Chapter 2: Framing Business Ethics

Question 1

Definition Corporation

Accepted Answer

the dominant form of business entity in the modern global economy defined in terms of legal status and the ownership of assets seperate entities in their own right regardes as having perpetual succession (can survive the death of any individual investors, employees or customers; they only need to find new ones) are tyoically regareded as artificial persons in the eyes of the law (certain rights and responsibilities like individuals) notionally owned by shareholders, but exist independently of them managers and directors have a fiduciary responsibility to protect the investment of shareholders

Question 2

Corporation and social responsibilities (Milton Friedman)

Accepted Answer

"The social responsibility of business is to increase its profits" Only human beings have a moral responsibility for their actions corporations are not human beings humans are individually responsible for the actions of the corporations It is managers responsibility to act solely in the interests of shareholders managers have been employed to make profit Social issues and problems are the proper province of the state rather than corporate managers managers should and cannot decide what is in society`s best interest not trained to set and achieve social goals (politicans are elected to do it)

Question 3

Corporation and its moral responsibility for its actions

Accepted Answer

every organization has a corporate internal decision structure that directs corporate decisions in line with pre-determined goals majority of corporate actions cannot be assigned to any indiviuals decision and therefore responsibility alone there are still quite number of decisions that can be directly traced back to individual actors corporations maifest a set of believs and values (right or wrong in the corporation) = organizational culture)

Question 4

Corporations and social responsibilites

Accepted Answer

Corporations cause social problems and hence have a responsibility to solve those they have caused corporations should use their power and resources responsibly in society all corporate activities have social impacts of one sort or another

Question 5

Definition corporate social responsibilty

Accepted Answer

includes the economic, legal, ethical and philantrophic expectations placed on organizations by society at given point in time → Caroll`s CSR-pyramide (20th century CSR)

Question 6

Economic responsibility

Accepted Answer

shareholders demand a reasonable return on their investements employees want safe and fairly paid jobs customers want good quality products at fair price... REQUIRED!

Question 7

Legal responsibility

Accepted Answer

business should "play by the rules of the game" satisfaction of legal responsibilities is required of all corporations seeking to be socially responsible REQUIRED!

Question 8

Ethical responsibility

Accepted Answer

oblige corporations to do what is right an fair even when they are not compelled to do so by the legal framework companies feel the mounting pressure from consumers, general public and employees for ethical reasons EXPECTED! by society

Question 9

Philanthropic responsibility

Accepted Answer

means "the love of the fellow human" incorporates activities that are within the corporations discretion to improve the quality of life of employees, local communities and society in general Example: sponsoring, recreation facilities, charitable donations DESIRED by society

Question 10

CSR in an international context

Accepted Answer

explicit CSR: CSR as an explicit activity of private companies Describes corporate activities that assume responsibility for the interests of society Consists of voluntary corporate policies, programs, and strategies Incentives and opportunities are motivated by the perceived expectations of different stakeholders of the corporation implicit CSR: sees social responsibilites of business thighly embedded in the legal and instututional framework of society (achieved through regluation in Europe) Describes corporations’ role within the wider formal and informal institutions for society’s interests and concerns Consists of values, norms, and rules that result in (often codified and mandatory) requirements for corporations

Question 11

Corporate social responsiveness

Accepted Answer

refers to the capacity of a corporation to respond to social pressures (Archie Carroll) Reaction: the corporation denies any responsibility for social issues (responsibility of government) Defence: the corporation admits responsibility, but fights it, doing the very least that seems to be required Accommodation: the corporation accepts responsibility and does what is demanded of it by relevant groups Pro-action: the corporation seeks to go beyond industry norms and anticipates future expectations by doing more than is expected

Question 12

Corporate social performance - Outcomes of CSR

Accepted Answer

measuring the outcomes of socal performance Social policies stating the company`s values, beliefs and goals with regard to its social environment Social programmes specific social programmes of activities, measures and instruments implemented to achieve social policies (ISO 14000, EMAS) Social impacts can be traced by lookin at concrete changes the corporation has achieved through the programmes implemented in any period

Question 13

Stakeholder definition

Accepted Answer

A stakeholder of a corporation is an individual or a group wich either is: harmed by, or benefits from the corporation whose rights can be violated or have to be respected by the corporation ------------------------------------------------------------------------------------------------------- Freeman: stakeholder vs. shareholder not only shareholders have a special interest economic perspective: externalities agency problem

Question 14

Different forms of stakeholder theory

Accepted Answer

Normative stakeholder theory provides a reason why corporations should take into account stakeholders interests Descriptive stakeholder theory attempts to ascertain whether (and how) corporations actually do take into account stakelholder interests Instrumental stakeholder theory attemps to answer the question whether it is benefical for the corporation to take into account stakeholder interests is in the best interests of the corporation

Question 15

Corporate accountability

Accepted Answer

refers to whether a corporation is answerable in some way for the consequences of its actions accountability is primarily to shareholders not to the public (Friedman`s view; social is task of the government)

Question 16

Privatization

Accepted Answer

Major reasons (Beck, 1986) governmental failure they are too much part of the problem to be able to be part of the solution beyond controls increasing power and influence of corporations liberalization and deregulation of markets governments cannot directly control employment levels golbalization makes companies able to engage governemtens in a "race to the bottom" (low cost regions and face of lower levels of regulation) corporations habe increasingly been set the task of regulating themselves

Question 17

Problem of democratic accountability

Accepted Answer

Questions: who controls corporations and to whom are corporations accountable Friedman argues that corporations are only accountable to their shareholders BUT: since corporations now shape and influence so much of public and private life in modern societies, they are already political actors (=more accountable to society) purchase votes = social control of corporations refers to transparency

Question 18

Transparency

Accepted Answer

is the degree to which corporate decisions, policies, activities and impacts are acknowlegded and made visible to relevant stakeholders accountability and transparency are being presented as neccesities

Question 19

Corporate citizenship (CC)

Accepted Answer

new way of adressing the social role of the corporation Describes the corporate function for governing citizenship rights for individuals Limited view Philantrophy tends to focus nearly completely on the direct physical environment of the company, resulting in a strong focus on local communities as the main stakeholder of the firm putting something back into the community Equivalent view All areas of CSR the extent to which business meet the economic, legal, ethical and discretionary responsibilities imposed on them by their stakeholders Extended view Political role of the corporation in society ciztizenship is defined as a set of individual rights Social rights, civil rights, political rights helps us to see better the political role of the corporation and clarifies the demand for corporate accountability

Corporate Social Responsibility (Subject) / Chapter 2: Framing Business Ethics (Lesson)