CSR and Business Ethics: Contrasting Ethical Vantage Points

Introduction to Corporate Social Responsibility

The manner in which institutions operate is increasingly becoming the target of attention from individuals, organizations, and societies across the globe. The recent interest in corporate social responsibility (CSR) has been fueled by innumerable examples of unethical behavior that have attracted media attention, especially in the last decade. These incidents have done much to illuminate the consequences that follow behaviors devoid of ethical merit, or instances in which ethics were disregarded altogether. Not only did these consequences become highly visible, but their effects on the economy as a whole were realized in a manner that has never before been possible. Technology has increased not only the speed, but also the volume of information available to the public about organizational operations. Only through advancements in technology have the interconnectedness of markets and the fragility of systems achieved such integration and transparency.

The increased access and availability of information has helped to shed light upon the costs of unethical transgressions that were once hidden. The speed at which today's economy moves, the integration of supply chains, the effects of globalization, and the intricacies of market overlaps have also added to the burden placed on society as a whole when the responsibility of operating within sustainable practices is ignored. These costs, which have grown in their impact, created a sense of urgency in understanding and, in some cases, persuasively injecting ethics into organizations.

CSR includes corporate philanthropy, but its scope extends far beyond that single endeavor. While innovation, creativity, value, and opportunity have been included in the mantras of the corporate world for years, conversations about CSR are just beginning to take hold. Some have argued that CSR need not be complicated, nor does it differ significantly from ethical values that are generally considered appropriate in society at the individual level — such as honesty, humility, respect, and dignity (Alahmad, 2010). Others argue that there need not be a separate classification denoted as business ethics because, in the end, all ethical systems stem from the same origins and the concept of business ethics holds no real relevance (Drucker, 1981). Yet others argue that organizations have no responsibilities other than maximizing shareholder value, provided they operate "within the rules," and that any attempt to impose other considerations represents a form of socialism (Friedman, 1970).

Another perspective from which this dilemma can be viewed concerns the identification of responsibility. At the heart of the issue, responsibility to different people — including oneself — as well as to institutions, investors, governments, future generations, and society as a whole can all demand varying requirements and all be in conflict simultaneously. One researcher identified six different types of responsibilities from the literature: legal, corporate, managerial, social, consumer, and societal (Murphy, 2010). Each of these factors can be more or less salient depending on the particular circumstance, and one component of ethical decision-making lies in the priority assigned to each. This literature review examines the types of ethical systems, contemporary interpretations, and CSR's value to modern organizations.

Review of the Variety of Ethical Systems

Ethical systems, in themselves, are far from clear or straightforwardly comprehensible. There exist three principal approaches that are generally considered enduring. These three approaches are Utilitarianism, the Theory of Justice, and the Theory of Rights (Cavanagh, Moberg, & Velasquez, 1981). Each of these can be further divided into proactive approaches and reactive (consequential) methods. Ethical behavior generally results from the consideration of ethical principles during the decision-making process; otherwise, the resulting behavior is somewhat a matter of chance. Ethical decision-making can therefore be considered an applied process that can be learned and improved with practice.

Utilitarianism is the approach that contemplates the greatest net benefit to society in any given scenario. This approach considers how the consequences of one's actions might affect the total population, though views on what constitutes a relevant population vary. When attempting to apply a utilitarian approach in decision-making, one must estimate the benefits and costs of the decision with regard to society. It is this process of estimation that presents the greatest challenge, because such estimations are often difficult to quantify. Yet in some instances, the mere identification of the social consequences that one's actions may have can be enough to alter behavior.

The Theory of Justice system of ethics is centered on fairness and impartiality. It essentially holds that every person should encounter the same rules within an equal organization of society. Abuses of such rules should require mandatory reimbursement to the victim by a method that equates the compensation to the damage caused. Much of the legal system has its origins in the Theory of Justice, and procedural fairness is of critical importance within this system. Such ideas are incorporated in legal systems across nearly every society today, though adherence to these principles varies significantly.

Another alternative framework is the Theory of Rights, which considers what rights are entitled to an individual. The growth of Human Rights represents an extension of this structure. Human Rights confront the challenges associated with determining what rights should be bestowed upon humans simply by virtue of their humanity. Another way to frame this is to ask: what responsibilities does an individual have to members of their own species? One of the most essential and widely accepted human rights is the right not to be physically harmed — sometimes called the harm principle. Simply stated, your rights end where mine begin. Other examples of rights derived from this system include the right to own property, the right to free speech, and the right to assembly.

Reactive approaches to ethical decision-making generally emphasize compliance with imposed rules and regulations. This approach places a smaller value on ethics as a practice in itself, focusing instead on avoiding the negative implications that can follow from violating a law or regulation. However, it should be noted that not all unethical behaviors are illegal; therefore, an individual can function within legal restrictions and still perform unethical acts. There have been countless examples of legal but unethical acts by organizations, such as the use of child labor or the deliberate pollution of the environment.

Proactive approaches, on the other hand, focus on the inherent value of ethics — that is, the value of ethics for ethics' own sake. Rules and regulations do not carry the salience that reactive systems tend to emphasize. Proactive approaches are generally grounded in moral reasoning and ethical interpretation of circumstances. Furthermore, it is possible — depending on the considerations of the individual and the situation — to be ethical in intent yet illegal under the constraints of law. A frequently cited example is the classic utilitarian scenario of killing one individual to save a million. The net benefit of such an action may be deemed perfectly ethical, yet it is certainly illegal.

Any one of the three systems may be considered independently of the other two. However, most scholars would agree that no single system is appropriate for all circumstances and situations. Each instance should be weighed against the alternative systems to determine the most ethical course of action in that case. Consideration of all three systems is most ideal, but it is also time-consuming, difficult to navigate, and adds layers of complexity. Within such complexities lie the debates that have been central to ethics since its philosophical origins.

Conclusion

There exist a plethora of arguments against the need for a salient and effective academic discipline that tackles the role of CSR and business ethics in modern society. Many of these assertions have been made by some of the leading academic minds as well as some of the most successful practitioners. Furthermore, these arguments are, for the most part, perfectly reasonable when viewed in light of the authors' intended context. That is, based on the assumptions provided, the logic and rationale are near-flawless — which is undoubtedly why these individuals have gained considerable popularity in their respective fields. However, increasing evidence suggests that many of these same assumptions are intrinsically flawed.

For example, both Friedman's and Drucker's positions fail to account for the potential of systemic risk to the broader system, and thus their foundations rest on the assumption that capitalism will prevail indefinitely. However, there are real possibilities that the system itself could collapse. One realization that has only recently begun to manifest is that anthropogenic activities are increasingly being identified as contributors to a changing climate. The natural infrastructure provided by the regenerative capacities of Earth's ecological systems is diminishing at an alarming rate. Since business and industry are major contributors to ecological destruction, one might argue that it is necessary to intervene to alter the course of industrial activity. Since CSR and business ethics represent a reasonable avenue for changing this direction, the salience and necessity of these disciplines will undoubtedly increase in the years to come.

Works Cited

Alahmad, A. (2010). To be ethical or not to be: An international code of ethics for leadership. Journal of Diversity Management, 31–35.

Cavanagh, G., Moberg, D., & Velasquez, M. (1981). The ethics of organizational politics. The Academy of Management Review, 363.

Drucker, P. (1981). What is business ethics? The Public Interest, 18–36.

Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. The New York Times Magazine.

Friedman, M. (1991). The social responsibility of business to increase its profits. North River Press.

Friedman, M. (2002). Capitalism and freedom: Fortieth anniversary edition. University of Chicago Press.

Murphy, P. (2010). The relevance of responsibility to ethical business decisions. Journal of Business Ethics, 245–252.