Chapter 2 Textbook
Introduction to Ethics and Corporate Social Responsibility
Learning Outcomes
After reviewing this chapter, readers should be able to:
Identify the philosophies and concepts that shape personal ethical standards.
Understand how organizations can promote ethical business behavior.
Define corporate social responsibility (CSR).
Explain how businesses fulfill social responsibilities towards various stakeholders.
Recognize current trends in ethics and CSR.
Case Study: Hasbro's Commitment to CSR
Hasbro, a global play and entertainment company, has embedded corporate social responsibility (CSR) as a central component of its operations. Founded nearly a century ago in Rhode Island, Hasbro aims to innovate positively within its community, which has awarded it the title of the top corporate citizen in “100 Best Corporate Citizens” for 2017 by Corporate Responsibility magazine. This consistent ranking reflects its sustainability practices and dedication to socially responsible actions.
Key Areas of Focus at Hasbro
Hasbro emphasizes safety and sustainability in four key areas:
Product Safety:
Prioritizes safety through a comprehensive five-step assurance process that includes design, engineering, manufacturing, and packaging while seeking continuous feedback from consumers and retailers.
Ensures that high safety and quality standards are applied globally, even to third-party manufacturers.
Environmental Sustainability:
Committed to reducing energy consumption, greenhouse gas emissions, and water use in production facilities.
Notably eliminated the use of wire ties in packaging, saving an impressive amount of material that could circle the Earth.
Human Rights and Ethical Sourcing:
Promotes fair treatment and diversity within its workforce.
Works closely with suppliers to uphold the human rights of workers in its global supply chain.
Community Engagement:
Invests in community programs, contributing nearly $15 million in financial support and donations to reach approximately 4 million children globally in 2016.
Hosts an annual Global Day of Joy, engaging over 93 percent of employees in community service efforts.
Conclusion
Hasbro's mission to create the best play experiences is underpinned by its commitment to CSR, demonstrating corporate accountability and a drive to improve the world.
Understanding Business Ethics
What Shapes Personal Ethical Standards?
Ethics incorporates moral standards that help individuals judge the rightness or wrongness of actions. Recognizing ethical issues often involves individuals facing choices between ethical or unethical actions.
For example, Martin Shkreli's price increase for essential medication highlights a significant ethical dilemma regarding prioritizing profit over well-being. Conversely, individuals' actions in desperate situations, such as taking from flooded stores during Hurricane Katrina, present complex moral questions.
Recognizing Unethical Business Activities
According to researchers, unethical business activities can be categorized as follows:
Theft: Utilizing someone else's property without permission.
Lying: Misrepresentation or false statements in pursuit of personal gain.
Misleading Impressions: Giving clients false confidence about product capabilities.
Corruption: Engaging in conflicts of interest, such as bribery.
Hiding/Diluting Information: Withholding or sharing harmful product information.
Exploitation: Taking advantage of uninformed consumers.
Misuse of Power: Instances of harassment or public embarrassment of employees.
Organizational Abuse: Poor treatment of workers in international practices, such as sweatshop labor.
Rule Violations: Breaking internal controls or organizational rules.
Condoning Bad Behavior: Tolerating unethical actions of colleagues.
Recognizing these unethical practices is the first step toward ethical decision-making.
Ethical Philosophies and Their Impacts
Different ethical philosophies guide personal decision-making, including:
Utilitarianism: Actions should promote the greatest good; however, measuring overall benefits can be challenging.
Deontology: Actions are primarily defined by obligations and duties regardless of consequences.
Justice: A perspective focusing on fairness and equitable treatment in ethical considerations.
Individual Rights: Emphasizing fundamental rights that cannot be infringed upon.
Organizational Influence on Ethical Conduct
Encouraging Ethical Business Behavior
Organizations create ethical environments through leadership example and ethics training. Key strategies include:
Leading by Example: Leaders set acceptable behavior standards, akin to Ben Cohen's equitable salary policy at Ben & Jerry's.
Offering Ethics Training: Programs to enhance awareness and appropriate responses to ethical dilemmas have been shown to be effective in corporations like Campbell Soup and American Express.
Establishing a Code of Ethics
Many firms now produce comprehensive codes of ethics, ranging from detailed guidelines to simple statements of values. An effective code positively influences behavior, especially when senior management actively adheres to it.
Managing a Socially Responsible Business
Define Corporate Social Responsibility
Corporate social responsibility (CSR) reflects a business's engagement in actions that promote societal welfare beyond the realm of legal obligations.
Core Components:
Economic Responsibility: Profit generation.
Legal Responsibility: Compliance with laws.
Ethical Responsibility: Conduct seen as fair and just.
Philanthropic Responsibility: Active engagement in community well-being.
Stakeholders and Their Roles
Stakeholders include employees, customers, investors, and the broader community. Companies owe various responsibilities to these groups, including job provision, product safety, and engagement in ethical and transparent practices. Organizations such as Cisco and Toyota showcase strong commitments to sustainability and employee empowerment, thus strengthening community relations.
Trends in Ethics and Corporate Social Responsibility
Changing Dynamics
Recent trends indicate a shift towards:
Strategic Giving: Philanthropy aligns more closely with business objectives and local community needs to ensure targeted impacts.
New Social Contracts: Modern employment expectations reflect a two-way commitment between employers and employees focusing on transparency, fairness, and engagement. This includes altering traditional compensation structures to accommodate shorter job tenures.
Global CSR Practices: Multnational firms face ethical challenges while navigating local cultures and are increasingly expected to set a precedent in ethical business practices worldwide, particularly regarding human rights and labor standards.
Case Study: Companies like Gap, Inc. actively work to foster ethical relationships in their global supply chains.
This chapter outlines the crucial interplay between ethics, corporate responsibility, and business practices necessary for sustainable organizational success. By understanding these dynamics, individuals and organizations are equipped to create a more ethical and socially responsible world.