CSR | Case / Opinion | Closing down a factory

Closing down a factory

Please prepare arguments for and against the following behavior:

Your company is managing to maintain a good profit margin on the computer parts you manufacture in a very tough economy. Recently, an opportunity has come along to move your production capacity overseas. The move will reduce manufacturing costs significantly as a result of tax incentives and lower labor costs, resulting in an anticipated 15 percent increase in profits for the company. However, the costs associated with shutting down your United States–based operations would mean that you wouldn’t see those increased profits for a minimum of three years. Your U.S. factory is the largest employer in the surrounding town, and shutting it down will result in the loss of over 800 jobs. The loss of those jobs is expected to devastate the economy of the local community.







Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility | Key Terms

Key Terms - Corporate Social Responsibility

Altruistic CSR:  Organizations take a philanthropic approach by underwriting specific initiatives to give back to the company’s local community or to designated national or international programs.

Corporate Citizenship:  An alternative term for corporate social responsibility, implying that the organization is a responsible citizen in meeting all its obligations.

Corporate Conscience:  An alternative term for corporate social responsibility, implying that the organization is a responsible citizen in meeting all its obligations.

Corporate Social Responsibility:  The actions of an organization that are targeted toward achieving a social benefit over and above maximizing profits for its shareholders and meeting all its legal obligations.

Ethical CSR:  Organizations pursue a clearly defined sense of social conscience in managing their financial responsibilities to shareholders, their legal responsibilities to their local community and society as a whole, and their ethical responsibilities to “do the right thing” for all their stakeholders.

Instrumental Approach:  The perspective that the only obligations of a corporation is to maximize profits for its shareholders in providing goods and services that meet the needs of its customers.

Social Contract Approach:  The perspective that a corporation has an obligation to society over and above the expectations of its shareholders.

Strategic CSR:  Philanthropic activities are targeted toward programs that will generate the most positive publicity or goodwill for the organization.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility 5 | Would the CSR policies of an organization influence your decision to use their products or services? Why or why not?

Would the CSR policies of an organization influence your decision to use their products or services? Why or why not?

Student responses will vary. Many people are aware and respond to organizations decision to act in a socially responsible manner by patronizing them. The consumers who are conscience of a corporation’s charitable donations, or environmentally friendly practices are very likely to have a positive impression of the company and therefore purchase items from them. On the other hand, some consumers simply care about the lowest possible price.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility 4 | Explain the term triple bottom line

Explain the term triple bottom line.

Organizations pursue operational efficiency through detailed monitoring of their bottom line. As a testament to how seriously companies are now taking CSR, many have adapted their annual reports to reflect a triple bottom line approach, where they provide social and environmental updates alongside their primary bottom-line financial performance.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility 3 | Explain why organizations are struggling to adopt CSR initiatives

Explain why organizations are struggling to adopt CSR initiatives.

Organizations are struggling to adopt CSR initiatives not because the ethical action itself causes a problem, but how to promote those acts to your stakeholders as proof of your new corporate conscience without appearing to be manipulative or scheming to generate press coverage for policies that could easily be dismissed as feel-good initiatives that are simply chasing customer favor. Also, many CSR initiatives do not generate immediate financial gains to the organization.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility – Social contract approach

Social contract approach

Social contract approach is the perspective that a corporation has an obligation to society over and above the expectations of its shareholders.

Prior years, the primary focus of the social contract was an economic one, assuming that continued economic growth would bring an equal advancement in the quality of life.

The modern social contract approach argues that since the corporation depends on society for its existence and continued growth, there is an obligation for the corporation to meet the demands of that society rather than just the demands of a targeted group of customers.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility – Strategic CSR

Strategic CSR

Strategic CSR is a type of philanthropic activity which targets programs that will generate the most positive publicity or goodwill for the organization.

By supporting these programs, companies can claim to be doing the right thing and they also can meet their fiduciary obligations to their shareholders.

Critics can argue that strategic CSR is ethically commendable because these initiatives benefit stakeholders while meeting fiduciary obligations to the company’s shareholders.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility – Instrumental approach

Instrumental approach






















































Instrumental approach is the perspective that the only obligation of a corporation is to maximize profits for its shareholders in providing goods and services that meet the needs of its customers.


Most famous advocate of this “classic” model is the Nobel Prize-winning economist Milton Friedman. 


Friedman argues it would be unethical for a corporation to do anything other than deliver the profits for which its investors have entrusted it with their funds in the purchase of shares in the corporation.


Friedman also argues that, as an employee of the corporation, the manager has an ethical obligation to fulfill his role in delivering on the expectations of his employers.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility - Altruistic CSR

Altruistic CSR 


















































Altruistic CSR takes a philanthropic approach by underwriting specific initiatives to give back to the company’s local community or to designated national or international programs.


Critics argue this type of CSR is immoral since it represents a violation of shareholder rights if they are not given the opportunity to vote on the initiatives launched in the name of corporate social responsibility. 


Relative legitimacy of altruistic CSR is based on the argument that the philanthropic initiatives are authorized without concern for the corporation’s overall profitability.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility - Ethical CSR

Ethical CSR 






















































Ethical CSR represents the purest or most legitimate type of CSR in which organizations pursue a clearly defined sense of social conscience in managing their financial responsibilities to shareholders, their legal responsibilities to their local community and society as a whole, and their ethical responsibilities to do the right thing for all their stakeholders.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility 2 | Discuss the difference between ethical, altruistic, and strategic types of CSR

Discuss the difference between ethical, altruistic, and strategic types of CSR. 


















































Ethical CSR pursues a clearly defined sense of social conscience in managing a company's financial responsibilities to shareholders, its legal responsibilities to its local community and society as a whole, and its ethical responsibilities to do the right thing for all of its stakeholders.


Altruistic CSR takes a philanthropic approach underwriting specific initiatives to give back to the company's local community or to designated national or international programs.


Strategic CSR include philanthropic activities targeted toward programs that generate the most positive publicity or goodwill for the organization.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility 1 | Why is the failure of the public sector a major trend behind the CSR phenomenon?

Why is the failure of the public sector a major trend behind the CSR phenomenon?


















































Many, if not most, developing countries are governed by dysfunctional regimes. Developing countries alone do not suffer from public sectors. In the United States and in other developed countries, citizens expect less of government than they used to, having lost confidence in the public sector as the best or appropriate venue for addressing growing lists of social problems.


Source: Ghillyer_Business Ethics A Real World Approach 2e