Student Name:

Shanna

Whelan
Student
Number:
11100150
Assignment

Title:

Criti

cally
examine

the

role of
business ethics and corporate social responsibility
in contemporary organisations using examples to
support your answer. What advice would you give
to senior managers who wish to improve their
organisations corporate ethical profile with its
entire stakeholders?

Justify your answer. Use

case studies to support key points.

Module Name:

Ethics and Social Responsibility

Course Title:

BA Human Resource Management

Lecturer:

Paddy Stronge

Due Date:

22nd July 2016

The way in which companies conduct their business has come under an
increased amount of scrutiny in recent years, as stakeholders are holding
companies accountable for their actions. Business ethics and corporate social
responsibility (CSR) standards are also forcing companies to evaluate how
their actions are affecting not only themselves and their company, but also
their stakeholders. The extent to which companies are expected to act in an

ethical fashion will also be discussed, as Pitt & Kamery (2003) assert that
firms are not charitable institutions or mutual aid societies, which means that
ethics and CSR are a secondary function of the company, after a profit has be
produced. This essay will critically examine the role of business ethics and
CSR in contemporary organizations, using case studies, such as Coca Cola
and Apple Computers, as examples to justify any assertions that are made.
Additionally, this paper will also offer suggestions to management teams who
wish to improve their organizations corporate ethical profile. This will take the
form of a four-step program based on knowledge of ethics, corporate social
responsibility and public relations.
For many companies, corporate social responsibility was not always a
concern and is considered by many to be a recent addition to everyday
business strategy. Torres et al. (2012) confirm that multinationals and their
operations slowly began to be scrutinized by different segments of society
from the beginning of 2000. It could be argued that this scrutiny has
increased in recent years due to the proliferation of media in contemporary
society, as a result of advances in the availability of communication
technology. It is obvious from the abundance of mobile technology in
particular, that it is now easier than ever for consumers and other
stakeholders to instantly and cheaply obtain information about companies,
particularly large scale enterprises that are in the public eye. This is why
companies should consider incorporating CSR into their business strategy, as
it is now possible for consumers to actively seek information on companies
that interest them. Additionally, according to Torres et al. (2012) campaigns
and public scandals involving issues ranging from environmental pollution to
child labour and racial discrimination resulted in unwanted media attention.
Scandals such as these are commonly reported by various media outlets due
to the large amount of interest generated by such topical issues. From a
media perspective, reporting on stories such as these may lead to an increase
in viewership, listenership or readership numbers. This has implications when
it comes to reputation management, as a well thought out corporate social
responsibility strategy should consider the issues listed above, and determine
methods to avoid becoming entangled in scandalous behaviour that may

attract negative media attention. Ultimately, CSR should be considered a

necessary aspect of business strategy, as it is no longer possible for
companies to hide their actions from stakeholders. For this reason,
companies and other organizations should consider conducting their business
in a transparent and ethical way.
Before discussing the role of business ethics and CSR in contemporary
organisations, an understanding of stakeholder theory is crucial. Freeman
(1984), cited in Mutch & Aitken (2009), said that a stakeholder is any group or
organization that can affect or be affected by the achievement of the
organisations objectives. This means that stakeholders are not just those
who are employed by, or do business with the company. Stakeholders can be
anyone from other businesses to residents in the local area surrounding the
company in question. For example, the National College of Irelands
stakeholders may include local cafes that are dependent on the colleges
students and staff for customers, or local residents who may be impacted by
traffic levels generated by commuters to the college. This has implications for
businesses and other organizations, as they may have stakeholders that they
are not aware of or have not even considered. Stakeholder mapping is a
technique that is outlined by Yeoman & Tench (2009) that involves listing all
stakeholders and stratifying them based on their ability to impact and be
impacted by the organization. This can be a useful undertaking as it can help
companies identify who will be affected, and to what degree, as a result of any
corporate decision-making. Organizations have the potential to effect
stakeholders in both positive and negative ways. Good business ethics and
CSR decisions will try to maximize the positive effects while attempting to
minimize the negative effects. Companies demonstrate good corporate social
responsibility when they consider the impact their actions will have on
stakeholders and act accordingly.
The role of ethics and CSR in contemporary organizations is a complicated
one, as companies must attempt to balance the needs and expectations of
stakeholders and stockholders. Stockholders are perhaps one of the
companys biggest stakeholders as they are the investors in the company and

consequently they are also the party that carries the majority of the financial
risk. According to Pitts & Kamery (2003), the traditional idea of ethics in
economics is the stockholder theory, which states that managements largest
responsibility is to the shareholders of the business. This would imply that
management has an obligation to reduce costs and maximize efficiencies
wherever possible. However, this does not always constitute ethical
behaviour. Further to this, the stockholder theory states that when
management makes a decision that decreases the stockholders return on
invest, then management have acted in an unethical manner, as they have a
responsibility to reward their investors (Pitts & Kamery, 2003). This has ethical
implications as the cheapest and easiest decision to make is not necessarily
always an ethical one. For example, a manufacturing plant that releases substandard quality water into the local environment instead of treating it has
minimized cost, but has also acted in an unethical fashion as the local wildlife
and environment may be negatively effected by the presence of chemicals
and other harmful substances in the water. The role of business ethics and
corporate social responsibility is therefore to find an appropriate balance
between the priorities of their stakeholders and shareholders. An appropriate
solution to the above dilemma would be to treat the water, but make the
treatment process as cost effective as possible. Pitts & Kamery (2003) states
that the instrumental view of ethics illustrates that a firm can comply with the
highest ethical standards and behave in a way that would be economically
rational.
According to Torres et al. (2012) Coca Cola provides an example of the
questionable Corporate Social Responsibility outlined above, as they were
accused of selling beverages that contained a level of pesticides that
exceeded European standards. In addition to this, Coca Cola were also
accused of causing localized droughts in India during the early noughties due
to the over extraction of ground water. Coca Colas actions were a cause for
concern, as even after the unacceptable level of pesticides was brought to
their attention in 2003, the same tests conducted three years later in 2006
showed that nothing had changed and pesticide levels still remained
unreasonably high. This shows an intolerable level of disregard on Coca
Colas part for the health and well being of their consumers. Based on this

evidence, consumers could conclude that Coca Cola is more concerned with
profit than ethical decision-making. In addition to the level of pesticides in
beverages, Coca Cola was also allegedly responsible for local droughts that
were caused by a combination of both over extracting water from the
environment, and also polluting local sources of human drinking water. Cases
such as this one demonstrate how failing to achieve a balance between the
priorities of the stakeholders and the shareholders can call into question the
character of the business and the lengths they will go to in order to produce a
profit. These actions could easily be construed as capitalism in its purest form,
as the case was only resolved when Coca Cola succumbed to the pressure
exerted by non-governmental organizations and local communities. According
to Torres et al. (2012) Coca Colas reputation sustained a large amount of
damage as they saw a 40% drop in sales in India within two weeks of the
pesticide report being published in 2003. In addition to this, the scandal
caught the attention of American consumers as ten American universities
temporarily stopped selling Coca Cola products at their campus facilities.
It could be argued that there are two main reasons why companies may
engage with CSR: firstly as an opportunity for reputation enhancement and
secondly as an opportunity for genuine development. Companies may wish to
engage with ethics and CSR as an opportunity for genuine and real
development. There are numerous studies, such as the one conducted by
Caligiuri et al. (2013), which found that companies that engage in good
corporate social responsibility practices also created value for stakeholders,
including shareholders or investors. According to Caligiuri et al. (2013)
companies with active corporate volunteer programs attract and retain better
employees, and enhance goodwill to, in turn, increase a firms financial
performance. This shows how progressive firms can view doing good in their
society not just as a way to be seen to be doing good, but also as a benefit
and advantage to the company. Deloitte, which is a significant international
company, demonstrates this by showing a commitment to publishing their
annual Volunteer Impact Survey. The results of their survey have implications
for all business owners, as it found a connection between workplace
volunteerism

activities

and

employee

engagement,

specifically

that

employees who volunteer are more likely to be proud, loyal and satisfied
employees than their non-volunteering counterparts. In some cases, CSR can
even contribute to cost reducing measures for some companies. For example,
a company wishing to show a regard for the environment by printing on both
sides pages may actually save money due to the lower quantities of paper
required as a result. Forward thinking companies can incorporate Corporate
Social Responsibility in such a way that it is aligned with the overall company
strategy, as opposed to simply an obligation to society.
As explained above, in relation to the Coca Cola case, poor ethical decisionmaking and a lack of corporate social responsibility engagement resulted in a
loss of reputation. From this, it can be deduced that proper ethical decisionmaking and a satisfactory level of CSR engagement can enhance an
organisations reputation. Many sources agree that this is the primary
motivation behind a lot of CSR programs. For example, Mutch & Aitken (2009)
state that corporate- nonprofit partnerships are in many ways defined by the
opportunity they create for corporations to be seen to be doing good and
benefiting society. Further to this, Docherty & Hibbert (2003) found that
increasing press coverage and raising brand awareness were the important
benefits sought by the commercial partners in a cause-related marketing
program. While this may seem superficial on the part of the profit making
organization in question, studies have found that a good corporate reputation
is crucially important to businesses. Dawkins and Lewis (2003) found that the
proportion of the British public saying that corporate social responsibility is
very important in their purchasing decisions had doubled in the five years
preceding their study. This implies that the public is becoming increasingly
concerned and cynical of how companies are conducting their business
affairs. It seems like a contradiction that companies should themselves benefit
while trying to be seen to be helping others. However, the study conducted by
Dawkins and Lewis (2003) found that 57%, more than half, of those surveyed
felt that it is acceptable for companies to derive some benefit from their social
and community contributions. A further 9% had no opinion on the matter.
Dawkins and Lewis (2003)

In relation to advice for managers who wish to improve their organizations

ethical profile with its entire stakeholders, it would be advisable for them to
follow the four-step process as outlined in the following paragraphs.
Before an organization can improve their ethical profile with its entire
collective of stakeholders, it is first of critical importance to identify and stratify
stakeholders based on their ability to influence and be influenced by the
organization. It is advisable that managers undertake the stakeholder
mapping exercise as outlined by Yeoman & Tench (2009) and discussed
previously in this essay. Only once this crucial step has been completed can
management teams make fully informed and proper ethical decisions, as they
will be better equipped to determine the extent to which the consequences of
their decisions will be felt in their community, near and far. For example, in
addition to identifying local Indian consumers as stakeholders, Coca Cola
could have benefited significantly by identifying the media as a stakeholder.
This is because the media enabled information on the water scandal to travel
from India to America, causing unforeseen damage to their reputation. The
influence of the media on CSR will be discussed in further detail in the course
of this essay.
The second step that managers should take is to consider choosing a CSR
program with a relevant link to the companys line of business. This is
corroborated by Dawkins & Lewis (2003) who found that the best received
corporate community involvement programmes are those with an intuitive link
between the business and the initiative, where it fits that a company should
be supporting a particular cause. Similarily, ORiordan and Fairbrass also
state that causes are best selected based on their fit with the organization and
the congruency of the assisted partys values. Choosing a cause that has a
clearly observable link to the business lends legitimacy to the CSR program,
as it is easy for consumers and other stakeholders to see how the company
could genuinely be invested in the cause. This is crucial during a time in which
consumers are becoming increasingly sceptical Dawkins & Lewis (2003). This
approach was demonstrated by Coca Colas decision to become involved in
local water initiatives after they were accused of over extracting and polluting

local water sources. This shows the public that Coca Cola is committed to
making amends for the wrongs they were reported to have committed.
Choosing an unrelated cause may prevent stakeholders from making the
connection between supposed wrong doings and the efforts made to make
amends.
The third step that managers should undertake is to take action. The trend in
recent years is for companies to implement a strategy based on actions that
will bring about change, as opposed to simply making a generous donation to
a charitable organization of their choice. Theorists such as Dawkins & Lewis
(2003) attribute this to consumers being cynical of companies attempts at
CSR engagement, often seeing it as a flimsy attempt at reputation
enhancement. For this reason, companies must be seen to be taking genuine
positive and affirmative action. This was demonstrated by Coca Colas
establishment of the Coca Cola India Foundation, which set out to work in
unison with local communities and non-governmental organizations to
address issues with water quality (Torres et al. 2012). In addition to this, Coca
Cola also established local rain water harvesting projects, in an attempt to
reverse some of the damage that was done by the over extraction of ground
water that Coca Cola was allegedly responsible for (Torres et al. 2012).
Alternatively, Coca Cola could have made a sizable donation to the local
communities and groups involved, but it could be argued that this does not
show genuine repentance for their actions, and could be construed as a way
to simply make the problem go away.
Finally, the last step that managers should engage with should they wish to
improve their organisations corporate ethical profile with its entire
stakeholders, is to engage in a PR or media campaign. Pomering and
Dolnicar (2009) state that there is evidence to suggest that consumer
attitudes and purchase intentions are influenced by CSR initiatives if
consumers are aware of them. Further to this, studies have shown that
consumers want to be informed of the good that companies are doing with
86% of respondents to survey stating that companies should inform
consumers of their social and ethical behaviour (Pomering & Dolnicar, 2009)

This evidence suggests that a majority of consumers would not find anything
untoward in a PR campaign designed to demonstrate a firms altruistic
actions. In order to keep consumers informed, it would be advisable that
managers should engage the media through press releases, detailing their
charitable endeavours. This is of particular importance if the main objective of
a companys CSR campaign is to enhance reputation, as this will not be
achieved if the relevant stakeholders are not aware of it.
However, even if reputation is not the main concern, companies may find it
beneficial to have some evidence of charitable actions on public record should
they be faced with a scandal or if negative press should emerge in the future.
Ultimately, managers should always strive to maintain public knowledge of
CSR actions, as Corporate Social Responsibility programs may not be
sufficient to resurrect a reputation once it has been lost. It is better to make
ethical decisions and conduct CSR programs on an on-going basis rather
than as a reparative measure. Public knowledge of such behaviour may
encourage public understand and acceptance of any mistakes that may be
made in the future.
A company that demonstrated this strategy well is Apple Computers. As a
company with estimated sales of $108.2 million in 2011 (Torres et al. 2012),
there is pressure on them to act in an ethical fashion, and also to be seen not
to be acting in a way that could be construed as exploiting people for the sake
of money that they can arguably afford not to have. Therefore, it could be
argued that such a profitable business can afford to act ethically and
responsibly. This is evidenced by Apples Supplier Code of Conduct, which
outlines the expectations that Apple has of its suppliers. The supplier code
places a large amount of emphasis on the treatment of staff and the
enforcement of human rights. This shows that Apple has considered that even
staff members who are not directly employed by them can be stakeholders. In
order to enforce the supplier code, Apple audits their suppliers on a yearly
basis and publishes a report on their findings (Torres et al. 2012). This
demonstrates that Apple is committed to good business ethics and corporate
social responsibility on an on-going basis, and not simply in the face of

adversity or scandal. Apple enforces this policy on a regular basis, as

evidenced by the Supplier Responsibility Report that is published annually.
The 2011 report outlines how a supplier was found to be in violation of the
code, as they refused to comply with the regulations in relation to the use of
underage labourers. As a result of this discovery, Apple terminated their
dealings with that supplier (Apple, 2011). Apple demonstrates how clear and
affirmative action is necessary for a company to undertake ethical practices. It
is not enough for companies, such as Apple to have codes, such as Apples
Supplier Code of Conduct. Ultimately, enforcing such codes of conduct shows
true ethical standards.
To conclude, corporate social responsibility can be defined as an attempt to
maximize performance in not only in the firms financial goals, but also goals
related to improving society and the environment (Caligiuri et al., 2013). This
means that not only does the firm have obligations to the shareholders who
have invested in the company; the company also has moral and ethical
obligations to those who can influence and be influenced by the company. An
organization behaves in a way that is corporately responsible when they take
into account how their actions will impact those both inside and outside the
organization. These points were demonstrated by the Coca Cola India case
study and also the Apple Computers study. Coca Cola demonstrated how
amends must be made after unethical behaviour has been demonstrated,
while the Apple showed a proactive and forward thinking approach to CSR by
incorporating ethical business practices into their general strategy. Managers
wishing to improve their ethical profile would be advised to emulate Apples
strategy by incorporating ethics and CSR on a daily basis. This can be
achieved by following the four-step strategy outlined in the paragraphs above:
stakeholder mapping, cause congruency, action and public relations.
Ultimately, the role that ethics and corporate social responsibility plays in
contemporary organizations is to attempt to limit the harm caused by the
company in question, while simultaneously trying to promote good, both for
reputational and development reasons.

Bibliography
1. Arenas, D., Lozano, J.M. & Albareda, L. 2009, "The Role of

NGOs in CSR: Mutual Perceptions among Stakeholders",

Journal of Business Ethics, vol. 88, no. 1, pp. 175-197.

2. Caligiuri, P., Mencin, A. & Jiang, K. 2013, "WinWinWin:

The

Influence

of

CompanySponsored

Volunteerism

Programs on Employees, NGOs, and Business Units",

Personnel Psychology, vol. 66, no. 4, pp. 825-860.
3. Dawkins, J. & Lewis, S. 2003, "CSR in Stakeholder

Expectations:

And

Their

Implication

for

Company

Strategy", Journal of Business Ethics, vol. 44, no. 2/3, pp.

185-193.
4. Deloitte 2011 Volunteer Impact Survey
5. Docherty, S. & Hibbert, S. 2003, "Examining company
experiences of a UK causerelated marketing campaign",
International Journal of Nonprofit and Voluntary Sector
Marketing, vol. 8, no. 4, pp. 378-389.
6. Hordijk, R., Olup, L., Nguyen, K., Cedillo Torres, C.A. &
Garcia-French, M. 2012, "Four Case Studies on Corporate
Social Responsibility: Do Conflicts Affect a Companys
Corporate Social Responsibility Policy?", Utrecht Law
Review, vol. 8, no. 3, pp. 51-73.
7. Jamali, D. & Keshishian, T. 2009, "Uneasy Alliances:
Lessons Learned from Partnerships between Businesses
and NGOs in the Context of CSR", Journal of Business
Ethics, vol. 84, no. 2, pp. 277-295.
8. Mutch, N. & Aitken, R. 2009, "Being fair and being seen to
be fair: Corporate reputation and CSR partnerships",
Australasian Marketing Journal (AMJ), vol. 17, no. 2, pp.
92-98.
9. ORiordan, L. & Fairbrass, J. 2014, "Managing CSR
Stakeholder Engagement: A New Conceptual Framework",
Journal of Business Ethics, vol. 125, no. 1, pp. 121-145.
10. Pitts, S. & Kamery, R. 2003, "The role of business ethics:
incorporating values and ethics into business decisions",
Journal of Legal, Ethical and Regulatory Issues, vol. 6, no.
1, pp. 77.

11. Pomering,

A.

&

Dolnicar,

S.

2009,

"Assessing

the

Prerequisite of Successful CSR Implementation:

Are

Consumers Aware of CSR Initiatives?", Journal of Business

Ethics, vol. 85, no. S2, pp. 285-301.
12. Tench, R. & Yeomans, L. 2009, Exploring public relations,

2nd edn, Financial Times Prentice Hall, 207690; Harlow

13. Vickers, M.R. 2005, "Business ethics and the HR role:
past, present, and future", Human resource Management
Journal, vol. 28, no. 1, pp. 26.