Ethics Question-Quiz 02

Question- 1. Define CSR/ Define Carolls Pyramid (with example)

Corporate social responsibility, or CSR, is a corporation's obligation to its stakeholders, which

are any groups/people that have a stake or interest in a company's success and products. This
includes customers, employees, suppliers, investors and the communities surrounding the
business. Stakeholders have varying needs to be met. Whereas a customer's greatest concern may
be the safety of a company's products, an employee's need might be for a fair wage and safe
working conditions. An investor may be concerned with profits and the bottom line, while the
community may care about a business limiting the pollution it causes. Thus, corporate social
responsibility means maximizing the good and minimizing the bad effects your company has on
these stakeholders' diverse interests.

Carroll’s CSR pyramid explained

 Carroll’s CSR pyramid is a framework that explains how and why organisations should
take social responsibility. The pyramid was developed by Archie Carroll and highlights
the four most important types of responsibility of organisations. These are:
 Economic responsibility
 Legal responsibility
 Ethical responsibility
 Philanthropic responsibility
 The pyramid’s base is profit. This foundation is necessary for a company to meet all laws
and regulations, as well as the demands of shareholders. Before a company can and
should then take its philanthropic responsibility or discretionary responsibility, it must
also meet its ethical responsibilities.

Corporate Social Responsibility (CSR) as defined by Carroll

 Corporate Social Responsibility (CSR) has been a popular phrase since the 1950s. The
importance of the term and its execution didn’t become clearuntil much later, however.
The basis of the modern definition of CSR is rooted in the work that led to Archie
Carroll’s pyramid. This four-part definition was originally published by Carroll in 1979.
  CSR refers to a business’s behaviour, that it’s economically profitable, complies with the
law, is ethical, and is socially supportive. Profitability and compliance with the law are
the most important conditions for corporate social responsibility and when discussing the
company’s ethics, and the level to which it supports the society it’s part of with money,
time, and talent.

Economic responsibility in Carroll’s CSR pyramid

The economic responsibility of companies is about producing goods and services that society
needs and to make a profit on them. Companies have shareholders who expect and demand a
reasonable return on their investments, they have employees who want to do their jobs safely and
fairly, and have customers that want quality products for fair prices. That’s the foundation of the
pyramid upon which all the other layers rest. Economic responsibility in CSR is:

 The responsibility to be profitable

 The only way for a business to survive and support society in the long term

Legal responsibility in Carroll’s CSR pyramid

 The legal responsibility of companies is about complying with the minimum rules that
havebeen set. Organisations are expected to operate and function within those rules. The
basic rules consist of laws and regulations that represent society’s views of codified
ethics. They determine how organisations can conduct their business practices in a fair
manner, as defined by legislators on national, regional, and local level.
 Legal responsibility in CSR is:
 Operating in a consistent way in accordance with government requirements and the law
 Complying with different national and local regulations
 Behaving as loyal state and company citizens
 Meeting legal obligations
 Supplying goods and services that meet the minimum legal requirements

Ethical responsibility in Carroll’s CSR pyramid

 The ethical responsibility of businesses goes beyond society’s normative expectations –

laws and regulations. In addition, society expects organizations to conduct and manage
their business in an ethical manner. Taking ethical responsibility means that organizations
embrace activities, standards, and practices that haven’t necessarily been written down,
but are still expected.
  The difference between legal and ethical expectations can be difficult todetermine.
Obviously, laws are based on ethical premises, but ethics goes beyond that.
 Ethical responsibility in CSR includes:
 Performing in a way that’s consistent with society’s expectations
 Recognising and respecting new or evolving ethical and moral standards that have been
adopted by society
 Preventing ethical standards from being infringed upon to achieve objectives
 Being proper business citizens by doing what’s ethically or morally expected
 Acknowledging that business integrity and ethical behaviour go beyond compliance with
laws and regulations

Philanthropic responsibility or discretionary responsibility in Carroll’s CSR pyramid

 The philanthropic responsibility of businesses includes the voluntary or discretionary

activities and practices of businesses. Philanthropy isn’t a literal responsibility, but
nowadays business are expected by society to take part in such activities. The nature and
quantity of these activities are voluntary and are guided by companies’ desire to take part
in social activities that are generally not expected from organisations in an ethical sense.
Businesses developing philanthropic or discretionary activities give the public the
impression that the company wants to give something back to the community.

 In order to do so, businesses adopt different types of philanthropy, such as gifts,

donations, volunteer work, community development, and all other discretionary
contributions to the community or groups of stakeholders that make up that community.

 They are guided by business’s desire to participate in social activities that are not
mandated, not required by law, and not generally expected of business in an ethical sense.
Having said that, some businesses do give partially out of an ethical motivation. That is,
they want to do what is right for society. The public does have a sense that businesses
will “give back,” and this constitutes the “expectation” aspect of the responsibility. When
one examines the social contract between business and society today, it typically is found
that the citizenry expects businesses to be good corporate citizens just as individuals are.

Example of Archie Carroll’s CSR pyramid

Successful businesses often have plenty of ways in which they can take responsibility. They
don’t always do so, however. Here are a few examples of businesses that either have or have not.
Example of economic responsibility

Companies’ economic responsibilities are aimed at methods that enable the business in the long
term, while at the same time meeting the standards for ethics, philanthropy, and legal practices.
Companies that adapt manufacturing processes to be able to use recycled products and lower
material costs are examples of economically responsible companies. This benefits society in
several ways; increased profitability, reduced ecological footprint.

Example of legal responsibility

The second layer of Carroll’s CSR pyramid is the legal obligation of companies to comply with
laws and regulations. Fines can be steep when these laws aren’t being complied with. An
example is meeting regulations set by the food standards agency. If someone becomes ill due to
an organisation’s action, this could result in expensive legal proceedings which might even
destroy the company. This would then lead to job losses and financial setbacks for suppliers.

Example of ethical responsibility

The organisational focus on ethics is often about offering fair working conditions for employees,
both of the business itself as well as its suppliers. Honest business practices include equal pay for
equal work and compensation initiatives. An example of ethical business practices is the use of
products which have fair-trade certification. Ben & Jerry’s, for instance, only uses fair-trade
certified ingredients, such sugar, coffee, bananas, and vanilla.

Example of philanthropic/discretionary responsibility

Philanthropic initiatives include donations in the form of time, money, or resources to regional,
national, or international charities. The co-founder of Microsoft, Bill Gates, is a good example of
that. Together with his wife Melinda Gates, they founded the Bill and Melinda Gates
Foundation, to which he has donated billions. The Bill and Melinda Gates Foundation focuses on
developing education, eradicating malaria, and agricultural development, among other things.

In 2014, Bill Gates was the most generous philanthropist in the world, donating 1.5 billion to the
Bill and Melinda Foundation.
Question -2. Discuss the impact of CSR on organizational stability/ Discuss the advantage
of CSR for a business organization

Importance of Stability

A small business owner initially may not view organizational stability as an important goal. He
strives for growth, to create a dynamic, rapidly evolving organization that becomes a recognized
force in its industry. Stability may sound like a company that is standing still. Nevertheless, his
long-term goals of revenue growth and increased profits can be served by maintaining stability
with certain aspects of his company.

Customer Satisfaction and Retention

Consumers may choose to not do business with companies that have a reputation for being
socially irresponsible. Conversely, businesses that show a commitment to the community and the
environment can attract customers who share these values.

The good the company does is part of the perceived value of its products and services and can
result in higher customer satisfaction. These satisfied customers are likely to continue to do
business with the company. Thus, a stable, loyal customer base is a valuable asset.
Access to Funding

Capital often is needed to launch a company, and several capital infusions may be needed later
on to fund expansion plans. Capital can be viewed as a mechanism to ensure organizational
stability in the sense that it helps the business owner make continued progress toward achieving
his long-range growth objectives. Investors look at the ethical and social standards exhibited by a
business when deciding whether to commit capital to the company. Some investors focus
exclusively on companies that have a demonstrable track record of social responsibility.

Employee Recruitment and Retention

A small company must create a stable workforce by retaining its top talent and not losing these
individuals to competitors. The company also must compete to acquire the best talent. Younger
members of the workforce in particular have grown up in an era of heightened awareness of
environmental protection, and a company’s commitment to the environment and to society can
be a significant, even determining, factor in whether they elect to join an organization.

Fostering a Positive Image

Companies that have ethical lapses such as ignoring environmental regulations or standards for
how employees should be treated can suffer damage to their reputation when these lapses come
to light in traditional or social media. A company’s image affects its relationship with all of its
stakeholders, and remaking a company’s troubled image into one of stability – sometimes
referred to as damage control – can take time and draw managerial resources from the important
tasks of building the company. Customers who leave because they do not approve of the
company’s image can be difficult to win back.

Question -3. Discuss the advantage and disadvantage of CSR

 Advantages have already been written in 2

Disadvantage: CSR Costs Money to Implement

The main disadvantage of CSR is that its costs fall disproportionally on small businesses.
Major corporations can afford to allocate a budget to CSR reporting, but this is not always
open to smaller businesses with between 10 and 200 employees. A small business can use
social media to communicate its CSR policy to customers and the local community. But it
takes time to monitor exchanges and could involve hiring extra personnel that the business
may not be able to afford.
 Disadvantage: Conflicts with the Profit Motive

Even for larger companies, the cost of CSR can be an obstacle. Some critics believe that
corporate social responsibility can be an exercise in futility. A company's management has a
fiduciary duty to its shareholders, and CSR directly opposes this, since the responsibility of
executives to shareholders is to maximize profits. A manager who forsakes profits in favor of
some benefits to society may expect to lose his job and be replaced by someone for whom
profits are a priority.

Disadvantage: Consumers are Wise to Greenwashing

Greenwashing is term used to describe corporate practices that appear to be environmentally

responsible without actually representing a change in how a company conducts its business.

For example, a product may be labelled as "All Natural", even though it is being
manufactured just as it always has. Some dry cleaning services label their operations as
"Organic" which sounds similar to "organic food" but really carries no specific meaning.
Some customers may react positively to these types of claims, but others are wary of
corporate greenwashing.

Quesiton -4. Discuss the Evertt Rogers theory

Diffusion of Innovation (DOI) Theory, developed by E.M. Rogers in 1962, is one of the oldest
social science theories. It originated in communication to explain how, over time, an idea or
product gains momentum and diffuses (or spreads) through a specific population or social
system. The end result of this diffusion is that people, as part of a social system, adopt a new
idea, behavior, or product.   Adoption means that a person does something differently than what
they had previously (i.e., purchase or use a new product, acquire and perform a new behavior,
etc.). The key to adoption is that the person must perceive the idea, behavior, or product as new
or innovative. It is through this that diffusion is possible.

Adoption of a new idea, behavior, or product (i.e., "innovation") does not happen simultaneously
in a social system; rather it is a process whereby some people are more apt to adopt the
innovation than others.   Researchers have found that people who adopt an innovation early have
different characteristics than people who adopt an innovation later. When promoting an
innovation to a target population, it is important to understand the characteristics of the target
population that will help or hinder adoption of the innovation. There are five established
adopter categories, and while the majority of the general population tends to fall in the middle
categories, it is still necessary to understand the characteristics of the target population. When
promoting an innovation, there are different strategies used to appeal to the different adopter
categories.

1. Innovators - These are people who want to be the first to try the innovation. They are
venturesome and interested in new ideas. These people are very willing to take risks, and
are often the first to develop new ideas. Very little, if anything, needs to be done to
appeal to this population.
2. Early Adopters - These are people who represent opinion leaders. They enjoy leadership
roles, and embrace change opportunities. They are already aware of the need to change
and so are very comfortable adopting new ideas. Strategies to appeal to this population
include how-to manuals and information sheets on implementation. They do not need
information to convince them to change.
3. Early Majority - These people are rarely leaders, but they do adopt new ideas before the
average person. That said, they typically need to see evidence that the innovation works
before they are willing to adopt it. Strategies to appeal to this population include success
stories and evidence of the innovation's effectiveness.
4. Late Majority - These people are skeptical of change, and will only adopt an innovation
after it has been tried by the majority. Strategies to appeal to this population include
information on how many other people have tried the innovation and have adopted it
successfully.
5. Laggards - These people are bound by tradition and very conservative. They are very
skeptical of change and are the hardest group to bring on board. Strategies to appeal to
this population include statistics, fear appeals, and pressure from people in the other
adopter groups.

The stages by which a person adopts an innovation, and whereby diffusion is accomplished,
include awareness of the need for an innovation, decision to adopt (or reject) the
innovation, initial use of the innovation to test it, and continued use of the innovation. There
are five main factors that influence adoption of an innovation, and each of these factors is at
play to a different extent in the five adopter categories.

1. Relative Advantage - The degree to which an innovation is seen as better than the idea,
program, or product it replaces.
 2. Compatibility - How consistent the innovation is with the values, experiences, and needs
of the potential adopters.
3. Complexity - How difficult the innovation is to understand and/or use.
4. Triability - The extent to which the innovation can be tested or experimented with before
a commitment to adopt is made.
5. Observability - The extent to which the innovation provides tangible results.

Question -5. Explain the characteristics of an innovation according to Rogers

Innovation

An idea, practice, or object. It is perceived as new by an individual, group,or organization. It

need not be “new” in the pure sense.

1. Relative Advantage.

Relative advantage is the degree to which an innovation appears to be better than any other
alternatives the potential adopter might have, measured in terms of economics, convenience,
satisfaction, and social prestige.. Innovations do not typically exist in a vacuum and must
compete with other innovations looking to serve the same purpose.

2. Trialability.

Trialability is the degree in which the innovation can be experienced firsthand on a limited basis.
For example, pills for weight control are certainly more triable than having one's stomach
surgically tied, and are tried with far more frequency, in spite of their limited effectiveness.

3. Observability.

Observability is the degree in which the innovation or its results can be seen by others likely to
adopt it. If potential adopters are unaware of the innovation or do not see it being used by their
peers, they are less likely to adopt it themselves. If a tree falls in a forest, does it make a sound?

4. Compatibility.

Compatibility is the degree to which the innovation is seen as consistent with existing values,
previous experiences, and needs of the user. Innovations exist among other innovations and rest
on the experiences potential adopters have had with other innovations and their personal values
and beliefs. Some innovations

may be seen as a part of a larger group of innovations, known as a technology cluster, and may
be judged by potential adopters within the context of the group, rather than individually.
5. Complexity.

Complexity is the degree in which the innovation is seen as difficult to understand or use. People
are less likely to adopt hard to use or complex products.

a social system

According to Rogers, a social system is a set of interrelated “units.” These units may be
individual people, groups, or organizations. The key is that members of the system cooperate to
some extent towards a common goal. Members of a social system can facilitate or impede
adoption. If an innovation is compatible with a culture’s structure, it will succeed. If it isn’t, it
will fail. Innovation needs to be adopted widely to sustain itself. Human capital has to be on its
side.

Communication Channels

Communications are an important factor in the diffusion process. People have to get the word out
on new technology and new concepts. Communication channels can generally be divided into
mass media and social networks. In mass media, information travels from a channel to an
individual. In social networks, information travels from individual to individual. Means of
communication include face-to-face, broadcast media, mobile, electronic, and written.

Time

Adoption of innovations takes time. Thus time is an important variable in the study of diffusion.
Time is analyzed in terms of the Innovation-decision process. This refers to the interval between
first knowledge and formation of an opinion. Leading to a decision on adoption or rejection and
a final confirmation of decision. Potential adopters may need to be exposed to communications
for a long period. Before decision-making takes place on whether to adopt or not.

Characteristics of individual adopters

Like innovations, adopters have been determined to have traits that affect their likelihood to
adopt an innovation. A bevy of individual personality traits have been explored for their impacts
on adoption, but with little agreement. Ability and motivation, which vary on situation unlike
personality traits, have a large impact on a potential adopter's likelihood to adopt an innovation.
Unsurprisingly, potential adopters who are motivated to adopt an innovation are likely to make
the adjustments needed to adopt

it. First proposed by Ryan and Gross (1943), the overall connectedness of a potential adopter to
the broad community represented by a city. Potential adopters who frequent metropolitan areas
are more likely to adopt an innovation. Finally, potential adopters who have the power or agency
to create change, particularly in organizations, are more likely to adopt an innovation than
someone with less power over his choices.

Characteristics of organizations

Organizations face more complex adoption possibilities because organizations are both the
aggregate of its individuals and its own system with a set of procedures and norms.
Organizations can feel pressured by a tension for change. If the organization's situation is
untenable, it will be motivated to adopt an innovation to change its fortunes. This tension often
plays out among its individual members. Innovations that match the organization's pre-existing
system require fewer coincidental changes and are easy to assess and more likely to be adopted.
The wider environment of the organization, often an industry, community, or economy, exerts
pressures on the organization, too. Where an innovation is diffusing through the organization's
environment for any reason, the organization is more likely to adopt it. Innovations that are
intentionally spread, including by political mandate or directive, are also likely to diffuse
quickly.

Question -6.Discuss the five stages of the adoption.

Awareness: A person becomes aware of the innovation. They have some idea of what it is, and
what it does.

Persuasion: A person develops an attitude towards the innovation. A favorable or unfavorable

one. They are compelled to seek information about the innovation.

Decision: A person weighs the pros and cons of making use of the innovation. They decide to
adopt or reject it.

Implementation: A person puts the innovation to use. At this stage they are still determining
how useful it is.

Continuation: A person checks the results of the innovation decision. They come to a final
decision on whether to keep using the innovation. This decision may be motivated by group
confirmation (interpersonal factors).

Diffusion of Innovation: Innovators

Innovators are those who want to be the first to acquire a new product or service. They are risk-
takers, price-insensitive, and are able to cope with a high degree of uncertainty. Innovators are
crucial to the success of any new product or service, as they help it to gain market acceptance.

For example, individuals who stay overnight outside a movie theatre o be the first to purchase
the first showing to a movie are considered innovators.

Diffusion of Innovation: Early Adopters

Early adopters are those who are not quite as risk-taking as innovators and typically wait until
the product or service receives some reviews before making a purchase. Early adopters are
referred to as “influencers” or “opinion leaders”, and are often regarded as role models within
their social system. They are key in helping the spread of a product or service achieve “critical
mass”. Therefore, if early adopters of a product or service are small, the total number of people
who adopt the product or service will likely be small as well. Individuals who wait a couple of
days and spend some time reading reviews before going to see a movie are regarded as early
adopters.

Diffusion of Innovation: Early Majority

Early majorities represent the majority of the market – 34%. Early majorities are not risk-taking
and typically wait until a product or service is tested or used by a trusted peer. These individuals
are prudent and want to purchase things that are proven to work. Individuals who go to a movie
after it’s been out several weeks and gotten good reviews and made profits at the box office are
early majorities.

Diffusion of Innovation: Late Majority

Late majorities also represent an important percentage of the market – 34%. Late majorities are
the last large group of consumers to enter the market. They are deemed conservative and are
often technologically shy, very cost-sensitive, skeptical, and cautious in making a purchase. In
addition, late majorities are often peer pressured into purchasing the product or service.

People who wait for a movie to become available online or on Netflix are regarded as late
majorities.

Diffusion of Innovation: Laggards

Laggards are the last to adopt a new product or service. They resent change and may continue to
rely on traditional products or services until they are no longer available. In other words, they
typically only adopt the new technology when virtually forced to.

Laggards perhaps finally catch a hit movie when it’s shown on network TV.