1. Corporate Social Responsibility
BMJN 5402

2. Does a “Corporate” Have Legal & Moral Responsibility?

3. Corporate Legal & Moral Responsibility1
“Corporate” : from the word “corpus” or “corpora” means “legal entity” 2
Created by law has legal status  has legal obligation 3
Not identical with people, but operated by people 4
The people, who run the corporate has moral responsibility

4. Theory of Corporate Social Responsibility (CSR)1
Classical Model of CSR 2
Modified Version :Moral Minimum 3
Stakeholder Theory

5. Classical Model Of CSR
Milton Friedman (Economist-Nobel Prize Winner) in “Capitalism and Freedom”
Free Market Theory
“The one & only CSR of business (is)…to increase its profit so long it stays within the rule of game
Limit : obeying the law, without deception & fraud

6. Classical Model of CSR Manager is responsible to stockholder
Desjardin, p51
Manager is responsible to stockholder
Manager is ethically obliged to increase profit
Use of corporate money for social activity is abusing power
Business is understood as private property

7. Critical Assessment to Classical Model
Utilitarian Defense (Desjardin p-53)
Is free market an adequate means to our ends?
Are the ends ethically appropriate?
Private Property Defense (Desjardin p-58)
Are property rights absolute?
Status of stockholder : owner or investor?

8. Utilitarian Defense Is free market an adequate means to our ends?
Existence of “Market Failures”
Externalities, i.e : pollution & resource depletion
Protection of “public goods”
Impact of pursuing individual’s interest
First Generation problem
Influence of business to policy & customer

9. Utilitarian Defense Are the ends ethically appropriate?
People may not be “happy” after receiving goods & service that they desired
Economic growth only measure quantity, not quality
Efficient markets does not guarantee ethically worthy outcome

10. Private Property Defense
Are property rights absolute?
Use of property is constrained by right of others
Focus on profit will override competing goods & other rights
Status of stockholder : owner or investor?
Stockholders are “investor”, only one source of ethical limit
Obeying law is NOT the only restriction on pursuit of profit

11. Modified Version : Moral Minimum
Desjardin, p61
Ethical imperatives :
To cause no harm obligation
To prevent harm & do good  prima facie
Distinguishing between categories is not always easy
Significance : recognition that compliance with law is insufficient for being ethical business

12. The Stakeholder Theory
Desjardin, p64
Reject privileged position of stockholder
Concept of stakeholder :
Narrow: any group who are vital to survival and success of corporation
Wide : any group or individual who can affect or be affected by the corporation
Management requires to balance ethical interest of all affected parties

13. Classical vs. The Stakeholder Theory- Wal Mart
Framework of CSR
Framework of CSR
Wal Mart
Cus-tomer
Stock-holder
Wal Mart
Custo-mer
Stock-holder
Vendors
Emplo-yees
Society
Satisfy customer to
fulfill obligation to stockholder

14. Challenge to Stakeholder Theory1
General & vague  offer little practical guidance to management 2
Practical challenge : problem with identifying stakeholders & their interest

15. Corporate Social Responsibility
Bertens-p
Business has economic & social responsibility
State-owned enterprise : social responsibility may overrule economic responsibility
Social responsibility : negative (mandatory) & positive (supererogatory act)
CSR has impact on company’s image  investment
Government might sometimes need to be involved

16. Thank You