Chapter 2 - Business Ethics and CSR Flashcards
Business environment
(ccgeo) consumers -community government employees owners
The need for oversight
Adam Smith
The Regulatory challenge
Global commerce presents gaps in regulatory structures
The Nascent Regulatory Infrastructure
Composed of corporations, nation stats, and citizens
The Social Context
Business to and from Society have an understanding of each other, however society oe societal Stakeholder groups now the Rule of the game, (ie impose laws and regulations)
The Social environment
- rising expectations amplifies social problems
- leads to gaps between social expectations and social conditions/realities - affluence and education
- higher expectations of major institutions
- growing public awareness through media and the internet
The social environment raises three questions…
entitlement, rights, and fairness
Four components of the CSR
- Economic (required)
- Legal (required)
- Ethical (expected)
- Philanthropic (expected/desired)
Arguments against CSR
Classical economics, diluted business purpose, business not equipped, too much power already, global competitveness
Argument for CSR
Enlightened self-interest, warding gov regulations, resources available, proaction is less costly than reaction, the public strongly agrees with CSR
Benefits of CSR
- Employee relations
- customer relationships
- business performances
- enhanced market efforts
- influence and education
Social expectation vs business social performance
Society had a higher expectation of business performance than business’s actual social performance
Allegations Against Business
- Not enough concern for consumers
- Cares little about the deteriorating social order
- unsophisticated understanding of ethical behaviour
- indifferent to the problem of the powerless and non-economic stakeholders
- claims have generated many pleas for companies to be socially responsible
Basic meaning of CSR
- requires businesses to focus beyond economic and legal obligations…. corporate leaders much consider their actions in term of the whole social system, and how their actions will effect everyone in that system
The Stakeholder concept, what is a stake
- an interest ( affected or affected by) or a share in an undertaking
Stake can be categorized as what 3 things?
an interest, a right (legal and moral) and ownership
Who are business stakeholder?
Stakeholders, market stakeholder, and non-market stakeholders
Define Stakeholders
Individuals and groups of people that have an interest or expectation about a businesses operations and impact of those operations on themselves and others
Define Market Stakeholder
Those who have a financial stake in the organization and its success
Define non-market stakeholder
Those who have a public or non-financial interest in the organization
How to decide who gets business attention?
- Legitimacy - the validity of the stakeholder’s claim in the stake
- Power- the ability and capacity of the stakeholder to produce an effect
- Urgency - the degree in which the stakeholders claim needs immediate attention
2 bases for stakeholder management
- Instrumental base - it is in the interest of shareholders for managers to include all stakeholder in their business operation (more profitable , growth and sustainability
- normative base - Shareholders have a right to be a part of all decisions that affect them, managers have a fiduciary duty to serve stakeholder, and the objectivity of the firm should be to promote the interests of everyone and not just shareholder
FADS: Creating Shared Value
- It’s unoriginal
- ignored tension between social and economic goals
- it’s pollyanish about business compliance
4 Ethical Foundations
- Duty - ensure the protection of human dignity while acting in a consistant and impartial way
- Virtue - ensures that managers act in such a way that follow integrity, courage, and humility
- Rights - right to property law and human right laws
- Utility - results in economic, social, and environmental benefits
