Corporate Social Responsibility

I teach in the Masters in Management and Organizational Leadership (MMOL) program at Warner Pacific College. Several classes that I love to teach are done by other professors, while three classes I adore are still available to me. Finance, which is a great opportunity to look at financial decision-making and organizations; Systems Thinking, an opportunity to review the interconnected of events within an organization; and Business Ethics. I would have to say the Ethics course is my favorite. The discussions we have in class about the so-called free market and the socially responsible elements of creating wealth are exciting.

Tonight’s workshop will be especially interesting. The topics with include Corporate Social Responsibility (CSR) and Ethical Leadership. The CSR discussion will begin with Milton Friedman and end with Stakeholder Theory. These seem to have developed into polar opposites on the continuum of ethical analysis.

Friedman is usually described as the exemplar of a classic economic understanding of ethics. The only requirement for a company to be considered ethical is to ensure profit within the guidelines of the law. This is considered ethical because of created value and its positive effect on society, which is true. The second half of the discussion involves the relationship of action within the borders of law.

This implies there are problems with ethical business practices. Thus the need for guidelines. This is also true. Therefore the question is who establishes those guidelines? If we think allowing the government to establish regulation is good enough we are only fooling ourselves. Government is fallible, and can be influenced by lobbyists. Therefore, commerce will attempt to influence government representatives to ensure the interests of business are upheld. A classic example is CAFE laws. The government attempted to set miles-per-gallon standards at a level that would have been very expensive for automobile manufacturers to attain. The big three lobbied the government and was able to negotiate lower levels of fuel efficiency. I am not saying this is bad, but we must not fool ourselves when we think the government can control the ethical expression of business.

I am a proponent of corporate responsibility. This means that business must take responsibility for its own actions. It should not wait for government to tell them what is ethical business. Business must determine what is ethical and pursue it with a passion.

Usually we look at this from three vantage points: cause no harm, prevent harm, and do good. This is considered the moral minimum argument for business ethics. The cause no harm portion of the discussion is a no brainer. Any product or service offered on the market should not cause harm if used appropriately. The question though is whether business should prevent harm or do good. This is the $65,000 question that business leaders need to answer. Who cares what government does. If I have a business and decide the moral minimum is to prevent harm to society, then my business will have an ethical system greater than the legal system can create. If I choose to do good in the market, then the highest road of commerce is attained. Ray Anderson made this decision many years ago when he changed the business model associated with manufacturing carpet.

Any business needs to create profit or it won’t be in business very long, but all businesses should take the responsibility to be good civic partners. This means it needs to pay attention to the social elements of their business model as well as the environmental part too. Legal requirements for ethics is not enough, the business needs to decide what it’s ethical responsibility is, which means creating behavior that is more stringent than the law.

And that is my thought for the day!

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