company introduced 150 botanical pieces made from sustainably sourced sugarcane —a break from the petroleum-based plastic typically used to produce the company’s signature building blocks. The company has also recently committed to removing all single-use plastic packaging from its materials by 2025, among other initiatives .

Along with these changes, the toymaker has committed to investing $164 million into its Sustainable Materials Center , where researchers are experimenting with bio-based materials that can be implemented into the production process.

Through all of these initiatives, Lego is well on its way to tackling pressing environmental challenges and furthering its mission to help build a more sustainable future.

Related : What Does "Sustainability" Mean in Business?

2. Salesforce’s 1-1-1 Philanthropic Model

Beyond being a leader in the technology space, cloud-based software giant Salesforce is a trailblazer in the realm of corporate philanthropy.

Since its outset, the company has championed its 1-1-1 philanthropic model , which involves giving one percent of product, one percent of equity, and one percent of employees’ time to communities and the nonprofit sector.

To date, Salesforce employees have logged more than 5 million volunteer hours . Not only that, but the company has awarded upwards of $406 million in grants and donated to more than 40,000 nonprofit organizations and educational institutions.

In addition, through its work with San Francisco Unified and Oakland Unified School Districts, Salesforce has helped reduce algebra repeat rates and contributed to a high percentage of students receiving A’s or B’s in computer science classes.

As the company’s revenue continues to grow, Salesforce stands as a prime example of the idea that profit-making and social impact initiatives don’t have to be at odds with one another.

3. Ben & Jerry’s Social Mission

At Ben & Jerry’s, positively impacting society is just as important as producing premium ice cream.

In 2012, the company became a certified B Corporation , a business that balances purpose and profit by meeting the highest standards of social and environmental performance, public transparency, and legal accountability.

As part of its overarching commitment to leading with progressive values, the ice cream maker established the Ben & Jerry’s Foundation in 1985, an organization dedicated to supporting grassroots movements that drive social change.

Each year, the foundation awards approximately $2.5 million in grants to organizations in Vermont and across the United States. Grant recipients have included the United Workers Association, a human rights group striving to end poverty, and the Clean Air Coalition, an environmental health and justice organization based in New York.

The foundation’s work earned it a National Committee for Responsive Philanthropy Award in 2014, and it continues to sponsor efforts to find solutions to systemic problems at both local and national levels.

Related : How to Create Social Change: 4 Business Strategies

4. Levi Strauss’s Social Impact

In addition to being one of the most successful fashion brands in history, Levi’s is also one of the first to push for a more ethical and sustainable supply chain.

In 1991, the brand created its Terms of Engagement , which established its global code of conduct regarding its supply chain and set standards for workers’ rights, a safe work environment, and an environmentally-friendly production process.

To maintain its commitment in a changing world, Levi’s regularly updates its Terms of Engagement. In 2011, on the 20th anniversary of its code of conduct, Levi’s announced its Worker Well-being initiative to implement further programs focused on the health and well-being of supply chain workers.

Since 2011, the Worker Well-being initiative has been expanded to 12 countries and more than 100,000 workers have benefited from it. In 2016, the brand scaled up the initiative, vowing to expand the program to more than 300,000 workers and produce more than 80 percent of its product in Worker Well-being factories by 2025.

For its continued efforts to maintain the well-being of its people and the environment, Levi’s was named one of Engage for Good’s 2020 Golden Halo Award winners, which is the highest honor reserved for socially responsible companies.

5. Starbucks’s Commitment to Ethical Sourcing

Starbucks launched its first corporate social responsibility report in 2002 with the goal of becoming as well-known for its CSR initiatives as for its products. One of the ways the brand has fulfilled this goal is through ethical sourcing.

In 2015, Starbucks verified that 99 percent of its coffee supply chain is ethically sourced , and it seeks to boost that figure to 100 percent through continued efforts and partnerships with local coffee farmers and organizations.

The brand bases its approach on Coffee and Farmer Equity (CAFE) Practices , one of the coffee industry’s first set of ethical sourcing standards created in collaboration with Conservation International . CAFE assesses coffee farms against specific economic, social, and environmental standards, ensuring Starbucks can source its product while maintaining a positive social impact.

For its work, Starbucks was named one of the world’s most ethical companies in 2021 by Ethisphere.

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The Value of Being Socially Responsible

As these firms demonstrate , a deep and abiding commitment to corporate social responsibility can pay dividends. By learning from these initiatives and taking a values-driven approach to business, you can help your organization thrive and grow, even as it confronts global challenges.

Do you want to gain a deeper understanding of the broader social and political landscape in which your organization operates? Explore our three-week Sustainable Business Strategy course and other online courses regarding business in society to learn more about how business can be a catalyst for system-level change.

This post was updated on April 15, 2022. It was originally published on June 6, 2019.

corporate social responsibility and business ethics essay

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What Is CSR? Corporate Social Responsibility Explained

corporate social responsibility and business ethics essay

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corporate social responsibility and business ethics essay

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. 

By practicing corporate social responsibility, also called corporate citizenship , companies are aware of how they impact aspects of society, including economic, social, and environmental. Engaging in CSR means a company operates in ways that enhance society and the environment instead of contributing negatively to them.

Key Takeaways

  • Corporate social responsibility is a business model by which companies make a concerted effort to operate in ways that enhance rather than degrade society and the environment.
  • CSR can help improve society and promote a positive brand image for companies.
  • CSR includes four categories: environmental impacts, ethical responsibility, philanthropic endeavors, and financial responsibilities.

Understanding Corporate Social Responsibility (CSR)

Through corporate social responsibility programs , philanthropy, and volunteer efforts, businesses can benefit society while boosting their brands. A socially responsible company is accountable to itself and its shareholders. CSR is commonly a strategy employed by large corporations. The more visible and successful a corporation is, the more responsibility it has to set standards of ethical behavior for its peers, competition, and industry .

Small and midsize businesses also create social responsibility programs, although their initiatives are rarely as well-publicized as those of larger corporations.

  • Environmental responsibility: Corporate social responsibility is rooted in preserving the environment. A company can pursue environmental stewardship by reducing pollution and emissions in manufacturing, recycling materials, replenishing natural resources like trees, or creating product lines consistent with CSR.
  • Ethical responsibility: Corporate social responsibility includes acting fairly and ethically. Instances of ethical responsibility include fair treatment of all customers regardless of age, race, culture, or sexual orientation, favorable pay and benefits for employees, vendor use across demographics, full disclosures, and transparency for investors.
  • Philanthropic responsibility: CSR requires a company to contribute to society, whether a company donates profit to charities, enters into transactions only with suppliers or vendors that align with the company philanthropically, supports employee philanthropic endeavors, or sponsors fundraising events.
  • Financial responsibility: A company might make plans to be more environmentally, ethically, and philanthropically focused, however, it must back these plans through financial investments in programs, donations, or product research including research and development for products that encourage sustainability, creating a diverse workforce, or implementing DEI, social awareness, or environmental initiatives.

Volunteering

Some corporate social responsibility models replace financial responsibility with a sense of volunteerism. Otherwise, most models still include environmental, ethical, and philanthropic as types of CSR.

Benefits of CSR

According to a study published in the Journal of Consumer Psychology, consumers are more likely to act favorably toward a company that has acted to benefit its customers. As a company engages in CSR, it is more likely to receive favorable brand recognition . Additionally, workers are more likely to stay with a company they believe in. This reduces employee turnover, disgruntled workers, and the total cost of a new employee .

For companies looking to outperform the market, enacting CSR strategies may improve how investors view the company's value. The Boston Consulting Group found that companies considered leaders in environmental, social, or governance matters had an 11% valuation premium over their competitors.

CSR practices help companies mitigate risk by avoiding troubling situations. This includes preventing adverse activities such as discrimination against employee groups, disregard for natural resources, unethical use of company funds, and activity that leads to lawsuits, and litigation .

CSR programs can raise morale in the workplace.  

In its 2022 Environmental and Social Impact Report, Starbucks ( SBUX ) highlights taking care of its workforce and the planet among its CSR priorities through stock grants and additional medical, family, and educational benefits. The company's goals include achieving 50% reductions in greenhouse gas emissions, water consumption, and waste by 2030.

Home Depot ( HD ) has invested more than 1 million hours per year in training to help front-line employees advance in their careers, aims to produce or procure 100% renewable energy to operate its facilities by 2030, and has plans to spend $5 billion per year with diverse suppliers by 2025.

General Motors won the Sustainability Leadership Award from the Business Intelligence Group in 2022. The automaker provided $60 million in grants to more than 400 U.S. nonprofits focusing on social issues, and it has agreements in place to use 100% renewable electricity at its U.S. sites by 2025.

Why Should a Company Implement CSR Strategies?

Many companies view CSR as an integral part of their brand image, believing customers will be more likely to do business with brands they perceive to be more ethical. In this sense, CSR activities can be an important component of corporate public relations. At the same time, some company founders are also motivated to engage in CSR due to their convictions.

What Is ISO 26000?

In 2010, the International Organization for Standardization (ISO) released ISO 26000, a set of voluntary standards to help companies implement corporate social responsibility. Unlike other ISO standards, ISO 26000 provides guidance rather than requirements because the nature of CSR is more qualitative than quantitative, and its standards cannot be certified. ISO 26000 clarifies social responsibility and helps organizations translate CSR principles into practical actions.

What Are the Benefits of CSR?

CRS initiatives strive to have a positive impact on the world through direct benefits to society, nature and the community in which a business operations. In addition, a company may experience internal benefits through the initiatives. Knowing their company is promoting good causes, employee satisfaction may increase and retention of staff may be strengthened. In addition, members of society may be more likely to choose to transact with companies that are attempting to make a more conscious positive impact beyond the scope of its business.

What Companies Have the Best CSR?

Since 1999, Corporate Responsibility Magazine has ranked the top 100 Best Corporate Citizens each year among the 1,000 largest U.S. public companies. Rankings are based on employee relations, environmental impact, human rights, governance, and financial decisions. In 2023, the top-ranked companies include Hewlett-Packard Enterprise Company, Accenture, and Hasbro.

Companies striving to measure success beyond bottom-line financial results may adopt CSR strategies that target environmental, ethical, philanthropic, and fiscal responsibility that extend beyond the products they sell.

Society for Consumer Psychology. " Good Guys Can Finish First: How Brand Reputation Affects Extension Evaluations ."

Boston Consulting Group. " Your Supply Chain Needs a Sustainability Strategy ."

Frontiers in Psychology. " Corporate Social Responsibility and Employee Engagement: Enabling Employees to Employ More of Their Whole Selves at Work ."

Starbucks. " 2022 Starbucks Global Environmental and Social Impact Report ," Pages 6 and 32.

Home Depot. " ESG Report (2022) ," Pages 9-10.

General Motors. " 2022 Sustainability Report ," Pages 6-7.

International Organization for Standardization. " ISO 26000, Social Responsibility ."

3BL Media. " 100 Best Corporate Citizens of 2023 ."

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corporate social responsibility and business ethics essay

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The Past, History, and Corporate Social Responsibility

  • Editorial Essay
  • Published: 05 November 2019
  • Volume 166 , pages 203–213, ( 2020 )

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corporate social responsibility and business ethics essay

  • Robert Phillips 1 ,
  • Judith Schrempf-Stirling   ORCID: orcid.org/0000-0002-3632-4424 2 &
  • Christian Stutz   ORCID: orcid.org/0000-0003-2797-3753 3 , 4  

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An emerging body of research recognizes the importance of the past and history for corporate social responsibility (CSR) scholarship and practice. However, the meanings that scholars and practitioners can ascribe to the past and history differ fundamentally, posing challenges to the integration of history and CSR thinking. This essay reviews diverse approaches and proposes a broad conceptualization of the relationship between the past, history, and CSR. We suggest historical CSR as an umbrella term that comprises three distinct theoretical perspectives. The “past-of-CSR” perspective is concerned with the history of CSR and business ethics as a set of concepts and practices. The “past-in-CSR” perspective involves employing empirical historical research to substantiate and elaborate CSR concepts and theories. Finally, the “past-as-CSR” perspective seeks to understand the past as a living, yet contested, facet of current organizations, influencing contemporary perceptions of corporate and managerial responsibility. We then elaborate on conceptual issues and paths that may prove useful for future research. In all, this essay and the thematic symposium it precedes strive to deepen and broaden the salience of the past and history for thinking about business ethics and business responsibilities.

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Part of a broader literature dedicated to more historically informed theory and practice (Kipping and Üsdiken 2014 ; Maclean et al. 2016 ; Rowlinson et al. 2014 ; Stutz and Sachs 2018 ; Wadhwani and Bucheli 2014 ), the concept of historic corporate social responsibility (HCSR) addresses questions of responsibility and accountability for long-ago actions (Schrempf-Stirling et al. 2016 ). HCSR considers how corporations manage the legitimacy of their activities when criticism of past wrongdoings flares up. The introduction of HCSR to the scholarly discourse about business ethics and business responsibilities can “be seen as marking a historic turn in the ever-expanding field of CSR” (Godfrey et al. 2016 , p. 601, italics added ). The idea that the past and history have relevance for CSR scholarship, however, is a central theme of a more diverse body of research (Stutz 2018 ).

A first camp values a deep and complex understanding of the history of CSR practice and thought (e.g., Carroll et al. 2012 ; Kaplan and Kinderman 2017 ; Marens 2010 , 2012 , 2013 ), in order to revitalize today’s CSR thinking by “build[ing] new bridges from the past to the present” (Stutz 2018 , p. 21). The second group of scholars appreciates prior historical periods as a “fervid laboratory of social innovation” (Husted 2015 , p. 138) or a rich empirical repository of corporate misconduct among other topics of interest to CSR scholars. This camp uses history as a methodological approach to contribute to recent theoretical debates (e.g., Acosta and Pérezts 2019 ; Djelic and Etchanchu 2017 ; Marens 2018 ; Stutz and Sachs 2018 ; Warren and Tweedale 2002 ). This research interest follows a more general development in the broader management and organization studies, where the use of historical methods, evidence, and reasoning is increasingly considered a legitimate methodological option for business scholarship (Kipping and Üsdiken 2014 ; Maclean et al. 2016 ; Rowlinson et al. 2014 ; Van Lent and Durepos 2019 ; Wadhwani and Bucheli 2014 ). Finally, a third camp of research shares Schrempf-Stirling et al.’s ( 2016 ) interest in the contemporary relevance of the past for the (ir)responsible management of organizations in the present (e.g., Booth et al. 2007 ; Brunninge and Fridriksson 2017 ; Mena et al. 2016 ; Janssen 2013 ; Stutz and Schrempf-Stirling 2019 ).

This emerging—and manifestly diverse—body of CSR research affirms the importance of taking the past and history seriously. A simple definition of history conceives it as the interpretation and representation of the past from a position in the present (Rowlinson et al. 2014 ), regardless of whether mobilized by corporations and managers, stakeholders, social actors, the state, or academic scholars. However, recent literature that aims to justify a place for “Clio [the muse of history] in the business school” (Perchard et al. 2017 , p. 1) provides a note of caution—integrating history into disciplinary scholarship “requires [both] new ways of acting and […] thinking .” (Wadhwani and Bucheli 2014 , p. 23, italics in original ). CSR and business ethics academics interested in the past should not underestimate the conceptual and methodological challenges that historical thinking and acting pose (Stutz 2018 ). Consider, for instance, that Schrempf-Stirling et al. ( 2016 ) think differently about the past than Carroll et al. ( 2012 ) who provide one of the more influential—if US-centric—histories of CSR. While the former hold an interpretive historical stance to show both the symbolic and substantive relevance of the past in the socially constructed present, the latter retell the past from an objective position to illuminate the provenance of present thoughts and practices.

As another methodological challenge, one needs to recognize that the practice of history might have some similarities to other qualitative approaches, yet the temporal distance creates fundamental onto-epistemological differences in research and writing (Rowlinson et al. 2014 ). As a result, business ethics and CSR scholars grappling with the past risk “historical dilettantism” by failing to meet appropriate scholarly standards in historical thinking and practice (Maclean et al. 2016 , p. 616).

Anticipating both the prospects for—and challenges to—realizing the full potential of the past and history to CSR scholarship, this thematic symposium seeks to deepen and broaden the salience of the past for thinking about business ethics and business responsibilities. With this essay, we aim to take stock of the several nascent and emerging conversations at this moment in time as well as provide avenues for future research. In particular, we propose a broad conceptualization of the relationship between the past, history, and CSR thinking and suggest using historical CSR as an umbrella term that draws together the various threads of research. Thereby we regard the notion of HCSR as a subset of the broader idea of historical CSR.

In what follows, we first present our three history perspectives: “past- of -CSR,” “past- in -CSR,” and “past- as -CSR”. We also introduce the contributions of the individual articles of this thematic symposium to further the conversation. We conclude by elaborating future research directions for the most recent approach, the past-as-CSR perspective.

Toward Three History Perspectives

An emerging body of research affirms the past and history’s relevance for CSR scholarship, yet ascribes different meanings to the central notions. We isolate three perspectives that embrace distinct understandings of the past and history. We follow Munslow’s ( 2006 ) conceptualization of different ontological and epistemological positions on the matters of history and the past, as also expressed in Coraiola et al. ( 2015 ) and Suddaby and Foster ( 2017 ). One can think of the relationship as a continuum: On the one hand, scholars can equate the past and history (objectivism) and strive to understand the past “as it once was” (positivism). On the other hand, scholars may think of history as a narrative of the past that is tied to the narrator’s position (subjectivism). In this view, history is largely malleable despite the “brute facts” of the past (constructivism). It is this variety of past and history relationships that inform our three perspectives. Table  1 summarizes the different conversations and perspectives, to which we refer in our discussion below.

Past-of-CSR: History of CSR Thought and Practice

Research within the past-of-CSR perspective strives for a more comprehensive understanding of the history of CSR thought and practice. Research of this genre is concerned with producing historical knowledge about the idea of business ethics and business responsibility. According to Stutz ( 2018 , p. 3), this kind of historical knowledge may serve as a source of “historical consciousness” (Suddaby 2016 ) or historical awareness that may engender critical reflection on the power structures and sedimented relations in which historical and contemporary patterns of CSR are embedded.

Stutz’s recent review ( 2018 ) synthesizes existing research to provide historical depth to the received scholarly narrative about CSR. Many scholars consider the origins of CSR as associated with the historical particularities of the nineteenth and twentieth century Anglo-American institutional and cultural setting (e.g., Abend 2013 ; Acquier et al. 2011 ; Carroll et al. 2012 ; Marens 2010 , 2012 , 2013 ). Going farther back in time, Hielscher and Husted ( 2019 ) examine the “proto-CSR” activities of mining guilds as far back as the thirteenth century. This extends, as well, to the more recent global diffusion (e.g., Kaplan and Kinderman 2017 ) of ethical thinking and practice in business (e.g., Antal et al. 2009 ; Bengtsson 2008 ; Ihlen and von Weltzien Hoivik 2013 ; Van Buren 2008 ).

However, Stutz ( 2018 ) presents the history of CSR thought and practice from three distinct meta-theoretical orientations towards CSR (viz., economic, critical, and politico-ethical lens). This contrast of distinct narrative accounts demonstrates how the mobilization of history also serves political purposes in the present (De Baets 2009 ). Stutz ( 2018 , pp. 20–21) argues that prominent histories of CSR—written by scholars committed to the politico-ethical lens—tend to portray an “overly glossy” view that may neglect problematic aspects of CSR. Going further, critical scholars (Kaplan and Kinderman 2017 ; Marens 2010 , 2012 , 2013 ) provide historical evidence suggesting that CSR, as a business-led practice, may fail to provide adequate solutions—due, in part, to the perspective of their historical frame.

Leading scholars of organizational and management history argue that one explanation for the perceived dearth of novel ideas in management scholarship can be traced back to a limited view of the past that places boundaries around what scholars consider key foundations of management knowledge (Cummings et al. 2017 ). They go on to argue that a more nuanced historical understanding of how received management theories emerged and were enacted in the past can lead to more innovative and useful contemporary theory. As with the history of management theory more broadly, so also with the “past- of -CSR” perspective. Here we join Stutz’s ( 2018 , p. 20) call to “push the CSR community to become more historically conscientious” about its own scholarly past.

Past-in-CSR: Historical Methods, Evidence, and Reasoning

Whereas the previous perspective applies a historical lens to improve our understanding of past and present CSR theorizing, the past-in-CSR perspective involves tapping the potential for empirical historical research to exposit, substantiate, and even challenge CSR concepts and theories (Husted 2015 ; Marens 2018 ; Stutz and Sachs 2018 ). This genre of research draws from a new methodological paradigm within organization studies and the broader business disciplines to develop historical organization studies (Kipping and Üsdiken 2014 ; Maclean et al. 2016 ; Rowlinson et al. 2014 ; Wadhwani and Bucheli 2014 ). The literature associated with this paradigm provides practical guidance to the application of historical methods in an interdisciplinary context (e.g., Gill et al. 2018 ; Stutz and Sachs 2018 ) with an eye toward meeting the quality standards of both underlying disciplines (Maclean et al. 2016 ).

Toward this end, Husted ( 2015 ) argues that “historical material provides important resources for several current CSR issues and debates” ( 2015 , p. 135). By reviewing historical work about industrial paternalism in the nineteenth century, Husted ( 2015 ) encourages political CSR scholars to investigate the role of firms in providing (putatively) governmental services in past contexts of institutional voids, sharing many features with today’s emerging markets (i.e., boundary conditions). Warren and Tweedale ( 2002 ) suggest that business history can inform numerous ethical aspects of contemporary business including the operation of companies founded with a social conscience, green business and the environment, and the “discrepancy between the popular image of business as a highly respectable activity […] and what can happen behind the scenes—power struggles, rivalry, the manipulation of information, and the pursuit of short-term ends” ( 2002 , p. 215). Beets ( 2011 ) provides a helpful list of critical events in the ethics of U.S. corporate history that may motivate future past-in-CSR inquiries.

Beyond seeing the past as a repository of cases, Marens ( 2018 ) praises the advantages of history-work over the predominant scientific theory-testing mode of inquiry. Considering CSR scholars’ concern with inequality within and between societies, he argues that historical-empirical methods are better suited to account for institutionally deep-rooted, change-resistant issues. As an exemplar of this type of study published in this volume, Smith and Johns ( 2019 ) use history to contextualize and better understand the current debate over modern slavery. Barros and Taylor’s ( 2018 ) historical study of a significant Brazilian think tank in the 1960s provides another example. Addressing a gap in business ethics research on the influential role of think tanks on the transformation of social structures, they invoke this historical case to begin filling this gap.

Stutz and Sachs ( 2018 ) develop a methodological approach to the past that explicates yet another use of history to the CSR community. Recognizing this community’s normative agenda to (re)shape business in directions more humane and just, they argue for history as a reflexive space for theory elaboration. On this understanding, historical research is a means of evaluating normative theoretical claims and elaborating them. Djelic and Etchanchu ( 2017 ) compare the contemporary conceptualization of political CSR with alternative historical patterns of business-society relationships. They demonstrate that current CSR is a form of business-society interaction that reflects a (neoliberal) ideology embedded in a particular time and place. This literature stream suggests that history can add historical context and complexity to CSR theorizing in order to allay concerns of theoretical formalism and ahistoricism.

Past-as-CSR Perspective: HCSR and the Living Past

The past-as-CSR perspective seeks to understand the past as a living—and contested—facet of current organizations. This genre of research considers objective elements of the past (e.g., evidence of past (ig)noble activities) but highlights how contemporary actors, often with diverse interests, interpret and use the past in the present. The past pervades and shapes the effectiveness—even viability—of current business activities through contested interpretations of an organization’s history. Such “contest of narratives” can lie dormant when there is general agreement about the contours and implications of the past. However, when new evidence emerges (e.g., when the Berlin Wall came down and evidence surfaced from the former East Germany concerning business activities under Soviet Communism) or changes in contemporary norms and values affect how existing historical evidence is perceived, interpretive contest can re-emerge. The papers in this volume examine the emergence of new evidence and how interpretation of the evidence—old and new—is influenced by evolving cultural norms and expectations (Van Lent and Smith 2019 ; Coraiola and Derry 2019 ).

Schrempf-Stirling et al. ( 2016 ) look closely at HCSR by examining the relationship between “claim legitimacy” (i.e., the legitimacy of moral claims raised about past wrongdoings against corporations) and its effect on “corporate legitimacy” (i.e., the generalized perception that the behavior of a corporation is appropriate within a particular institutional context) mediated through “corporate engagement” (i.e., the behavioral options of corporations when reacting to a contestation of their past). Corporate engagement ranges from no engagement with the historical claim or claimants, to denying the claim, to fully engaging in a public discourse on the claim with an eye toward possible reconciliation of the claims and (at least temporary) resolution of the interpretive contest. The effects of corporate engagement on the legitimacy of the firm depend on whether the level of corporate engagement was adequate, given the legitimacy of the claim and the histories of the contestants.

While the HCSR—and the past-as-CSR perspective, more generally—is relatively new, other research has contributed to this genre avant la lettre (e.g., Booth et al. 2007 ; Janssen 2013 ). Mena et al. ( 2016 ) consider the manipulative initiatives by organizations to shape how larger audiences view instances of past corporate wrongdoing. Stutz and Schrempf-Stirling ( 2019 ) provide conceptual definitions of (ir)responsible uses of the past by managers and present them as a matter of moral integrity. In doing so, they also connect to the lively conversations of the so-called “uses of the past” approach (Suddaby et al. 2010 ; Wadhwani et al. 2018 ), which has mostly avoided questioning the ethics of managerial history-work.

The past-as-CSR perspective—and Schrempf-Stirling et al.’s ( 2016 ) elaboration of HSCR, specifically—invites a number of fundamental questions. Some are addressed in the pages of this thematic symposium. Others await future studies. We consider both below.

Contributions to the Thematic Symposium

The first two articles incorporated in this volume focus on and expand Schrempf-Stirling’s conceptualization of HCSR. Van Lent and Smith examine the Hudson’s Bay Company’s history-work over the long term as well as the public contestation of its past due to mistreatment of Canada’s Indigenous people. This empirical study adds historical context and complexity to HCSR, so that the authors bridge our past-in-CSR (using history to theorize) and past-as-CSR (theorizing the past in the present) categories. Their main contributions are threefold: First, following the traces of the company’s use of history in its stakeholder relations for almost 120 years, they observe other forms of history-work (mainly, heritage branding) that are simultaneously or sequentially employed in addition to corporate engagement with narrative contests of the past. Instead of assuming managerial discretion to choose between low and high engagement at t 0 , they reveal the sedimented nature of corporate engagement where managers are constrained by previous forms of history-work of the company. Second, the study complicates the aspect of “the receptivity to historical criticism within the current context,” which is a central aspect of Schrempf-Stirling’s notion of claim legitimacy. Recognizing that corporations are increasingly exposed to fragmented institutional environments with conflicting stakeholder demands, they elaborate on claim legitimacy to embrace cases of ambiguous stakeholder pressures. Finally, the study considers new mechanism of narrative contests by depicting the interaction processes of ambiguous claim legitimacy and sedimented corporate engagement. They conclude that their elaboration “could lead firms to recognize inconsistent or cynical elements in their approach to history, which would in turn provide a basis for more consistently responsible corporate engagement with history” (Van Lent and Smith 2019 ).

Coraiola and Derry develop a historical case study of U.S. tobacco companies to explore how corporations engage in forgetting work to avoid taking responsibility for past misbehavior. They introduce to the HCSR discourse the notion of an ethics of remembering on an industry level and argue that “sustained efforts of forgetting work depend on the continuity of the project through various generations of employees, which presumes the existence of frameworks of remembering in place” (Coraiola and Derry 2019 ). They advance HCSR further by highlighting how a collective of corporations engages in forgetting work and how such efforts lead to “additional layers of historical irresponsibility and may turn into a compounded liability in the event the memory of the colletive strategy of social forgetting becomes public” (Coraiola and Derry 2019 ).

The next two articles in this volume exemplify the vast opportunities for empirical historical research to inform mainstream CSR discourses. Hielscher and Husted describe the pre-modern activities of medieval German miners’ guilds as “proto-CSR.” Starting from the premise that CSR is a modernist concept, their article is not a contribution to the past-of-CSR perspective per se, but it is clearly an example of the past-in-CSR. They elaborate on early—at the time novel and experimental—practices of mutual aid involving mining guilds. These practices evolved through the interactions among business, worker, ecclesiastical, and secular groups to form the precursors to many of our modern social and workplace institutions. If today’s CSR practices have become rigid, standardized, and overly “Westernized,” it may be due to the loss of pragmatic experimentalism and a neglect of the lessons of history.

Smith and Johns use a historical lens to engage with a social phenomenon that is of utmost humanist concern for business ethics and CSR scholars: slavery and racism. Empirically, they investigate the consumer market for slavery-free sugar in nineteenth-century Britain, discovering that this values-driven market category disappeared again in circa 1840—despite the ongoing scourge of slavery. Following the principles of past-in-CSR, they challenge assumptions of scholars participating in academic discourse about modern slavery in which parallels and continuities with historical reactions to slavery are largely ignored. By historicizing modern slavery, the authors highlight the problem of overly optimistic historical meta-narratives that lead scholars to believe in the steady moral progress of humankind. Their documentation of this slippage in the arc of the moral universe away from justice adds historical nuance to contemporary thinking. Their theorization explains the demise of ethical consumption due to shifting attitudes towards slavery and the resurfacing of racism. By considering the fragile nature of ethics-driven market categories, they offer a note of caution to scholars and practitioners who place their hopes in the moral consciousness of consumers to tackle modern slavery.

Avenues for Future Research

As the past-as-CSR perspective is still emerging, we present here directions for future research that we consider promising. We first turn to prospective topics specific to HCSR, before discussing other, broader conceptual paths that may prove useful. Table  2 shows the research opportunities for both HCSR and other past-as-CSR research.

Different Media

Arguably the default raw materials of historical analysis are documentary. Historians are often imagined combing through dusty archives deep in the bowels of some library or other ancient structure. How thoughts, opinions, and directives were contemporaneously recorded is, indeed, a rich and nuanced source of historical insight. However, written records are far from the only source of insight and historical contest.

The recent debates about statues (e.g., Robert E. Lee throughout the American South), buildings (Georgetown University’s Mulledy and McSherry Halls) and colleges (e.g., Yale’s Calhoun College) have caused re-examinations of those so honored. Recognitions of place and the indigenous Traditional Custodians of the Land are becoming more frequent in Australia, Canada, and elsewhere.

To date, these eliminations and elevations more often occur in educational and governmental settings than within business firms. One notable example of using physical structures to represent and frame history is Haigh’s ( 2007 ) Asbestos House —a historical examination of James Hardie Industries’ efforts to disavow legal, moral, and historical responsibility for asbestos-related illness and death. It will be interesting to see how companies react going forward to the non-documentary physical manifestations of their corporate histories.

Acquiring an Inconvenient Past

Managers interested in the effects of history on today’s organizational practice may wonder about the durability of history. In many cases, managers would be justified in hoping that the re-emergence of a particular piece of their company’s history will blow over if simply ignored. Public attention spans can be short, and many historical controversies amount to little more than flashes in the pan. But why? What are the factors that influence this durability?

When a newly emergent contest of narratives does prove durable, common reactions include re-branding or mergers with less controversial companies. Future research may fruitfully examine the effectiveness and moral justifiability of these tactics. When and why does a company’s history prevail over obscuration? And how should we understand the responsibilities of acquiring organizations to address the history of acquired organizations?

Action, Omission, Memorialization

Asserting the priority of action over intention invokes historical questions of inaction . In assessing historical responsibility for inaction, intentions move to the background. IBM did not intend the Holocaust; Shell did not intend that Ken Saro-Wiwa be executed (Wheeler et al. 2002 ); and Nokia Siemens Networks did not intend for Iranian dissidents be tortured (Schrempf 2011 ). According to some, these corporations nevertheless fell short of meeting their responsibilities (Young 2006 ; Schrempf-Stirling and Palazzo 2016 ; Miller 2001 ) by failing to mitigate the harm they had the power to do so.

A corporation has moral responsibility for its actions and inactions if they were performed or omitted voluntarily and the corporation could have acted differently (Manning 1984 ; Werhane 1985 ). Coraiola and Derry ( 2019 ) demonstrate that an industry’s forgetting work turns into a compound liability over the course of time when the irresponsible history-work becomes known to the public. Consider also the practice of “memorialization” of past wrongdoings. Corporate memorialization remembers aspects of the past, but such rituals can also signal a discontinuity, closure, and a break with the past (Suddaby and Foster 2017 ). As a paradoxical consequence, memorialization of past misconduct may take place only in the symbolic realm without any substantial efforts in terms of redemption.

This is where the historian’s tool kit, specifically, historiography plays a role in assessing responsibility. How events and practices—including the history-work by corporations—are discussed and passed down over time provides clues and evidence of both the relative voluntariness of the action and the availability of alternatives. Articles of this volume started to evaluate current companies’ responsibility for past activity through the historical lens, yet ample opportunities for historical research remain.

Future Directions for the Past-as-CSR

While HCSR primarily uses the concept of legitimacy to bridge the past, present, and future of corporations, CSR scholars interested in the contemporary relevance of the past could use other conceptual underpinnings and foundational past-related concepts. Within the humanities, the broader social sciences, and other business disciplines, scholars understand that the mobilization of the past in the present is multifaceted. Table  3 provides an overview of concepts of business studies that either emphasize the agency of organizational actors (e.g., rhetorical history) or the constraining forces of past events (e.g., imprinting). CSR scholars can “borrow” and adapt them to improve our understanding of past-as-CSR phenomena. We elaborate on this by considering related ideas of identity, image, reputation, legacy, and nostalgia.

Corporate Identity, Image, and Reputation

Corporate image, identity, and reputation are similar constructs. While some use the three terms interchangeably, other scholars have been eager to clarify how the concepts differ. Identity refers to how internal stakeholders perceive the corporation. As Fombrun ( 1996 ) and Barnett et al. ( 2006 ) argue, identity refers to the core character of a corporation and the features that appear most relevant to internal stakeholders (i.e., employees). Image, in contrast, relates to the desired or actual perception of a company by its external stakeholders (Alvesson 1998 ). According to Whetten ( 1997 ), a corporate image is the perception that corporations want their external stakeholders to have about them. Others maintain that the image is the actual perception of a company by external stakeholders. Hence, it can be positive or negative (depending on the stakeholder).

Reputation combines elements of both identity and image (Walker 2010 ). Fombrun’s ( 1996 , p. 72) definition of a firm’s reputation is perhaps the most influential. Reputation is the “perceptual representation of a company’s past actions and future prospects that describes the firm’s overall appeal to all of its key constituents when compared with other leading rivals.” Corporations can have multiple (or mixed, or both) reputations: Wal-Mart, for instance, has a reputation among its suppliers of being a tough negotiator, and a reputation of being good for customers and investors (Carter and Deephouse 1999 ). Reputations may also vary depending on the underlying institution: economic reputation, social reputation, environmental reputation.

More specific to historical concerns, Fombrun ( 1996 ) explains that reputation is the result of corporate past actions and future prospects. Reputation has “an accumulated historical meaning” (Chun 2005 , p. 96) that “takes time to build” (Balmer 1998 , p. 696). Reputation is relatively stable, but mutable (Mahon 2002 ; Rhee and Haunschild 2006 ). Recent work has emphasized that a strongly positive reputation may also increase both the vigilance and expectations of stakeholders (Parker et al. 2019 ). We suspect that the addition of historical responsibility considerations may fruitfully inform longstanding questions of corporate identity and reputation. Future inquiries, for instance, might pursue the question whether distinct stakeholder groups prize the (ig)noble past of a corporation differently over time. Prior research suggests that a long history in CSR is useful to manage current CSR crisis (Vanhamme and Grobben 2009 ). Also, can employers use the history of being first movers on a historically controversial issue to attract new employees?

Suddaby ( 2016 , p. 55) considers organizational legacy a bridging construct to integrate history and organization studies. An organization’s unique historical legacy is a crucial variable in explaining aspects of corporate behavior. Fox et al. ( 2010 , p. 159) stressed an important characteristic of legacy when they defined legacy as being “manifested in the impact that one has on others beyond the temporal constraints of the lifespan.” Like reputation, legacy is based on perception, can vary by stakeholder, can be positive or negative, and is built over time. There remain differences between legacy and reputation, however. Unlike reputation, legacy is not comparative. Legacy is about creating enduring popularity and does not necessarily involve an outperformance of other actors. Legacy is also more enduring. Because legacy—unlike the broader concept of historical responsibility—is backward looking, the activities in question cannot be changed. The interpretation of these activities is subject to contest at any time (Schrempf-Stirling et al. 2016 ), but this is a slower process than changing a reputation.

Research on legacy has also appeared in psychology and focuses on how legacy affects individuals’ activities, on the intensity of the legacy motive, and on legacy building behavior. Humans recognize their mortality and are eager to create meaning to their lives. Humans want to contribute positively to the world and ensure that their lives mattered. Psychology-based studies in management and business ethics have investigated the legacy motive in business contexts (Fox et al. 2010 ; Wade-Benzoni et al. 2010 ). The motivation to create lasting and mostly positive legacies encourages ethical decision-making and responsible behavior in a business context (Fox et al. 2010 ).

In their experiments, Wade-Benzoni et al. ( 2010 , p. 7) found that “compared to benefits, allocating burdens intergenerationally increased concern with one’s legacy, heightened ethical concerns, intensified moral emotions (e.g., guilt, shame), and led to feelings of greater responsibility for and affinity with future generations.” Some legacy-related research found that the motivation to avoid a negative legacy is stronger than the motivation to create a positive legacy (Wade-Benzoni et al. 2010 ). Cognizant of the dangers inherent in directly adapting individual constructs to the group level, we argue that the considerations of legacy and sensitivity to the demands of historic responsibility more generally can be usefully employed in the case of corporations.

Executive’s identification with the organization (Treviño et al. 2008 ) will increase concern for organizational legacy. Future research within the genre of past-as-CSR and legacy might explore what other factors influence the desire to maintain or repair a corporate legacy (founding actor, family name, length of tenure, level of seniority, age, etc.).

Nostalgia and Emotions

Nostalgia refers to “a positively toned evocation of a lived past” (Davis 1979 , p. 18). Gabriel ( 1993 , p. 119), building on Davis’ ( 1979 ) work, describes nostalgia as a sentimental “attachment to the organization that was, [like a] yearning for the past.” Organizational research demonstrates that nostalgia is not only individually experienced, but also a social phenomenon (Miller et al. 2018 ). That is, the experience of nostalgia, like other emotive experiences, is often shared among social groups such as organizations (De Rivera 1992 ). Hence, nostalgia can be a constitutive element of a collective identity. It juxtaposes an idealized interpretation of the past with a present that is found impoverished and lacking (Gabriel 1993 ). For instance, organizational members might nostalgically recall the pioneering golden days, the founder, or the physical buildings of the organization now relocated.

Nostalgia has been introduced as an approach to investigate the complexity and ambivalence of emotional feelings and experience in organizations (Gabriel 1993 ). The topic of emotions in social and organizational life has only recently gained traction in organization theory (see the overview in Zietsma et al. 2019 ). In CSR research, an emerging stream considers emotions (such as guilt and shame) as drivers for CSR engagement. However, Gond et al. ( 2017 , p. 233) observed that “surprisingly little is known about how affective processes shape CSR evaluations.” Hence, we suggest that studying nostalgia in the context of long-term CSR engagements might be a path to fill this gap. For instance, Gabriel ( 1993 ) posits that social functions (e.g., qualities as mutuality, caring, altruism) that become lost over time can attract nostalgic feelings in organizations. Nostalgia may well be a central emotive experience that triggers the restoration or upholding of CSR practice once dropped. Such longing for the past may also be a catalyst to the sort of institutional innovation, experimentation, and adaptation described by Hielscher and Husted ( 2019 ). In all, we suggest that studying the emotional evocation of history in the present offers a novel approach to investigate the role of emotions in contemporary CSR practice.

Only future historians of the CSR field can tell whether a “historic turn” in the CSR field, as proclaimed by Godfrey et al. ( 2016 ), is underway or not. Our review, however, is evidence that the collective effort of organizational historians and scholars of CSR and business ethics has resulted in a remarkable interdisciplinary integration of the past, history, and CSR thinking. This essay is a snapshot of these efforts at this moment. Our umbrella term historical CSR embraces, at least, three distinct theoretical perspectives that we called past-of-CSR, past-in-CSR, and past-as-CSR. Each perspective draws from and contributes to a different understanding of the relevance and meaning of the past and history for CSR scholarship and practice. We eagerly await the history’s judgement—and that of other scholars—as to the usefulness of these distinctions as a lens for future work.

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Phillips, R., Schrempf-Stirling, J. & Stutz, C. The Past, History, and Corporate Social Responsibility. J Bus Ethics 166 , 203–213 (2020). https://doi.org/10.1007/s10551-019-04319-0

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A Level Philosophy & Religious Studies

Business Ethics

Introduction.

This topic is about the relationship between capitalism and ethics. It is about whether businesses should be required to follow ethical principles in their dealings, or whether ethics even has or should have any relevance to business at all.

The idea that good ethics is good business is the view that good business decisions are good ethical decisions.

Proponents of CSR argue that good ethics is good business, because it’s profitable to have a good public image and avoid government regulation.

Utilitarians and Kantians believe there should be some restrictions on business. Not all good business decisions which maximise profit will be ethically good. Not if they go against the general happiness or violate duty.

Libertarians economists like Milton Friedman think business and ethics have nothing to do with each other. Businesses only responsibility is to maximise profit which is ethically good because it is the result of freedom and enables economic growth.

This topic includes three sub-issues:

  • Corporate social responsibility: the idea that a business has responsibility to the environment and its community.
  • Globalisation: the issue that businesses are now global entities, giving them tremendous power.
  • Whistleblowing: the ethics around going public to reveal secret unethical business practices.

Corporate social responsibility (CSR)

CSR is the theory that a business has ethical responsibilities to towards the environment and the communities it is part of or affects. There are two main types of CSR.

Environmental CSR. The responsibility a business has towards the environment.

  • Reducing negative impact on the environment such as pollution and non-recycled products.
  • Increasing the reliance on ‘green’ renewable and sustainable energy and products.
  • Offsetting negative impact done to the environment for example by donating to pro-environment groups that will make conservation efforts. E.g. a business aiming to be ‘carbon neutral’ might release some carbon dioxide through industry but donate for trees to be planted that might absorb the same amount of carbon their industry released.

Community CSR. The responsibility a business has to its social community, respecting human rights and avoid exploitation.

  • Respecting human rights and avoiding exploitation.
  • Avoiding being supplied by any business which involves exploitation, sweatshops or child labour.
  • Responsible treatment of employees e.g. minimum wage, health and safety provisions.
  • Philanthropy. Donating money to charitable causes.

A more contemporary version of CSR is ESG, Environmental, social and governance. The ‘governance’ term adds the requirement of avoiding political corruption such as bribery.

CSR and ESG is often promoted as a way of linking good business and good ethics. If a business is discovered to have illegal environmental harm human rights violations in its supply chain then that can cause governments to step in and regulate it. That can be very bad for profit. Committing to CSR/ESG can allow a business to maximise its profits by minimising those risks and thus do well by doing good.

It is also an opportunity for improved public relations (PR). The company appears better in the eyes of the public for the good that it does. It can essentially be used as a selling point for advertising, which can also increase profits.

Utilitarianism on CSR

Free market capitalism is the idea that the only responsibility of a business is to maximise profit for its shareholders. Bentham and Mill think that the free market is generally the best way to maximise happiness. They would likely accept environmental CSR because of how damaging climate change can be to happiness. However, regarding community CSR, they would probably reject philanthropy as a responsibility of business. Bentham did favour some regulations for employees like minimum wage. Ultimately, Mill and Bentham think the free market generally works for producing human flourishing and happiness. They would generally be against restrictions and responsibilities laid on business which would interfere with that.

Kantian ethics on CSR

The second formulation would require that market interactions do not involve the treatment of people as mere means. Labour should not be treated merely as a commodity. A basic level of respect must be given to employees and all stakeholders.

  • Avoiding exploitation (community CSR). This includes paying workers enough, perhaps a minimum or even living wage.
  • Providing a safe work environment (community CSR).
  • Avoiding fraud or deceptive advertising (community CSR).
  • Avoiding polluting the environment or having a net negative impact on the environment (environmental CSR).

Examples of CSR and critique of CSR as hypocritical window-dressing

Innocent smoothie advertises on every bottle that they give 10% of all their profits to charity. Pret-a-manger gave away their left over food away to charities at the end of the day. On the label of each sandwich they sell, they advertised this fact and stated ‘it’s the right thing to do’.

CSR is typically a centrist or centre-left position. Those further left often regard CSR as hypocritical window dressing, meaning making something appear good while overall it is bad. A business which engages in CSR for public relations purposes might be doing so to distract from their unethical practices.

This can apply to capitalism in general, because by encouraging a slightly healthier version of capitalism, people might feel less motivation to address the problems of capitalism or they might even be deceived that capitalism is not the cause of the problems to begin with.

Anand Giridharadas summed up this self-serving hypocrisy well in this article title: “Jeff Bezos wants to start a school for kids whose families are underpaid by people like Jeff Bezos.” The subtitle was “A free crash course in why generosity is no substitute for justice”.

Anand’s point is that businesses like Amazon, who don’t pay taxes and bust unions, are the actual cause of the problem that they then give a tiny amount of their profits to ‘address’. Corporate social responsibility is a sham. It’s not businesses giving away their profits for the good of society, it is a cold calculation that it would be more profitable for them to give away a fraction of their profits in order to give a good impression of themselves to the public, purely in order to avoid the greater loss to their profits if the public became more focused on their inequality, tax avoidance and union busting. That ‘class consciousness’ might cause the public to vote for more left-wing political parties which would institute policies that would cause businesses to give far more than they do for corporate social responsibility.

“We don’t need you to do more good. We need you to do less harm.”

It’s not simply gaining PR, it is an attempt to disguise the fact that businesses are part of the cause of economic problems like inequality, by giving the impression that businesses can be part of the solution. The amount ‘given back’ through CSR is nothing compared to the profits gained through avoiding taxes and busting unions.

This hypocritical window-dressing can also simply done for public relations (PR) purposes, to make the business look good, regardless of whether the overall impact of the business is negative.

For example, Tim Cook the CEO of Apple made a speech where he talked about how his platform would be against white supremacy, yet Apple continues to exploit people in third world countries.

This brings into question whether CSR even has a good ethical outcome. However even in cases where it does, some would be sceptical and suggest these businesses only do this so they can advertise themselves attractively to customers. The question is whether those intentions matter ethically.

Globalisation

Globalisation is the phenomenon where businesses are now global entities spanning multiple countries and continents and its impact on stakeholders. Globally, economies, industries, markets, cultures and policymaking are integrated (connected).

The problem with globalisation is that it can cause the violation of corporate social responsibilities and even undermine the free market itself.

Becoming global entities has given businesses an unprecedented level of money, and money is power. A business will do whatever it can to increase profit. If its new levels of power allow it to pressure peoples, cultures and governments, then it will do that. Businesses may be less likely to violate CSR in western countries, but globalisation certainly allows them to violate CSR in developing countries instead.

Offshore outsourcing – where businesses build products in factories in third world countries. This moves jobs from western countries to those countries which has made many industry workers unemployed.

The issue of monopolies. If a business gains enough power over a market, they can essentially fix or rig the system, altering the way the market functions, to reduce or eliminate competition and ultimately benefit themselves. This is called a monopoly, when a business has such dominance or power over a market that the market ceases to have competition. Without competition, a market no longer creates innovation and economic progress.

Even Freidman accepted that “It’s always been true that a business is not a friend of a free market”.

Corporations, power, globalisation and monopolies. Since money = power, and some businesses can be so large thanks to globalisation, perhaps they are becoming more powerful than governments, which could be problematic since they aren’t accountable to anyone as they aren’t democratically elected. This gives corporations the power to affect laws by financing the election campaigns of politicians. They can also make offers or threats to a government or state to change regulations and laws in ways that would favour their business. Example of amazon and new York.

This allows businesses to manipulate a market for its own benefit, turning it into a monopoly. Adam Smith may have been right that free market competition is generally good for the progress and prosperity of society. However, a particular corporation would rather not have to compete and if it can use its massive profits to simply buy other companies or affect laws that would give it an unfair advantage, then it will do so. E.g. Facebook acquiring Instagram. Amazon copying products that do well. Uber temporarily lowering its prices, running at a loss in cities it wants to expand into, in order to put other cab companies out of business at which point it can increase its prices and not face competition.

Utilitarianism on globalisation

Utilitarianism would be against the aspects of globalisation which undermine free markets, such as the power it has given business over policy making.

However, Utilitarianins might accept off-shore outsourcing so long as happiness is maximised.

Kant on globalisation

Globalisation seems problematic for Kant in that it can cause all of the corporate social responsibilities to be violated.

Whistleblowing

Whistleblowing is when someone, usually an employee, leaks information about the wrongdoings of a company. This could be bad business practices regarding employees, customers, society or the environment.

Facebook case study. Frances Haugen worked for Facebook (which owns Instagram) and leaked internal documents which came to be known as ‘The Facebook Files’. One quote from the files in the leak acknowledged that “we make body issues worse for one in three teenage girls”. The leak also shows that the Facebook algorithm promoted posts that caused anger or outrage.

The upside to whistleblowing is that the negative business practice is brought to light which gives it a better chance of being brought to an end.

The downside is that the company might suffer financial losses or even go bankrupt, causing some of or all of its staff to lose their job. In cases where the company was doing good, that could also be stopped.

Utilitarianism on Whistleblowing

Act utilitarianism holds that whistleblowing is morally right depending on the situation. If whistleblowing causes more happiness than not whistleblowing, then it is morally good; if it causes less happiness then it is morally wrong. For example, if the business is causing a lot of happiness, then whistleblowing about some suffering it is causing, e.g. through exploitation, might be wrong.

Kant on Whistleblowing

Kant thinks lying cannot be universalised and is therefore always wrong. So, he would certainly also be against lying to cover up negative business practises, even if that truth being brought to light resulted in the failure of the businesses and employees who may have done nothing wrong nonetheless losing their jobs. It is your duty never to lie.

Kant would also regard the treatment of people as mere means to be wrong due to the second formulation of the categorical imperative. Most if not all cases of whistleblowing seem to involve exploitative or deceptive business practices that treat people as a mere means. This would be another reason that Kant would be in favour of whistleblowing.

Sweatshops are an issue which is relevant to CSR, globalisation and whistleblowing.

A sweatshop is a shop or factory which employs workers, sometimes children, for very low pay, long hours in unsafe conditions. They are seen as a classic case of exploitation . This is because they exploit the lack of choice and opportunity many people have, giving them little choice but to accept terrible working conditions.

Sweatshops & CSR. It is typically considered the responsibility of a business to ensure that none of the products or services in its supply chain are sourced from or make use of sweatshops (community CSR).

Sweatshops & whistleblowing. If a company is discovered to source products from sweatshops without that being public information, it might be thought to be a valid reason to whistle blow.

Sweatshops & globalisation. Sweatshops are often a result of offshore outsourcing which is a consequence of globalisation.

The Utilitarian defence of sweatshops as having good consequences. William MacAskill argues that although sweatshops are ‘horrific’, thinking that boycotting western companies which sell products produced in sweatshops will help the workers there assumes that they have a better opportunity to make a living elsewhere, but “sadly that’s just not the case”. If you boycott sweatshop produced goods “all you are doing is taking away the best working opportunity that these people in very poor countries have”.

The argument is that many people in third world countries are in danger of starvation. If a sweatshop opens then they will at least earn some money. Even though the working conditions are terrible and dangerous, it is still better than nothing. It is a step up on the economic ladder.

If we demanded that businesses sacrifice profit to treat their sweatshop employees non-exploitatively, then businesses will lose their profit incentive to open a sweatshop and will simply stop opening them in third world countries. Then, people in the third world will lose a potential step up the economic ladder. The only reason a business opens a sweatshop in a third world country is because it is cheaper than opening a properly regulated factory in a developed country. In many cases a Utilitarian would therefore be in favour of globalisation, against CSR and against whistleblowing.

Primark case study. Primark were found to be supplied by exploitative factories in the third world that used child labour and paying people very little for extremely long hours. In response to this, Primark cut ties with those suppliers.

In some cases, sweatshops provided a better quality of life to its workers than they previously had and made those in developed countries happy at having products for a lower price. In those cases , a Utilitarian would therefore be in favour of this effect of globalisation, against CSR and against whistleblowing.

Critical comparison of Utilitarianism with Kant: Utilitarianism justifies bad actions (e.g. exploitation). Utilitarianism is incompatible with the basis for human rights which are deontological. This is because a ‘right’ is something which must be respected regardless of the consequences.

The idea of human rights was strongly influenced by Kant’s formula of humanity. Kantian ethics would be against sweatshops regardless of their positive consequences, because they treat workers as a mere means.

Mill’s harm principle seems to solve this problem because it suggests that society will be happiest if the rule of not harming others is followed. The question then is whether exploitation counts as harm. So long as the workers are free to leave any time, technically they accept the risk of harm in the sweatshop because their risk of harm from starvation without the sweatshop is greater. Arguably sweatshops, except in particular circumstances, do not count as harm, therefore. So, sweatshops are permissible

Perhaps it’s not permissible for children to work in them though. The Bangladesh factory case study might be something Mill would prohibit too, since it threatened to withhold pay if people didn’t work, which is borderline forced-labour.

A factory in Bangladesh evacuated because of health and safety concerns, however it then said it would not pay its employees for a month if they didn’t return the next day. So the employees returned, and the next day the factory collapsed on them killing over a thousand of them.

This seems like a better approach than Kant, who famously said he would not value consequences even when life was at stake – claiming that lying even to save a life is wrong. Similarly, Kant would not allow exploitation even if it is generally life-saving when compared to not allowing the exploitation (since without sweatshops there would be more starvation than there would be work-related deaths with sweatshops).

The issue of calculation: Util vs Kant

Utilitarianism faces the issue of calculation, but Kant does not.

Utilitarianism seems to require:

  • That we know can the future consequences of all the possible actions we could take
  • That we can make incredibly complex calculations about the range of possible actions, sometimes under time-constraints.
  • That these calculations include the objective measuring of subjective mental states like pleasure and pain.

All three of these conditions are plagued with difficulty, and yet each seems absolutely necessary if we are act on the principle of utility.

Application of this issue to Business ethics:

CSR: The effects of CSR are difficult to predict, both in terms of how much they might negatively cost a business and how much it might positively affect society or the environment.

Globalisation: the effects of globalisation are very difficult to predict. It’s hard to say how much poverty it might prevent through off-shore outsourcing, or conversely how much it might corrupt markets due to creating monopolies and buying off politicians.

Whistleblowing: It’s possible that whistleblowing might cause a company to go bankrupt, causing unhappiness for its employees, or the business might not. It’s very hard to predict that, but then it’s very hard to know whether whistleblowing would maximise happiness.

Critical comparison with Kant: Kant does not have this issue. In fact, Kant makes this criticism himself when defending himself against the murderer at the door scenario, claiming that we cannot predict or control consequences and therefore cannot be responsible for them. All we are morally responsible for is doing our duty, therefore.

Arguably Kant’s blanket ban on all actions which treat people as a mere means is the better approach than Utilitarianism’s seemingly futile suggestion that we try and calculate which cases will have good or bad consequences.

Bentham’s response to issues with calculation. Bentham claims that an action is right regarding “the tendency which it appears to have” to maximise happiness. So, we actually only need to have a reasonable expectation of what the consequences will be based on how similar actions have tended to turn out in the past.

Mill’s response to issues with calculation. Mill’s version of Utilitarianism seems to avoid these issues regarding calculation. We do not need to know the future, nor make incredibly complex calculations, nor measure subjective feelings. We only need to know the secondary principles that our civilisation has, through its collective efforts and experience, judged to be those best conducive to happiness. We then need to simply follow those principles as best we can. For Mill, the moral rightness of an action depends on maximise happiness, but because of the immense complexity of that, our only moral obligation is to just do our best to follow the principles geared towards producing happiness of our society, which are themselves only the best current principle that our current stage of civilisation and culture has managed to develop.

In cases of a conflict of rules, Mill adopts the same approach as Bentham and says we must judge the individual action by the principle of utility, though Mill adds that we should consider the quality not only quantity of the pleasure it could produce. He agrees with Bentham’s point that when judging individual actions, we can base our calculations on what we know of the ‘tendencies’ actions have. We do not need to exactly predict their consequences.

The issue of the value of consequences: Util vs Kant

Kant and the issue of failing to appreciate the value of consequences. Kant faces this issue, but Utilitarianism does not. Sometimes actions have very good or bad consequences and Kant seems wrong for not thinking that morally relevant.

The murderer at the door example attempts to show the downside of Kant’s rejection of consequences having moral significance.  

Whistleblowing – some cases of whistleblowing have very bad consequences – at least resulting in misery but sometimes even resulting in death (if the workers lose their job and starve). Just like with lying, Kant would say we must always tell the truth, even if it ends up killing people.

Imagine that a business employed a genius but sadistic scientist who was likely to cure some terrible disease that affected millions. However, they were treating their workforce in some horrible way, but there was no way to gain the valuable research without allowing the exploitation. A Utilitarian might reason that we should allow the exploitation because the happiness gained would far outweigh the suffering, just like lying to the murderer at the door is justified for its good consequences.

Globalisation & CSR can each have very good consequences, even when allowing exploitation. First world countries get very cheap products and third world countries get jobs.

Kant’s response: we cannot predict/control consequences.

However: we can to some degree and therefore to that degree we are morally responsible for consequences and they do matter ethically to the rightness or wrongness of an action.

The issue of intentions: Util vs Kant

Utilitarianism faces the issue of intentions and character, but Kant does not.

Utilitarianism only views the consequences of actions as good, not the intention or character (integrity) of the person who performs them. This goes against the intuition that a person can be a good person and can have good/bad intentions. Consequentialist theories seem unable to accept that because for them, it is only consequences which are good or bad, not intentions/character.

It is part of Kant’s theory that your moral intention is relevant to the goodness of your action, so he does not face this issue.

Application of this issue to business ethics:

CSR: Applying this to business ethics, it looks like Utilitarianism would not care about a business merely engaging in CSR for PR out of greed for profit or even for deception to distract from their other unethical practices. So long as the business and its CSR activities overall have good consequences, Utilitarian reasoning seems to be committed to it being morally good.

Globalisation: Globalisation could

Whistleblowing: A person whistleblowing might only do it in order to bring down a rival company

Kantian ethics would not have this issue because for Kant good intention is essential. We must act out of duty (“ duty for duty’s sake” ) in order for our action to be morally good.

Mill responds firstly that a person’s character does matter because it will determine their future actions. The stabber should be condemned for his motive because that will prevent them stabbing others in future. The priest should be forgiven because he’s not likely to do anything bad in the future as his character is good. Secondly, Mill argues that having a good character helps you become happy. Motives and character therefore do matter ethically, though not intrinsically but only insofar as they result in good consequences, in line with consequentialism.

So, Mill might argue that if the intention behind CSR involved greed or deception then that might have bad consequences overall or in the future and therefore can be thought of as morally wrong.

Kant would not be satisfied by this response, however, as he would maintain that it was the greed and deceptiveness itself that should be regarded as morally deficient.

Leads to the critique of Kant – that it is impractical to think humans can act without emotion. Utilitarianism does not have this issue – in fact it accepts that avoiding negative feelings and achieving positive feelings is our ultimate desire/end.

Adam Smith, the ‘father’ of capitalism

Adam Smith was an economist and philosopher sometimes called the father of capitalism. Smith’s argument is that when people follow their rational self-interest competing in a free market, the result is economic prosperity which benefits society and general happiness. In a free market, people gain money by providing a product or service that others are willing to pay for. Competition encourages productivity and innovation resulting in economic growth. Free market capitalism harnesses self-interest for societal gain, as if guided by an ‘invisible hand’. This is the origin of the view that good business decisions have positive social results and is thus linked to good ethics.

Utilitarianism on capitalism & business ethics

Bentham was influenced by Adam Smith. Bentham and Mill mostly agreed with Smith’s reasoning, accepting that in general happiness is maximised by leaving markets free. However, they both thought that restrictions needed to be placed on the market in some cases to direct it towards maximising happiness where it failed to. Bentham thought the government should guarantee employment and impose a minimum wage. Mill thought that the government should step in to aid in cases of market failure by providing their own products or service, such as education, to encourage competition if the market failed to. Mill even thought that worker-owned co-ops were long-term the best model for ownership structure.

The Utilitarian view then is that CSR is generally good and if globalisation detracts from CSR then it is generally bad.

Kant on capitalism & business ethics

Kant was influenced by Adam Smith and agreed that the division of labour was important for progress. Capitalism is based on autonomous market interactions and contracts between employers and employees. It involves individuals pursuing their rational self-interest. Kant’s ethics accords with this as it depicts the rational individual as the centre of moral responsibility. When contractual arrangements and market interactions involve the treatment of people by each other as ends, they are good.

However, when either business practices or the macro effects of capitalism result in people being treated as mere means or otherwise violate duty, it seems that Kant would think that immoral, even if it was good for the profit of the business.

The Kantian view then is that CSR is our duty and globalisation which undermines CSR is wrong.

M. Friedman vs Kant & Utilitarianism on CSR and globalisation. Milton Friedman (libertarian) claims that the only responsibility of a business is to “make as much money for their stockholders as possible”.

Friedman therefore rejects the approach of both Kant and Utilitarianism. He would not accept that restricting markets or businesses is acceptable, whether to maximise the general happiness or to ensure the treatment of stakeholders as ends.

Free market capitalism is the result of freedom, voluntary co-operation. Any attempt to control markets, even with the best of intentions, requires force and power. Friedman argues that no one is angel-like enough to wield that power without becoming corrupted.

The only escape from extreme poverty is capitalism and largely free trade. Societies which depart from that are worse off. Evidence which supports Freidman’s case is that the percentage of the world in extreme poverty dropped from 70% in 1960 to 17% in 2012.

Freidman further argues that free market capitalism is best for economic growth. Reducing profits only reduces the incentive to innovate.

Evidence for Friedman’s point is that northern Europe might be more equal than the USA, but it is less innovative. There’s a reason silicon valley is in America.

The problem for Freidman is that he thinks freedom is good, yet freedom leads to monopolies, especially under globalisation. Monopolies actually end up undermining innovation and freedom. The only way to ensure that the market remains free is government intervention and control. Friedman accepted this, but in that case, he has to accept giving the government power.

A free market is an inherently unstable thing. Money is power. Successful corporations will use their money to rig the market in their favour. The only way to prevent governments from being corrupted is by preventing businesses from having the power to corrupt governments.

Adam Smith’s arguments made much more sense in his time when capitalism was just starting out. The macro-effects of globalised capitalism are disastrous for the environment and for the free market itself.

So, it looks like Kant and Utilitarianism are right that some restrictions should be placed on markets.

Possible exam questions for Business ethics

Easy How useful is utilitarianism in dealing with issues in business ethics? Assess whether Kantian ethics applies successfully to business ethics What does it take for business to be ethical?

Medium Does the principle of utility lead to ethical business? ‘the categorical imperative leads to ethical business’ – Discuss. Is Corporate social responsibility just ‘hypocritical window-dressing covering the greedy profit motive of business. Can human beings flourish in the context of capitalism and consumerism? Assess whether corporate social responsibility makes business ethical To what extent is whistle-blowing ethical? How successful is Kantian ethics at dealing with the issue of (CSR/Whistleblowing/Globalisation)? How helpful is Utilitarianism at dealing with the issue of (CSR/Whistleblowing/Globalisation)?

Hard Assess whether globalisation encourages or discourages the pursuit of good ethics as the foundation of good business. Is good ethics good business? Should whistle-blowing be considered good ethical business practice?

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The Case of Coyote V. Acme: Analyzing a Cultural Icon

This essay is about the hypothetical case of “Coyote v. Acme,” where Wile E. Coyote sues the Acme Corporation for the defective products that consistently fail him in his pursuit of the Road Runner. The essay explores how this scenario humorously critiques consumer culture and corporate responsibility. It highlights the absurdity of product liability issues through the exaggerated failures of Acme’s gadgets and Coyote’s relentless persistence. The essay also discusses themes of accountability, justice, and the relatable nature of Coyote as an underdog. The cultural impact of this satirical scenario extends beyond cartoons, serving as a commentary on consumer rights and corporate ethics.

How it works

In the realm of animated entertainment, few characters are as enduringly popular as Wile E. Coyote and his perpetual pursuit of the Road Runner. Central to this enduring appeal is the frequent and spectacular failure of Coyote’s elaborate schemes, often involving products from the fictional Acme Corporation. The humorous and exaggerated mishaps have led to the satirical “Coyote v. Acme” case, where Wile E. Coyote hypothetically sues Acme for the countless defective products that have caused him endless physical harm and humiliation.

The premise of “Coyote v. Acme” taps into a rich vein of humor and satire, cleverly critiquing consumer culture and corporate responsibility. The Acme Corporation, portrayed as a ubiquitous supplier of fantastical gadgets, is emblematic of the all-purpose, all-promising nature of many real-world companies. The fictional lawsuit is not just about the failures of these products but serves as a broader commentary on the sometimes misleading promises made by manufacturers and the frustrations of the consumers who rely on them.

One of the reasons this hypothetical case resonates so strongly is its grounding in the absurdities of product liability. In real life, consumers have the right to expect that products will function as advertised and not cause harm when used correctly. Wile E. Coyote’s repeated injuries and failures, despite following the product instructions to the letter, highlight the gap between consumer expectations and reality. This exaggeration serves to underscore the real-world frustrations when products fail to meet their advertised standards, leading to inconvenience, expense, and even physical danger.

Moreover, the character of Wile E. Coyote embodies the quintessential underdog. His relentless pursuit of the Road Runner, despite constant setbacks, engenders a mix of sympathy and amusement. Each Acme product failure not only thwarts his plans but also accentuates his persistence and ingenuity. This blend of characteristics makes Coyote a relatable figure, as many people can identify with the experience of trying, failing, and trying again in the face of repeated obstacles.

The humor in “Coyote v. Acme” is also rooted in its exaggerated physical comedy. The animation exploits the principles of cartoon physics, where characters can survive and rebound from extreme impacts that would be fatal in reality. This allows for a comedic exploration of failure without the grim consequences that would accompany such accidents in real life. The absurdity of Acme products—rocket skates, spring-loaded shoes, and dynamite sticks—contributes to the over-the-top scenarios that are both entertaining and thought-provoking.

Furthermore, “Coyote v. Acme” touches on themes of accountability and justice. In a real legal context, the case would delve into issues of negligence, product safety, and corporate ethics. The satire lies in the absurdity of Coyote’s unwavering trust in Acme, despite an endless string of defective products. It raises questions about the extent to which companies should be held accountable for their products and how much responsibility falls on the consumer for using those products. The fictional lawsuit serves as a playful yet pointed reminder of the importance of consumer protection laws and the legal frameworks that exist to hold companies accountable for their goods.

The cultural impact of Wile E. Coyote and Acme products extends beyond the cartoons themselves. They have become symbols in discussions about product liability and corporate ethics. The scenario of “Coyote v. Acme” has been referenced in legal education, humor essays, and even courtrooms to illustrate points about consumer rights and corporate responsibility. This enduring relevance speaks to the powerful way in which humor and satire can encapsulate complex legal and ethical issues in a manner that is accessible and engaging.

In summary, the hypothetical case of “Coyote v. Acme” is a brilliant example of how animated entertainment can provide more than just laughs. It offers a satirical critique of consumer culture, highlights the frustrations associated with product failures, and underscores themes of persistence and resilience. Through the lens of exaggerated humor and cartoon physics, it brings to light important questions about corporate accountability and consumer rights. The story of Wile E. Coyote and his misadventures with Acme products continues to resonate, reflecting the timeless nature of its themes and the universal appeal of its humor.

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Ethics and Governance. Corporate Social Responsibility

“There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits”

The integrated concept of ‘profit’ making refers to the fact that our economy is treated as an ingredient of the social system and when integrated in society, it encompasses the economy to be as one of its constituents. Only then, such an economic agent is assumed to be a complex social actor, and profit-making is a multiplex social action, the ends and motivations of which are diverse in that they are both rational and non-rational (Zafirovski, 1999).

When we talk about social responsibility of a business, we mean that side of economics which is concerned with the production and distribution of goods and services for market exchange, thereby increasing the profit motive and contributing to social betterment.

Using business resources (capital or labour) for other purposes lessens the amount available for the business’s economic mission and is thus an act of irresponsibility to society. However the point of conflict in social responsibility is the ethical and discretionary categories which represents the opposition to discretionary social responsibility on the right but is joined by opponents on the left who make the same argument for different reasons.

For example Friedman (1971) believed that the credit for general rise in the quality of living standards in the West goes to the then capitalists who have been allowed relative freedom to pursue profit maximisation. Many other economists and theorists believe that the common good is best served by business people focusing on the financial return on capital investment. In other words, the only responsibility of any business towards a society is to utilise its resources in order to maximise profit margin. It is only when they channel business resources, including their time and expertise, into non business, discretionary social responsibility areas; they fail to fulfil their primary responsibility to society.

The concept of ‘doing good by doing well’, or progressing from ‘doing good to doing better’, in the area of social responsibility simply means that social responsibility is and should be handled as a corporate investment that will result in a long-run corporate profit and not a corporate expense. Most businesses would probably like to achieve this goal, but for many businesses this may be easier said than done.

Before the ‘doing good to doing better’ concept can work it must have the complete blessing and support of top management and be inculcated and totally supported all the way down the organisational ladder. Studies have shown that this may take several years to accomplish as it is a long-term educational process. If everyone in the company does not support the concept, it is subject to failure anywhere along the line. If outside stakeholders are not properly educated and do not understand the concept and processes involved and if they do not agree with it then the entire program can falter and even fail.

Keeping the company in business in order to keep people employed and still generating a reasonable profit for its stockholders are also primary concerns and top priorities of the company. Large companies, with large planning, policy, and strategy staffs, may be in a better position to make the ‘doing good to doing better’ concept work. On the other hand, medium-sized and smaller companies with limited resources may have serious problems in applying this concept of social responsibility for they have limited resources to utilise.

Today it is a common notion to accept that business firms have social responsibilities that extend well beyond what in the past was commonly referred to simply as the ‘business economic function’ (Angelidis & Ibrahim, 1993). However in earlier times managers, in most cases, had only to concern themselves with the economic results of their decisions. Today managers are bound to consider and weigh the legal, ethical, moral, and social impact and repercussions of each of their decisions in the name of socially responsible (Anderson, 1989, p. 15). Most of the organisations do not consider this area of social responsibility as a major or separate functional area for the reason that usually it is believed that businesses actions’ in this area are limited to be considered vested in an individual or small staff.

When evaluating these conflicting demands and their impact upon the revenue and profitability of the company, management must maintain a degree of detachment. Professional decisions must be relatively free of hypocrisy or self-deception. This is no easy task because a company believes to be engaged in philanthropy because others need money, as though a corporation were a well-heeled uncle who should spread his good fortune around the family. For the most part, corporations give because it serves their own interests or appears to.

Most companies find it no simple matter to formulate and implement socially responsible actions and programs. However, all companies must become concerned and involved in this area where every one must understand and play her part in contributing towards social responsibility. To operate without major disruptions, a company must at all times be in compliance with legal requirements international, federal, state, and local. It must develop, establish, implement, and police a code of ethical and moral conduct for all members of its organisation (Maignan & Ralston, 2002).

In the area of philanthropic activity, where there is considerably more latitude of operations in how, when, where, and even if the company or division wants to contribute money or other resources to ‘worthy causes’, the firm must deliberate about and resolve many questions prior to establishing fair and workable guidelines. Unlike past which was governed by ‘public be damned’ attitudes, today there is more awareness in consumers and general public, therefore such attitude is of no relevance.

With a more active government and populace, company social responsibility has continued to gain greater concern and prominence over the past several decades. Social responsibility will continue to take more time, money, consideration, and concern in all future management decisions and actions (Anderson, 1989, p. 16). Diverse managerial skills, ranging from simple to highly complex, are required in all of these areas of social responsibility.

Social responsibility of a business in actual is upon those business managers who, in addition to their irresponsibility to society, are neglecting their duty to the business owners. In effect, managers who contribute business resources to social causes are taxing the business owners without their consent or to put it more bluntly, they are stealing from owners. Therefore managers are bound by an implicit contract to use business resources for profit maximisation purposes only. Beyond economic responsibilities, managers must obey the law and do business by the rules of the free enterprise system, e.g. free competition and fair pricing (Besser, 2002, p. 36).

On the national level, economic rewards for discretionary social responsibility are favourable treatment by social investors. People who consider themselves social investors base their investment choices on the social responsibility of companies, thus partially countering the impact of short-term investors whose only concern in making investment decisions is quarterly profit statements (Besser, 2002, p. 36).

In some cases, however, it may be costly to engage in activities that can raise profits at an adjacent stage. Economies of scale, for example, may deter the replication of retail premises and production facilities. Another consideration is that the established firms may enjoy goodwill with their customers or suppliers. The simple redistribution of profit from adjacent stages cannot be the motivation for integration in this case, however, for the monopoly earnings of the incumbent firms will be capitalised in their acquisition price. The motivation is rather that bluffing not only redistributes profit but distorts the coordination of output too.

For example, when each party is dishonestly claiming adverse conditions, output may be set at a level below that which would maximise the joint profits of all the parties involved. With integration into a single enterprise, prices no longer redistribute profits, and a strategic advantage to bluffing no longer exists. Information does not have to be encoded in offer prices any more; it can be supplied directly as factual information to the headquarters of the firm (Casson, 2001, p. 18).

Social responsibility also follows some ethical grounds. If the corporate objective is purely to maximise the owner’s profit, however, then it is difficult to see why they should subscribe to it on ethical grounds. But if the maximisation of profit is represented as something instrumental to the pursuit of a morally higher goal then individual self-interest may well be suppressed. More precisely, when self-interest is construed more broadly in terms of the satisfaction of helping to achieve this higher goal, material self-interest carries much smaller weight.

An important policy implication regarding social responsibility is that social institutions are of enormous economic significance as they affect both the absolute level of performance and the comparative performance of different sectors. Since these institutions have moral rather than profit objectives, the strength of the moral commitment of their founders is probably more important to the national economy than their conventional entrepreneurial skills.

An economy needs to encourage social leadership in order to build and maintain social institutions that engineer trust. A society that emphasises the pursuit of profit to the exclusion of other objectives is therefore likely to suffer in the long run as it will damage these institutions and so be unable to exploit contractual arrangements that require high levels of trust (Casson, 2001, p. 145). Profitable business does not therefore require an exclusive emphasis on the pursuit of profit but rather a balanced moral system in which profit considerations guide the choice of efficient means by its firms and business networks, but which is ultimately driven by the not-for-profit ends of its social institutions.

Thinking along the lines of simple cause-and-effect in business, this would appear to be quite straightforward as social responsibility is simply a matter of minimising use of resources and maximising the amount of value created. Put briefly, a maximum productivity level should be the aim in every situation but it’s not quite as simple as that. Quantity is not always the same as quality, be it a question of sugar in your coffee, drugs to treat illness, or profit in business (Hansen & Christensen, 1995, p. 51).

With social responsibility of a business comes defining feature of economic globalisation which is the evolution of new footloose transnational corporations possessing superior management mechanisms of control and coordination.

According to the economic globalisation paradigm, MNCs (multinational corporations) truly compose of global citizens that do not identify with any nation. Hirst and Thompson (1999) use data from the annual reports of the world’s largest corporations to ascertain whether they are truly devoid of economic bias toward their mother country. The researchers note the difficulties of cross-cultural comparisons as companies report the same activities differently within the same country, and legal reporting procedures can vary considerably from country to country.

Nevertheless, analyses of the location of assets, sales, and profit generation leads them to conclude, that Multinational corporations still rely on their home base as the centre for their economic activities, despite all the speculation about globalisation. In other words, although these companies operate in international markets, they remain oriented toward their mother country in terms of sales, assets, and as the locus of innovation and leadership.

A company can consider variable capital as the source of surplus value for a perfectly sensible reason. The employer possesses a right to command the worker at the point of production, ensuring that materials are used in an economical way, to earn a profit. Often a company while purchasing an intermediate good, thinks of helping an employer extract surplus value from the labor this way employed at the job site, but the intermediate good, in itself, does not produce surplus value (Perelman, 2000, p. 66).

Management’s emphasis on profit improvement mean that internal competition for the same funds slated for social responsibility investment will become more intense among the internal managers. Keeping internal company priorities straight and yet having a sense of social responsibility thus becomes a difficult balancing act. The ideal point on the social responsiveness grid would be the upper right hand quadrant, where both social concern and economic and profit concern would be maximised.

Anderson W. Jerry, (1989) Corporate Social Responsibility: Guidelines for Top Management : Quorum Books: New York.

Angelidis P. John & Ibrahim A. Nabil, (1993) “Social Demand and Corporate Supply: A Corporate Social Responsibility Model” In: Review of Business . Volume: 15. Issue: 1.

Besser L. Terry, (2002) The Conscience of Capitalism: Business Social Responsibility to Communities : Praeger: Westport, CT.

Casson Mark, (2001) Information and Organisation: A New Perspective on the Theory of the Firm : Oxford University Press: Oxford, England.

Hansen Jon Lund & Christensen Per. A, (1995) Invisible Patterns: Ecology and Wisdom in Business and Profit : Quorum Books: Westport, CT.

Maignan Isabelle & Ralston A. David, (2002) “Corporate Social Responsibility in Europe and the U.S.: Insights from Businesses’ Self-Presentations” In: Journal of International Business Studies . Volume: 33. Issue: 3.

Perelman Michael, (2000) The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation : Duke University Press: Durham, NC.

Zafirovski Milan, (1999) “Profit-Making as Social Action: An Alternative Social-Economic Perspective” In: Review of Social Economy . Volume: 57. Issue: 1.

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A Big Plot Twist at OpenAI

Ilya Sutskever, a co-founder at the artificial intelligence start-up and one of the world’s leading researchers, is out, and Sam Altman’s control looks firmer than ever.

By Andrew Ross Sorkin ,  Ravi Mattu ,  Bernhard Warner ,  Sarah Kessler ,  Michael J. de la Merced ,  Lauren Hirsch and Ephrat Livni

A man in a suit stands up with his right hand clinched and held aloft while a seated man looks up at him.

Behind a big shake-up

A day after OpenAI announced major updates to its ChatGPT chatbot , the company said its chief scientist and co-founder was leaving.

There were signs that Ilya Sutskever would quit , six months after he helped lead the rebellion that briefly ousted Sam Altman as OpenAI’s C.E.O. (He hasn’t been spotted in the office since that episode.) But it also raises questions about the future of a leading developer of generative A.I.

“OpenAI would not exist without him and certainly was shaped by him,” Altman told The Times about Sutskever. It’s hard to understate Sutskever’s importance to OpenAI: He helped found it in 2015 along with Altman and others including Elon Musk, and his stature as a leading researcher in neural networks gave the fledgling company instant credibility.

But Sutskever’s presence at OpenAI may have become untenable. In November, when he was a board member, Sutskever teamed up with other directors to fire Altman, accusing him of not being “consistently candid in his communications.” After a slew of OpenAI employees resigned in protest, he had a change of heart, effectively stepping down from the board and supporting Altman’s return.

After Altman’s reinstatement, Sutskever has stayed quiet publicly — though he did spearhead the creation of a so-called Super Alignment team to help ensure that OpenAI’s products didn’t harm humanity. (Jan Leike, who ran that team with Sutskever, also resigned on Tuesday and will be replaced by another company co-founder, John Schulman.) Meanwhile, OpenAI had already effectively elevated Jakub Pachocki as chief scientist.

Sutskever’s exit is another sign that Altman is in the driver’s seat. While OpenAI is expanding its board after last year’s turmoil, Altman remains the company’s most prominent figure. (Pachocki and Schulman are regarded as his allies.)

While Sutskever has worried about A.I.’s apocalyptic potential, his statement on Tuesday said he was confident that the company would build artificial general intelligence — A.I. as sophisticated as the human brain — “that is both safe and beneficial.” That’s in some ways a validation of Altman’s approach of speedy innovations and commercialization.

Where will Sutskever go? “I am excited for what comes next — a project that is very personally meaningful to me about which I will share details in due time,” Sutskever said in his statement, without providing details.

One possibility some have raised is joining Musk, who’s credited with recruiting Sutskever to OpenAI . Musk has defended Sutskever’s initial effort to oust Altman, and in December he offered his former colleague a job at his xAI start-up .

That said, Sutskever co-signed an OpenAI blog post that rebutted Musk’s breach-of-contract lawsuit against the company, suggesting a break between the two.

In other A.I. news: A bipartisan group of senators has called for the U.S. to spend $32 billion to bolster American leadership in the tech but held back on revealing plans on how to regulate it.

HERE’S WHAT’S HAPPENING

The S&P 500 approaches a record as investors await key inflation data. The Consumer Price Index report comes out at 8:30 a.m. Eastern (as does retail sales data), with economists forecasting that inflation moderated slightly last month . A hotter-than-expected report could set up a volatile trading day given warnings by Jay Powell, the Fed chair, that stubborn inflation may force the central bank to keep interest rates higher for longer .

Boeing violated a settlement over the 737 Max, the Justice Department says. The agency accused the plane maker of failing to “design, implement and enforce” a compliance and ethics program to prevent and detect violations of U.S. fraud laws in its operations, a key condition of a 2021 settlement deal struck after two deadly 737 Max plane crashes. Boeing said it believed that it was in compliance with the agreement.

Vanguard names a former BlackRock executive as its new C.E.O . Salim Ramji, who ran BlackRock’s exchange-traded funds business, will succeed Tim Buckley , who is set to retire from the $9.3 trillion fund manager. Ramji was once considered a potential successor to BlackRock’s chief executive, Larry Fink.

As A.I. search ramps up, publishers worry

Search is a cash cow for Google’s parent, Alphabet, helping propel the company into a $2 trillion giant. This dominance is at the heart of one of the biggest antitrust cases in a generation , and the company’s lock on the market has long bedeviled web publishers’ ad-focused business model.

Artificial intelligence is now being added to the mix.

Google this week will make a significant upgrade to its $175 billion search business. It’s introducing a product called AI Overviews that uses generative A.I. to supercharge its search results. The move comes as the Big Tech arms race to commercialize the technology — especially through search — goes into overdrive.

Publishers are worried about the fallout. AI Overviews will give more prominence to A.I.-generated results, essentially pushing website links farther down the page, and potentially depriving those non-Google sites of traffic. “Some people are going to just get bludgeoned,” Ross Hudgens, the C.E.O. of Siege Media, a search engine optimization consulting company, told The Washington Post .

One much-cited statistic: Tweaks like this could cut search engine traffic by 25 percent by 2026.

Google has downplayed the concerns. Liz Reid, its vice president of search, wrote in a blog post that so far it had found that “the links included in A.I. Overviews get more clicks.” The company did not say, however, whether the change would translate to more traffic for publishers, The Times’s Kevin Roose notes .

Does search needs news? A recent study by researchers at the University of Houston and Columbia University estimated that Google and Meta owed U.S. publishers up to $13.9 billion a year for the value that they bring to search results.

Google has pushed back against the study , arguing that less than 2 percent of all searches are news-related and that the company already sends billions of visitors to publishers’ sites.

A.I. has divided a media industry that’s making huge job cuts and retrenching. Executives and journalists are fearful that the technology could lead to the mass theft of their work. Some publishers have struck licensing agreements with Big Tech, as The Associated Press did with OpenAI.

By contrast, The New York Times and a number of other newspapers, including The New York Daily News and The Chicago Tribune, have sued OpenAI and Microsoft , accusing them of copyright infringement.

The F.D.I.C. chair faces a fight on the Hill

The embattled chair of the Federal Deposit Insurance Corporation can expect a tough ride on Capitol Hill on Wednesday in his first public testimony since a scathing report revealed that sexual harassment and discrimination ran rampant at the agency.

Martin Gruenberg , has rejected calls to quit, but the pressure isn’t letting up on a regulator that’s also facing off with big banks over a proposed new capital requirement rule.

Gruenberg has apologized, but doesn’t seem ready to fall on his sword. Cleary Gottlieb, a law firm, last week lifted the lid on a toxic culture at the agency. The firm was hired after a Wall Street Journal investigation that detailed reports of senior bank examiners and other officials sending junior female employees nude pictures of themselves and taking them to brothels on work trips. Gruenberg plans to say that he took “full responsibility” and was “committed to addressing these issues,” according to prepared remarks.

Top Republicans want him out. Gruenberg, a Democrat, has led the agency for 10 of the past 13 years, and President Biden reappointed him for a second term in 2022. Representative Patrick McHenry, a Republican and the chairman of the Financial Services Committee, wants him to go .

But Representative Maxine Waters, the ranking Democrat on the committee, and Senator Sherrod Brown of Ohio, the chairman of the Senate Banking Committee before which Gruenberg will testify on Thursday, back him.

New banking rules may be one reason for the split. The so-called Basel III endgame rules would force lenders with more than $100 billion in assets to set aside more capital to deal with any shocks, like the regional banking crisis last year. Banks say it would limit competition and crimp their ability to lend; Republicans also oppose the rule.

Removing Gruenberg would mean that Travis Hill, a Republican and the F.D.I.C.’s vice chair, would step up, and Democrats would lose their majority.

Gruenberg can likely thank politics for him keeping his job — for now. “I think it would be very difficult for the C.E.O. of a public company to survive this scandal, particularly because it appears to be pretty widespread and longstanding,” Jonathan Macey, a professor of corporate law at Yale, told The Times.

A legal fight to take on hate

The fights that have erupted over the war in Gaza have forced some in corporate America to reassess their own relationships with universities and their role in a national conversation. Some have withheld donations from Ivy League schools and others have attacked the curriculum .

The law firm Paul, Weiss, Rifkind, Wharton & Garrison is taking a different approach by creating a center to tackle discrimination through litigation.

The Center to Combat Hate came together in the past six months. It was officially introduced last night at an event at Paul Weiss’s office in Midtown. The center will partner with civil right organizations and educational institutions to pursue impact litigation, lawsuits that aim to influence social policy, with a focus on civil rights.

The center will be led by two partners. Daniel Kramer became involved in civil rights litigation after his brother-in-law was killed in an attack at the Tree of Life synagogue. He was part of the team hired by the District of Columbia attorney general to file a civil lawsuit against the Proud Boys and Oath Keepers over the Jan. 6, 2021, attack on the Capitol.

Karen Dunn, a chair of the firm’s litigation department, led the team of lawyers that won $25 million in a civil lawsuit filed against the promoters of the Charlottesville, Va., white power rally . Dunn is also well-known in Democratic politics for being part of debate preparation teams for President Barack Obama and Vice President Kamala Harris.

Many firms are looking to stay out of political fights. But Kramer was confident that Paul Weiss’s clients wouldn’t be put off. “We don’t have any clients that are pro-hate,” Kramer told DealBook, when asked whether he was worried the center would be divisive.

In other news: Harvard reached a deal with student protesters to clear their encampment.

THE SPEED READ

The real estate mogul Frank McCourt, who has called for a more decentralized and privacy-focused internet, said he planned to bid for TikTok’s U.S. business . (Semafor)

The restaurant chain Red Lobster is said to be preparing to file for bankruptcy protection as soon as next week to cut its debt load. (WSJ)

TikTok creators sued the U.S. government over a newly enacted law that would force the video app’s divestment by its Chinese parent. The group’s legal fees are being paid by the company. (NYT)

Jacob Helberg, an adviser to tech C.E.O.s and the husband of the prominent investor Keith Rabois, has donated $1 million to Donald Trump’s re-election efforts. (WaPo)

Best of the rest

“Walmart’s Reign as America’s Biggest Retailer Is Under Threat” (WSJ)

To celebrate Mark Zuckerberg’s birthday, the Meta C.E.O.’s wife recreated key locations like his college dorm room — with a guest appearance by the fellow Harvard dropout Bill Gates. (@Zuck)

We’d like your feedback! Please email thoughts and suggestions to [email protected] .

An earlier version of this article misstated the nature of the Justice Department's complaint against Boeing. It is for failures related to a compliance and ethics program, not only an ethics program.

How we handle corrections

Andrew Ross Sorkin is a columnist and the founder and editor at large of DealBook. He is a co-anchor of CNBC’s "Squawk Box" and the author of “Too Big to Fail.” He is also a co-creator of the Showtime drama series "Billions." More about Andrew Ross Sorkin

Ravi Mattu is the managing editor of DealBook, based in London. He joined The New York Times in 2022 from the Financial Times, where he held a number of senior roles in Hong Kong and London. More about Ravi Mattu

Bernhard Warner is a senior editor for DealBook, a newsletter from The Times, covering business trends, the economy and the markets. More about Bernhard Warner

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Michael de la Merced joined The Times as a reporter in 2006, covering Wall Street and finance. Among his main coverage areas are mergers and acquisitions, bankruptcies and the private equity industry. More about Michael J. de la Merced

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  1. Business Ethics and Social Responsibility Essay

    Ethics and social responsibility play an important role in business management. Organizations, both public and private, feel the need to incorporate corporate responsibility in their organizational culture. Ethics deals with knowing what is wrong and what is right. Business ethics encompasses analyzing ethical decisions, beliefs, and actions ...

  2. What Are Business Ethics & Their Importance?

    Business ethics are principles that guide decision-making. As a leader, you'll face many challenges in the workplace because of different interpretations of what's ethical. Situations often require navigating the "gray area," where it's unclear what's right and wrong. When making decisions, your experiences, opinions, and perspectives ...

  3. Social responsibility of business: 50 years of thinking

    The statement outlined a modern standard for corporate responsibility. On the 50th anniversary of Friedman's landmark definition, we look at how the conversation on corporate purpose has evolved. The pre-1970 conversation. Even before Friedman's essay published, the social responsibility of business was a topic of discussion.

  4. Business ethics and corporate social responsibility

    Corporate social responsibility (CSR) has become a mainstream business practice, attracting broad attention from business, consumers, academics, and policymakers, leading firms to account for the social and environmental footprints of their activities.

  5. Corporate Social Responsibility Free Essay Examples And Topic Ideas

    24 essay samples found. Corporate Social Responsibility (CSR) represents a business model where companies integrate social and environmental concerns in their business operations and interactions with stakeholders. Essays on CSR could explore its evolution from philanthropic initiatives to a core strategic component of business operations ...

  6. Corporate Social Responsibility

    Corporate social responsibility (CSR) is a legitimate responsibility to society, based on the principle that corporations should share some of the benefit that accrues from the control of vast resources. CSR goes beyond the legal, ethical, and financial obligations that create profits. In the research literature, corporate social responsibility ...

  7. Business Ethics And Corporate Social Responsibility Essay

    This is known as corporate social responsibility. A code of conduct is a set of organizational rules or standards regarding organizational values, beliefs, and ethics, as well as matters of legal compliance that govern the conduct of the organization and its members. The law is the key starting point for any business.

  8. 5 Examples of Corporate Social Responsibility

    5 Corporate Social Responsibility Examples. 1. Lego's Commitment to Sustainability. As one of the most reputable companies in the world, Lego aims to not only help children develop through creative play, but foster a healthy planet. Lego is the first, and only, toy company to be named a World Wildlife Fund Climate Savers Partner, marking its ...

  9. Ethics and Corporate Social Responsibility

    Corporate social responsibility requires businesses to behave ethically and promote economic development and at the same time improve the quality of its personnel together with their families, community and the society at large (Sims, 2003, p43; Kotler & Lee, 2005, p. 7). Corporate social responsibility is a social obligation.

  10. What Is CSR? Corporate Social Responsibility Explained

    Corporate social responsibility, often abbreviated "CSR," is a corporation's initiatives to assess and take responsibility for the company's effects on environmental and social wellbeing. The term ...

  11. Business Ethics and Corporate Social Responsibility

    Such an investment in social responsibility and business ethics which brings about productivity and profitability is termed as sustainable value. Sustainable value is the value given to the shareholders and stakeholders, which can be expressed in monetary terms and which is increasingly rejecting the idea that investing in corporate social ...

  12. Ethics and Corporate Social Responsibility in Business

    Ethics can be defined as the moral principles that govern the way an organization operates, and issues range from corporate governance to bribery. CSR refers to the involvement of a business in social issues that promote the welfare of the society, above and beyond the need for increased profits. In that regard, it is important for ...

  13. The Past, History, and Corporate Social Responsibility

    In all, this essay and the thematic symposium it precedes strive to deepen and broaden the salience of the past and history for thinking about business ethics and business responsibilities. An emerging body of research recognizes the importance of the past and history for corporate social responsibility (CSR) scholarship and practice.

  14. Business Ethics and Corporate Social Responsibility Essay ...

    Open Document. Business ethics and corporate social responsibility have become an increasing area of focus for organizations today. However, this has not always been the case in the American business environment. Chapter three "Conducting Business Ethically and Responsibly" (R.W. Griffin & R.J. Ebert, p.56 - p.87) concentrates on the ...

  15. Essay on Business Ethics and Social Responsibility

    Social responsibility is the application of a set of ethics to a business or organization. Edwin Epstein's definition of corporate social responsibility supports the idea that corporate responsibility is ethically based in its decisions with the agents associated with the company. Epstein stated, "Corporate social responsibility relates ...

  16. Corporate Social Responsibility in a Competitive Business Environment

    2. Concepts. Although several papers have tried to pin down indicators of CSR, no common measurement or definition exists (Crifo & Forget, Citation 2015).In some definitions, CSR refers to firm activities that go beyond the law in incorporating social, environmental, ethical, and consumer concerns into their business operations to create shareholder and stakeholder value (Bénabou & Tirole ...

  17. Corporate Social Responsibility, Business Ethics and Corporate

    Business essay sample: This study would address the corporate social responsibility, business ethics, and corporate governance of the two companies given in the case. Call to +1 844 889-9952 +1 844 889-9952

  18. Business Ethics

    Corporate social responsibility: the idea that a business has responsibility to the environment and its community. Globalisation: the issue that businesses are now global entities, giving them tremendous power. Whistleblowing: the ethics around going public to reveal secret unethical business practices. Corporate social responsibility (CSR)

  19. Sustainability

    Companies have shown interest in advanced human resource management as a means to secure distinctive competitive advantages for organizational survival and growth through sustainable management systems. Hence, in the current context, where sustainability in business is a growing concern, the objective of this study was to investigate the relationship between high-performance work systems and a ...

  20. Business Ethics: Corporate Social Responsibility

    The first example is the case study of Microsoft's adoption of the CSR strategy. According to Sehgal et al. (2020), Microsoft was ranked №1 on the annual Best Corporate Citizens Magazine's list in 2018. Microsoft's strategy for development includes CSR goals in three key domains: "economic, social, and environmental" (Sehgal et al ...

  21. The Case of Coyote V. Acme: Analyzing a Cultural Icon

    This essay is about the hypothetical case of "Coyote v. Acme," where Wile E. Coyote sues the Acme Corporation for the defective products that consistently fail him in his pursuit of the Road Runner. The essay explores how this scenario humorously critiques consumer culture and corporate responsibility.

  22. The Deloitte Global 2024 Gen Z and Millennial Survey

    Download the 2024 Gen Z and Millennial Report. 5 MB PDF. To learn more about the mental health findings, read the Mental Health Deep Dive. The 13th edition of Deloitte's Gen Z and Millennial Survey connected with nearly 23,000 respondents across 44 countries to track their experiences and expectations at work and in the world more broadly.

  23. Ethics and Governance. Corporate Social Responsibility

    With a more active government and populace, company social responsibility has continued to gain greater concern and prominence over the past several decades. Social responsibility will continue to take more time, money, consideration, and concern in all future management decisions and actions (Anderson, 1989, p. 16).

  24. A Big Plot Twist at OpenAI

    A Big Plot Twist at OpenAI. Ilya Sutskever, a co-founder at the artificial intelligence start-up and one of the world's leading researchers, is out, and Sam Altman's control looks firmer than ...