Phases of Corporate Social

Responsibility
Frederick provides expanded framework for
understanding the evolution of CSR concept
Divided into 4 phases:
• Corporate social stewardship, 1950s – 1960s
• Corporate social responsiveness, 1960s –
1970s
• Corporate/business ethics, 1980s – 1990s
• Corporate/global citizenship, 1990s – 2000s
 Evolving Phases of Corporate Social Responsibility

CSR, Phases of CSR CSR Drivers CSR Policy

1950-1960
Instruments
Corporate Social Stewardship
Corporate Executive Philanthropic
Philanthropy-acts of Conscience funding
charity

Managers as Public Company Image Public relations

Stewards / Reputation

Balancing social
Pressure
 Evolving
PhasesPhases
of CSR of CorporateCSRSocial
Drivers Responsibility
CSR Policy
Instruments
Corporate Social Responsiveness

Social unrest / Stakeholder

Social Impact Analysis
Protest Strategy
Repeated
Strategic priority for social Regulatory
corporate
Response compliance
misbehavior
CSR, Public Policy /
Social audit
Balancing social Pressure Govt Regulations
1960-
1970 Organizational redesign and
training for Responsiveness
Stakeholders
Pressure
Public affair
functions

Stakeholder mapping and Governance

implementation reforms

Political lobbying
 Evolving Phases of Corporate Social Responsibility
CSR, Phases of CSR CSR Drivers CSR Policy
1980-1990
Instruments
Corporate / Business Ethics
Foster an ethical Religious / Ethnic Mission/vision/
corporate culture beliefs values statements

Establish an ethical Technology CEO Leadership

organizational climate driven value Ethics
changes
Recognize common Human rights
ethical principles pressure

Code of ethics
Ethics Training
Stake holder
negotiation
 Evolving Phases of Corporate Social Responsibility
CSR, Phases of CSR CSR Drivers CSR Policy
1990-2000
Instruments
Corporate / Global Citizenship
Stakeholder Global economic Intergovernmental
Partnerships trade/investment compacts

Integrate financial, High-Tech Global audit

social, and communication standards
environmental networks
performance
Identify globalization Ecological NGO dialogue
effects awareness/conce
rns
Sustainability of NGO Pressure Sustainability audit
company and /reports
environment
 Carroll’s Pyramid of Social
Responsibility
Source: A Carroll (1991) The pyramid of
corporate social responsibility, Business
Horizons, July-August, pp 39-48

Compare with the Reidenbach and Robin Model

The Pyramid of Social Responsibility
PHILANTHROPIC
Responsibilities
Be a good Corporate Citizen.
Contribute resources to the
community; improve quality of life.

ETHICAL
Responsibilities
Be ethical.
Obligation to do what is right,
just and fair; Avoid harm.

LEGAL
Responsibilities
Obey the Law
Law is society’s codification of right and wrong;
Play by the rules

ECONOMIC
Responsibilities
Be Profitable
The foundation upon which all others rest

Source: Carroll (1991)

Level 1 ECONOMIC
Responsibilities
Be profitable
The foundation upon which all other
levels rest
 Economic Components
 It is important to perform in a manner consistent
with maximising earnings per share
 It is important to be committed to being as
profitable as possible
 It is important to maintain a strong competitive
position
 It is important to maintain a high level of
operational efficiency
 It is important that a successful firm be defined as
one that is consistently profitable.
Level 2 LEGAL

Responsibilities
Obey the Law
Law is society’s codification of right
and wrong; Play by the rules
 Legal Components
 It is important to perform in a manner consistent
with expectations of government and the law.
 It is important to comply with various national
and supra-national laws and regulations.
 It is important to be a law-abiding corporate
citizen.
 It is important that a successful firm be defines as
one that fulfils its legal obligations.
 It is important to provide goods and services that
at least meet the minimal legal requirements.
Level 3 ETHICAL

Responsibilities
Be Ethical
Obligation to do what is right, just
and fair; Avoid harm.
 Ethical Components
 It is important to perform in a manner that is
consistent with the expectations of societal mores
and ethical norms.
 It is important to recognise and respect new or
evolving ethical/moral norms adopted by society.
 It is important to prevent ethical norms from being
compromised in order to achieve corporate goals.
 It is important that good corporate citizenship be
defined as doing what is expected morally or ethically.
 It is important to recognise that corporate integrity
and ethical behaviour go beyond mere compliance
with laws and regulations.
Level 4 PHILANTHROPIC

Responsibilities
Be a Good Corporate Citizen
Contribute resources to the
community; improve quality of life
 Philanthropic Components
 It is important to perform in a manner consistent
with the philanthropic and charitable expectations
of society.
 It is important to assist the fine and performing arts.
 It is important that managers and employees
participate in voluntary and charitable activities
within their local communities.
 It is important to provide assistance to public and
private educational institutions.
 It is important to assist voluntarily those projects
that enhance a community’s ‘quality of life’.
Moral Management and Stakeholders

Three Moral Types:

Immoral Managers
Amoral Managers
Moral Managers
 Immoral Managers
Characterised by:
 managers whose decisions, actions and
behaviour suggest an active opposition to what
is deemed to be right and ethical
 These managers care only about their or their
organisation’s profitability or success
 Legal issues are there to be circumvented
 Strategy is to exploit opportunities for personal
or organisational gain at any cost
 Amoral Managers
 Amoral Managers are neither immoral nor
moral but are not sensitive to the fact that
their everyday business decisions may have a
deleterious effect on others.
 These managers may lack an ethical
perspective in their organisational lives.
 Typically their orientation is to the ‘letter of
the law’ as their ethical guide.
 Sometimes we can have a sub category - the
unintentional amoral manager
 Un-intentional Amoral Manager
 These managers are un-intentionally amoral
in their behaviour. They tend to see ethical
issues are for their private lives not their
business lives, where different rules apply.
 They tend to believe that business activity
resides outside the sphere to which moral
judgements may apply.
 Amoral managers here may not consider a
role for ethics in business.
 The Moral Manager
 In moral management, ethical norms that adhere
to a high standard of right behaviour are
employed
 Moral managers not only conform to accepted
and high levels of professional conduct, they also
lead on issues of ethical behaviour.
 The law is seen as giving a minimal guide to
ethical behaviour. The ‘spirit of the law’ in more
important than the ‘letter of the law’. The
objective is to operate well above what the law
mandates the firm to do.
 The Moral Manager
 Moral mangers want to be profitable and
ethical.
 Moral mangers will use ethical principles to
base their judgements upon - justice, rights,
the Golden Rule, utilitarianism etc.
 When ethical dilemmas arise, moral managers
and moral companies will tend to assume
leadership in their companies and industries.

Compare this model with the Reidenbach & Robin Model

 The Three Moral Types

Orientation towards Stakeholders:

 Shareholders
Employees
Customers
Local Community
 Moral Types and Stakeholders
 Our goal is to gain a fuller understanding of
what it means to engage in moral
management and what this implies in terms of
relationships with key stakeholders.
 The next four slides are in table form showing
the orientation of moral types and
stakeholder orientations.
 Three Moral Types and Orientation Toward Stakeholder Groups:
Owners and Shareholders

Type of Management Orientation Toward Owner/Shareholder

Stakeholders
Immoral Management Shareholders are minimally treated and given
short shrift. Focus is on maximising positions of
executive groups - maximizing executive
compensation, perks, benefits. Golden
parachutes are more important than returns of
shareholders. Managers maximise their positions
without shareholders being made aware.
Concealment from shareholders is the operating
procedure. Self-interest of management group is
the order of the day.

Amoral Management No special thought is given to shareholders; they

are there and must be minimally accommodated.
Profit focus of the business is their reward. No
thought is given to ethical consequences of
decisions for any stakeholder group, including
owners. Communication is limited to that
required by law.

Moral Management Shareholders’ interest (short- and long-term) is a

central factor. The best way to be ethical to
shareholders is to treat all stakeholder claimants
in a fair and ethical manner. To protect
shareholders, an ethics committee of the board is
created. Code of ethics is established,
promulgated, and made a living document to
protect shareholders’ and others’ interests.
 Three Moral Types and Orientation Toward Stakeholder Groups:
Employees

Type of Management Orientation Toward Employee Stakeholders

Immoral Management Employees are viewed as factors of production to

be used, exploited, manipulated for gain of
individual manager or company. No concern is
shown for employees’ needs/rights/expectations.
Short term focus. Coercive, controlling,
alienating.

Amoral Management Employees are treated as law requires. Attempts

to motivate focus on increasing productivity
rather than satisfying employees’ growing
maturity needs. Employees still seen as factors
of production by remunerative approach used.
Organization sees self-interest in treating
employees with minimal respect. Organization
structure, pay incentives, rewards all geared
toward short- and medium-term productivity.

Moral Management Employees are a human resource that must be

treated with dignity and respect. Goal is to use a
leadership style such as consultative/participative
that will result in mutual confidence and trust.
Commitment is a recurring theme. Employees’
rights to due process, privacy, freedom of
speech, and safety are maximally considered in
all decisions. Management seeks out fair
dealings with employees.
 Three Moral Types and Orientation Toward Stakeholder Groups:
Customers

Type of Management Orientation Toward Customer Stakeholders

Immoral Management Customers are viewed as opportunities to be

exploited for personal or organizational gain.
Ethical standards in dealings do not prevail;
indeed, an active intent to cheat, deceive, and/or
mislead is present. In all marketing decisions -
advertising, pricing, packaging, distribution -
customer is taken advantage of to the fullest
extent.

Amoral Management Management does not think through the ethical

consequences of its decisions and actions. It
simply makes decisions with profitability within
the letter of the law as a guide. Management is
not focused on what is fair from perspective of
customer. Focus is on management’s rights. No
consideration is given to ethical implications of
interactions with customers

Moral Management Customer is viewed as equal partner in

transaction. Customer brings needs/expectations
to the exchange transaction and is treated fairly.
Managerial focus is on giving customer fair
value, full information, fair guarantee, and
satisfaction. Consumer rights are liberally
interpreted and honoured.
 Three Moral Types and Orientation Toward Stakeholder Groups:
Local Community

Type of Management Orientation Toward Local Community

Stakeholders
Immoral Management Exploits community to fullest extent; pollutes the
environment. Plant or business closings take
fullest advantage of community. Activity
disregards community needs. Takes fullest
advantage of community resources without
giving anything in return. Violates zoning and
other ordinances whenever it can for its own
advantage.

Amoral Management Does not take community or its resources into

account in management decision making.
Community factors are assumed to be irrelevant
to business decisions. Community, like
employees, is a factor of production. Legal
considerations are followed, but nothing more.
Deals minimally with community, its people,
community activity, local government.

Moral Management Sees vital community as a goal to be actively

pursued. Seeks to be a leading citizen and to
motivate others to do likewise. Gets actively
involved and helps institutions that need help -
schools, recreational groups, philanthropic
groups. Leadership position in environment,
education, culture/arts, volunteerism, and general
community affairs. Firm engages in strategic
philanthropy. Management sees community
goals and company goals as mutually
interdependent.
 Finally
 Though the concept of social
responsibility may change from time to
time, the pyramid model gives us a
framework for understanding the
evolving nature of the firm’s economic,
legal, ethical and philanthropic
performance.
Issues, Questions and Reflections

Marketing Ethics
Social Responsibility
Moral Management
 Marketing and Ethics

From Buyer Beware to Seller Beware

See:
Smith, N.C., (1995) Marketing Strategies for the
Ethics Era, Sloan Management Review, Summer,
pp. 85-97.
 Marketing Ethics Continuum
Producer Interests Producer Interests
Favoured Less favoured

Consumer Interests Consumer Interests

Less Favoured More Favoured

Caveat Industry Ethics Consumer Caveat

Emptor Practice Codes Sovereignty Venditor

Profit General business Codes of Capability Consumer

maximisation practice (average individual satisfaction
across all firms) firms Information

Subject to Practices of Industry Choice

legal constraints specific industries codes

Practice of Professional
best firms codes
Source: N C Smith (1995)
 Some Ethical Maxims
Marketers often rely on simple maxims to evaluate their
marketing practices. While useful, they generally lack
specific guidance.

 Do unto others as you would have them do unto you.

 Would you be embarrassed in front of your family/ friends/
colleagues if the media publicised your decision ?
 Good ethics is in the long term interests of the firm.
 Would an objective panel of professional colleagues view
my actions as proper ?
 When in doubt, don’t.

Read the article in the reading list entitled ‘Ethics - a view from the
trenches’
 Social Responsibility

Look at the ‘principles’ of key

companies - Shell, Lockheed Martin
and Body Shop
The new Philanthropy

Shell’s ‘principles’ can be found in the

Shell folder in Readings
 Some Issues to Consider
 Compare the Carroll Model with the Reidenbach and
Robin Model. Look at the similarities and differences.
 Read the section in the Visions folder particularly on
the articles by:
 Malcolm McIntosh - particularly focus on the last
paragraph which quotes Timberland’s mission statement.
See next slide
 Glazebrook and Birch
 Go to the web sites of Shell, Lockheed Martin and
Body Shop. Compare their ‘principles of business’.
 Where would you place them on model ? Why?
Timberland’s Mission Statement
“We do not give money to charity. Instead we try to create a
return. We create values for our customers, the community
and the non-profit organisations we work with. The
traditional notion of philanthropy is not adequate. It is not
smart or wise to approach social problems with the financial
leftovers of companies.”
 Consider this statement carefully, and reflect on the issues
that it addresses. To what extent can this statement be be
said to be ‘enlightened’? What is your position about
businesses and the community and how does this relate to
Carroll’s model and moral types ?
Moral Management
‘Cartel’ - 1999 Style
 Vitamins Inc -
An International Cartel

Featuring Europe’s Top Companies

BASF - Germany
Roche - Switzerland
Rhone-Poulnec - France

This Cartel lasted 9 years and was busted in May 1999

Members were fined $ 725m under US Anti-trust laws and a
Senior Executive was jailed for 4 months and fined $100,000

See FT cuttings in Readings/Cartel Folder

Vitamins Inc: How to Run an Efficient
Cartel
 Hold and annual summit between ‘hot shot’
executives in late summer
 Negotiate a budget for the year, covering prices and
sales volumes around the world
 Fix quarterly meetings between mid-level managers
to watch each other’s figures
 Police the cartel’s targets with regular telephone
calls
 Review each year’s performance at a ‘shareholders’
meeting’ of top executives
 Questions for Reflection
 Where would you classify these three companies on
the Carroll and the Reidenbach and Robin Model ?
 What would morale and attitudes of managers be in
other parts of the these firms ?
 Can firms like Roche and BASF be ‘moral’ and
‘ethical’ in their other SBUs, while at the same time
be manipulating the market by running an illegal
cartel ? Discuss.
 Would you be attracted to such a firm for a
managerial opportunity ?