Being a socially responsible business often involves higher material and labour costs. But there is a business case to be made for being a good corporate citizen.
In a competitive labour market, employees are drawn to companies that have a good track record for responsible behaviour, such as environmental protection. By being a good role model, a company will attract people who have skills such as innovativeness, leadership and the ability to work in teams. And by treating employees responsibly, costly employee turnover is minimized. It is also good for a business to stand out from the crowd—for the right reasons of course. Being a good corporate citizen can help a company differentiate itself.
For example, if a company shows that it is committed to helping solve social problems such as rising high school dropout rates, it is also showing that the firm values positive social change. That image will appeal to customers who want to deal with a company that genuinely cares about young people. And by adopting improved environmental practices, a company shows consumers and the public that it cares about the community, the planet and the future. This can help solidify and guarantee customer loyalty. (Improved environmental practices also help a company to comply with environmental regulations and avoid penalties.)
So where does a company start? Here are seven tips you can follow to ensure your company is a responsible corporate citizen.
1. Adopt a business code of ethics
A business code of ethics will outline employee conduct on issues such as ethics, values, environment, diversity, employee respect and customer service.
More and more entrepreneurs are choosing to go one step further by changing their governance document to include their commitment to social and environmental goals.
2. Follow a workplace health and safety program
Creating a clear workplace health and safety program will help you establish reliable systems to protect your employees and prevent accidents and injuries. It will also ensure you are compliant with government legislation on health and safety.
3. Commit to protecting the environment
Develop policies and practices that allow your company to fulfill your commitment to the environment. For example, you can consider producing a report that documents your activities and results as they relate to your environmental impact. Some companies produce broader “sustainability” reports, which encompass social, economic and environmental activities.
4. Get your suppliers on board
Ensure your suppliers know and meet your expectations of responsible behaviour regarding issues such as fair pricing, for example. Screen them to determine their past conduct, and tell them what you expect.
5. Be smart about donating money
Get behind causes that are meaningful for your business. A forestry business, for example, might choose to support organizations that protect the environment. Many manufacturing businesses donate to community organizations in towns where they have plants. The idea is to give back to society, while at the same time sending a message about the values of your brand.
6. Don’t greenwash your business
Use marketing techniques that are fair and honest, and that reflect your company’s integrity. Avoid any advertising or communication that could be seen as manipulative or harmful to the public. Make sure you walk the talk and that your company does what it says it does, otherwise your company could risk a customer backlash.
7. Explore B Corp certification
Many public and society-minded entrepreneurs are choosing to get B Corp certified. B Corps are certified “beneficial” companies. Their purpose is to create value for society as well as money. They meet high standards of transparency and accountability, and create positive social and environmental benefit.
Beyond the certification, B Corp entrepreneurs are a movement of people who believe that business can be a force for good in the world. You can find out more here.
MGT 4150 Chapter 9
Ethical principles in business
are not materially different from ethical principles in general.
How do ethical principles apply to businesses?
They are not materially different from ethical principles in general.
Ethical principles as they apply to the conduct of personnel and business decisions
deal primarily with the company's duty to comply with legal requirements and conform to ethical norms of society, in general.
Although exposing children to hazardous work and long work hours is unquestionably deplorable, which of the following, if true, leads to a moral dilemma?
Many child laborers come from poverty-stricken families.
The results of strategies that cannot pass the test of moral scrutiny often are NOT manifested in
increased customer loyalty.
The contentions that (1) many of the same standards of what's ethical and what's unethical resonate with peoples of most societies regardless of local traditions and cultural norms and (2) to the extent there is common moral agreement about right and wron
the school of ethical universalism but not the school of ethical relativism
The school of ethical universalism holds that
the most fundamental conceptions of right and wrong are universal and apply to members of all societies, all companies, and all businesspeople.
According to the school of ethical universalism
to the extent there is common moral agreement about right and wrong actions and behaviors across multiple cultures and countries, there exists a set of universal ethical standards to which all societies and all individuals can be held accountable.
Which of the following is true of the school of ethical universalism?
They are ethical principles that set forth the traits and behaviors considered virtuous and that a good person is supposed to believe in and display.
If one concurs with the school of ethical universalism, then one believes that
many basic moral standards travel well across cultures and countries and really do not vary significantly according to local cultural beliefs, social mores, religious convictions, and/or the circumstances of the situation.
The strength of the beliefs underlying ethical universalism is that
it draws upon the collective views of multiple societies and cultures to put some clear boundaries on what constitutes ethical business behavior and what constitutes unethical business behavior no matter what country or culture a company is operating in.
The contention that since there are cross-country or cross-cultural differences in ethical standards, it is appropriate to judge behavior as ethical/unethical in the light of local customs and social mores should take precedence over a single set of ethic
defines what is meant by ethical relativism.
The school of ethical relativism holds that
when there are cross-country or cross-cultural differences in what is deemed ethical or unethical in business situations, it is appropriate for local moral standards to take precedence over what the ethical standards may be elsewhere.
Which of the following is true of ethical relativism?
There are important occasions when local cultural norms and morality and the circumstances of the situation determine whether certain behaviors are right or wrong, for there are no absolutes when it comes to business ethics.
Which of the following statements about the ethical relativism school of thinking is FALSE?
When there are cross-country or cross-cultural differences in ethical standards, it is appropriate for ethical standards in a company's home market to take precedence over what the local ethical standards may be.
According to the advocates of ethical relativism,
if the use of underage labor and/or the payment of bribes/kickbacks are acceptable in a particular culture/society/country, then a case can be made that it is morally correct and ethical for a company to use these practices in conducting its business acti
A belief in ethical relativism leads to the conclusion that
whether the use of underage labor and the payment of bribes/kickbacks should be deemed ethical or unethical depends on the moral standards, values, and business norms that prevail in particular cultures, societies, countries, or circumstances.
The degree of cross-country variability in paying bribes and kickbacks to grease business transactions
is one of the thorniest ethical problems that multinational companies face because paying bribes is normal and customary in some countries and ethically or legally forbidden in others.
Multinational companies that forbid the payment of bribes and kickbacks in their codes of ethical conduct and that are serious about enforcing this prohibition
face a particularly vexing problem of losing business to competitors that have no scruples�an outcome that penalizes ethical companies and company personnel.
According to the ethical relativism school of thinking,
there can be no one-size-fits-all template (set of authentic ethical norms) against which to gauge the conduct of company personnel, due to cross-cultural differences in ethical standards.
Which of the following is NOT true about why codes of conduct based on ethical relativism are ethically dangerous for multinational companies?
They create standards that mostly relate to ethical codes in a company's home market, which might trigger compliance issues in the local market.
Companies that adopt the principle of ethical relativism in providing ethical guidance to company personnel
may quickly find themselves on a slippery slope with no higher order moral compass if they operate in countries where ethical standards vary considerably from country to country.
The contention that ethical standards should be governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and (2) the circumstances o
integrative social contracts theory.
The contention that ethical standards should reflect the collective views of multiple societies in establishing a set of universal ethical principles (that are widely recognized as laying legitimacy to ethical boundaries on actions and behavior in all sit
integrated social contracts theory.
According to integrated social contracts theory, the ethical standards a company should try to uphold
are governed both by a limited number of universal ethical principles and the circumstances of local cultures, traditions, and shared values.
Which of the following regarding integrated social contracts theory is NOT true?
Local ethical norms always take precedence over universal ethical norms.
Which one of the following is NOT a key element of integrated social contracts theory?
Integrated social contracts theory rejects the slippery slope of ethical relativism and embraces ethical universalism.
Integrated social contracts theory maintains that
adherence to universal ethical norms always takes precedence over local ethical norms.
According to integrative social contracts theory, the ethical standards a company should try to uphold
are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and (2) the circumstances of local cultures, traditions, and shared val
The litmus test of a company's code of ethics is
the extent to which it is embraced in crafting strategy and in the day-to-day operations of the business.
Which of the following is NOT a key question that senior executives must ask whenever a new strategic initiative is under review?
Would the potential outcome of the proposed action pose a risk of embarrassment?
Senior executives can ensure compliance with the ethical code of conduct by considering whether
the proposed action is fully compliant and in harmony with the code of ethical conduct and whether stakeholders would consider anything ethically objectionable.
Unethical managerial behavior tends to be driven by such factors as
overzealous or obsessive pursuit of personal gain, wealth, and other self interests; a company culture that puts the profitability and good business performance ahead of ethical behavior; and heavy pressures on company managers to meet or beat performance
Which of the following factors does NOT necessarily drive unethical managerial behavior?
executive compensation independent of company performance
Which of the following is NOT NECESSARILY a consequence of pursuing a strategy that has unethical or shady components?
sharp drops in the price of company stock
Which of the following would increase the likelihood of ethical lapses as well as poor long-term company performance?
dramatic cuts in research and development expenditures in years when low earnings are reported by the company
Which of the following activities does NOT reflect short termism?
avoiding stock repurchases made to increase earnings-per-share of a company
Short-termism is defined as
the tendency for managers to focus on immediate performance objectives at the expense of longer-term strategic objectives.
Cultural demands to employ unethical means if circumstances become challenging can prompt
clever ways to operate outside established policies to boost profits.
When high ethical principles are deeply ingrained in the corporate culture of a company, culture can function as a powerful mechanism for all of the following EXCEPT
A company's strategy needs to be ethical because
it is good business and in the best interest of shareholders.
Which of the following is NOT true regarding the effect of ethical standards on a company's strategy?
An ethical strategy results in higher employee turnover.
The strength of the beliefs underlying the moral case for an ethical strategy relates to all EXCEPT which of the following?
It starts with managers that involve themselves in creating strategies based on risks and loss of reputation that implementing an unethical strategy can cost.
Notions of right and wrong, fair and unfair, moral and immoral, ethical and unethical
are present in all societies, organizations, and individuals.
Visible costs that are incurred by companies and imposed for ethical wrongdoing include all of the following EXCEPT
legal and investigative costs.
Internal administrative costs which are incurred by companies for ethical wrongdoing include all of the following EXCEPT
costs attached to adverse effects on employee productivity.
How does a company's unethical behaviors risk doing direct damage to a company's creditors?
It could lead to default on loans due to potential business fallout.
The theory of corporate social responsibility concerns
the company's responsibility to balance between strategic actions to benefit shareholders against the duty to be a good corporate citizen.
Which one of the following is NOT a part of the business case for why companies should act in a socially responsible manner?
aggressive pursuit of market share, revenues, and profits
The essence of socially responsible business behavior is
balancing strategic actions to benefit shareholders against the duty to be a good corporate citizen.
The notion of social responsibility as it applies to businesses is concerned with
a company's duty to operate in an honorable manner and provide good working conditions for employees.
Which of the following is NOT generally an action for a company to consider in crafting a strategy of social responsibility?
taking steps to provide suppliers, distributors, and other value chain partners with handsome profit margins
Which of the following is NOT something a company should usually consider in crafting a strategy of social responsibility?
actions to benefit shareholders such as raising the dividend or boosting the stock price
go beyond meeting society's expectations for ethical strategies and business behavior by fostering social benefit and balancing the interests of all.
A company's social responsibility strategy typically comprises all of the following EXCEPT
actions to keep the company's profits at a reasonable and acceptable level to ensure the company's products/pricing will not be viewed by the general public as obscenely high or exorbitant.
Striving to be socially responsible entails touching such bases as
what, if any, actions to take to protect or enhance the environment (beyond what is legally required).
The "triple bottom line" refers to what three performance metrics a company should simultaneously succeed in?
economic, social, and environmental
The three dimensions of performance are often referred to in terms of the "three pillars" and include all of the following EXCEPT
a company's efforts to reduce research and development funding to boost profits.
Triple-bottom-line (TBL) reporting is emerging as an important way for companies to
make the results of their CSR strategies apparent to stakeholders and for stakeholders to hold companies accountable for their impact on society.
A company's environmental sustainability strategy consists of its deliberate actions to
operate the business in a manner that promotes the longevity of sustainability effects.
An environmental sustainability strategy consists of a company's deliberate actions to
meet the current needs of customers, suppliers, shareholders, employees, and other stakeholders in a manner that protects the environment, provides for the longevity of natural resources, maintains ecological support systems for future generations, and gu
Which of the following is NOT something a company should consider in crafting an environmental sustainability strategy?
actions to couple environmental degradation and economic growth
What is the function of the Global Reporting Initiative?
It promotes greater transparency and facilitates benchmarking CSR efforts across firms and industries.
Which of the following statements regarding a company's CSR and sustainability strategies is FALSE?
A company is not demonstrating an adequate degree of social responsibility or endeavoring to be a model corporate citizen unless it spends 5 percent (or more) of pretax profits on social responsibility initiatives.
Sourcing a supply from a small, women-owned business is an example of a corporate social responsibility action to
promote workforce diversity.
When a company's social responsibility initiatives become part of the way it operates its business every day, these initiatives are
likely to be fully effective in creating a competitive advantage.
The moral case for why a company should actively promote the betterment of society and act in a manner benefitting all its stakeholders
boils down to "it's the right thing to do.
Which of the following is NOT part of the moral case for why a company should actively promote the betterment of society?
Acting in a socially responsible manner is in the best financial interest of shareholders.
The business case for why companies should act in a socially responsible manner includes such reasons as it
generates internal operating benefits (as concerns employee recruiting, workforce retention, employee morale, and training costs).
The business case for CSR and environmentally sustainable business practices suggests such actions could lead to all of the following EXCEPT
Which of the following is FALSE as it concerns the merits of why acting in a socially responsible manner is good business?
Acting in a socially responsible manner nearly always results in higher profits and a higher stock price for shareholders.
Studies done on the correlation of between good corporate behavior and good financial performance have generally found
a small positive correlation.
A multinational automobile manufacturer issues a public statement that the company's vehicle emissions tests had been falsified to meet environmental compliance standards over recent years using software specifically designed for that purpose. Following t
visible and intangible costs
A manufacturer and marketer of prescription pharmaceuticals decided to raise the price of its anti-malaria drug from $15.00 per dose to $750.00 per dose, a price increase of 5,000%. Following a public outcry, the CEO was forced to resign, the company was
visible and intangible costs
Which of the following companies incurs mainly internal administrative costs due to unethical practices?
Company D must retrain its employees who are using their Twitter accounts to post workplace frustrations.
A company that sets aside 2 percent of its pre-tax profits to build and then fund a cancer-recovery facility for teens is an example of a corporate social responsibility action to
A company that promotes carpooling among its employees, has cut its printer-paper usage in half, and has installed solar panels on its roof is an example of a corporate social responsibility action to
protect and sustain the environment.
Which of the following is an activity a company engages in to enhance the quality of life for its employees in an attempt to fulfill its corporate social responsibility?
It provides work-at-home opportunities.
Which of the following is most likely to be morally valid from the perspective of ethical relativism?
bribing a government official in an underdeveloped country to obtain a permit to build a hospital
Which of the following builds a moral case for corporate social responsibility and environmentally sustainable business practices?
A strong commitment to socially responsible behavior reduces the risk of reputation-damaging incidents.
Following a public outcry, the CEO of a nationwide consumer bank was forced to apologize to and recompense customers for whom the bank had set up false credit card and auto loan accounts, over 100,000 account managers were terminated, and the company's st
internal administrative costs, tangible costs, and intangible costs
The business case for why companies should act in a socially responsible manner DOES NOT include such reasons as
reducing the triple bottom line.
Which one of the following is NOT a part of the business case for why companies should act in a socially responsible manner?
Every business has a moral duty to be a good corporate citizen.
Which one of the following is false as concerns the merits of why acting in a socially responsible manner is "good business"?
There is a high correlation between socially responsible behavior that addresses social issues and a firm's competitive advantage and financial performance.