2014-2015

Taxonomies of CSR theories

"We are not studying [ethics] in order to know what virtue is, but to become good, for otherwise there would be no profit in it." (Nicomachean Ethics)

Klonoski (1991)

3 domaines de théories RSE

  1. Fundamentalist theories: businesses are merely legal artefacts and thier only social responsibility is to create shareholder value
  2. Corporate citizenship
  3. Social dimension theories

Windsor (2006)

3 approaches to CSR

  1. Ethical responsiblity theories: Businesses have ethical duties, states should interven and correct market failures
  2. Economic responsibilty theories: Shareholde value creation & few gonvernment interventions
  3. Citizenship theories: strategic philantrophy

Garriga et Melé (2002)

4 approaches to CSR approches de la RSE, en fonction de 4 dimensions de la réalité sociale: l'économie, la politique, l'intégration sociale et la moralité.

  1. Les entreprises en tant que outils à la création de vleurs
  2. Le pouvoir social des entreprises vient avecc un devoir politique
  3. Les entreprises doivent intégrer les demandes sociales
  4. La relation entre monde économique et société régies par des règles morales

Moral relativism

The trolley dilemma

Consequentialist vs. deontological ethics

Cognitive reflection test

  • A bat and a ball cost $1.10 in total. The bat costs $1.00 more than the ball. How much does the ball cost?
  • If it takes 5 machines 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets?
  • In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake?

CRT French

  • Une batte de base-ball et une balle coûtent 1.10eur au total. La batte de base-ball coûte 1eur de plus que la balle. Combien coûte la balle?
  • Si il faut 5 minutes pour que 5 machines produisent 5 objets, combien de temps faut-il pour que 100 machines fassent 100 objets?
  • Dans un lac, il y a un pied de nénuphar. Chaque jour, le nénuphar double de taille. Si il faut 48 jours pour que le nénuphar recouvre totalement le lac, combien faut-il de jours pour qu'il en couvre la moitié?

Shareholder value theory

"The Social Responsibility of Business is to Increase its Profits" (M. Friedman - NYT Magazine)

Who?

Milton Friedman (1912-2006)

  • Context: WW1+WW2 great depression
  • 'Capitalism and freedom (1962)'
  • Nobel prize in 1976
Who decides what is morally acceptable? In a market economy exchange only takes place in a win win situation.

Assumptions

  • A free society: According to Friedman, all other conceptions ar inherently subversive
  • Society is nothing but the sum of all individuals
  • Property is an absolute value becuse it assures individual freedom
  • Companies are legal entities that result from contracting
  • A company only has duties townards it's owners (eg. pollution only needs to be stopped if the danger of legal penalties exists)

Normative standards

  • Fiduciary duty towards the business owners (stockholders)
  • Conformity to law, the 'rules of the game' of competition

Strenghts

  • The objectives of performance and pursuit of personal interest are an optimal context for wealt creation in competitive markets
  • SVT favors innovation, cost reduction, produciton of goods with an added value and fund raising
  • Negative outcomes can be adressed by government or individual charity

Weaknesses

  • Kennet Arrow: effects of externalities untder assymetric information
  • Short terminism vs. long terminism
  • Economic performance is not the only common good.

Stakeholder value theory

Who?

Edward Friedman (1951-*)

  • Context: Economic Growth
  • Strategic Management: A Stakeholder Approach. (1984)
  • Philosopher & Professor of business administration (Universty of Virginia)

Normative standards

  • 'Principle of Corporate Rights': Companies and managers are not allowed to violate the legitimate rights of others to determine their future
  • 'Principle of Corporate Efects': Companies and managers are responsible for the efects of their actions on others

Managerial tasks?

  • Identify who are the stakeholders: Its customers, suppliers, owners, employees and local communities (wide vs. narrow definitions)
  • Balance the interests of stakeholders: "Business executives have positive duties to promote the interests of all stakeholders. (These are prima facie duties) But the duties to some stakeholders are more important than the duties to other stakeholders. Thus, sometimes lesser interests of more important stakeholders take precedence over the greater interests of more important stakeholders. Positive duties of stake holders are constrained by negative duties, as for example not to lie or break the law" (Carson 1993)
  • Example: Clarkson Center for Business Ethics - Principles of Stakeholder Management

Examples from HRM

  1. Ensure fair and prompt payment
  2. Prioritize employee health and safety
  3. Prioritize local employment
  4. Consider local/regional employment and training needs in human resources strategy
  5. Ensure access to and understanding of employee policies
  6. Offer employee performance reviews
  7. Provide equal access to employment and promotion
  8. Use living wage as a starting point for employee compensation
  9. Provide employee benefits

Examples from HRM (continued)

  1. Provide opportunities to share in company growth and profitability
  2. Use a clear business model for out-sourcing work
  3. Investigate alternatives to layoffs and downsizing
  4. Encourage employee/management communication
  5. Support employees to balance work, family, and personal development commitments
  6. Provide equal access to employment and promotion
  7. Provide a resource or referral for confidential counseling
  8. Practice open book management
  9. Gather and promptly respond to employee complaints

Strengths

  • Language more in line with human dignity
  • Concrete concepts of interests, practices and specific responsibilities
  • Close ties to business

Weaknesses & Critics

  • Does not provide a specific objective function for companies
  • Moral doctrine
  • Provides opportunity for managerial opportunism: Managers are able to justify self-serving behavior by appealing to the interests of those stakeholders who benefit
  • Primarily concerns the distribution of final outputs
  • admits several interpretations (e.g. feminist, ecological,fair contracts)

Corporate Citizenship

Who?

Archie B. Caroll (1947-*)

  • 'The Pyramid of Corporate Social Responsibiiity : To- ward the Moral Management of Organizational Stakeholders.' (1991)
  • 'citizenship' comes from political sience
  • Evokes rights and duties, responsibilities and possibilities for partnerships between business and societal groups and institutions

Assumptions & Definition of CC

  • Busniess citizenship is "a set of policies and practices that allow a business organization to abide by a limited number of universal moral standards, to respect local cultural variations that are consistent with those standards, to experiment with ways to re-conciliate localpracticewiththestandardswhentheyarenotconsistent,andtoimplement systematic learning processes for the benefit of the organization, local stakeholders, and the larger global community"" (Logsdon & Wood, 2005)
  • A company is a citizen, a member of the larger community and inconceivable without it

Normative standards

3 views of citizenship:

  • minimalist
  • communitarian
  • universal rights

Application process

  1. Define set of fundamental values that are enclosed in the corporate code of conduct
  2. Implementation throughout the organization
  3. Analysis and experimentation of how to deal with problem cases
  4. Systematic learning processes to communicate the results internally and externally

Strengths

  • Appealing to some practitioners simply because of its terminology rooted in pol. sci.
  • Basic economic responsibility + social and moral dimension (human rights, social welfare and human developmen)
  • Extensive global reach

Weaknesses

  • Lacks focus, and in cludes many diferent subjects, like public-private partnerships, corporate ethical practices, corporate community economic development, corporate voluntarism, corporate community involvement or corporate brand, image and reputation management
  • Underlying metaphorical nature of the application of citizenship to companies is inappropriate
  • Cannot contribute to the understanding of business-society relations