EWMBA 207B

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EWMBA 207B

• Lecture 2
• March 24 and 25
• Kathryn Mc Neil
• Lecture on CSR- Corporate Social Responsibility
• RU486
• California Space Heaters
• Ellen Weinreb

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Grades34 Class Participation (7.5 /class x
4.5classes)33 Class Paper 133 Final Paper
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Looking for in First Paper

• Critical Thinking. Insight. Ah ha!
• Demonstrate understanding of the theory (more
  than using the right jargon)
• Application of the theory to the analysis
• Application of frameworks from articles (ie A
  Guide to Defining Moments)
• If you choose to apply the theory to your own
  experience, you will not be graded on the
  experience itself
• Assume the reader knows the facts of the case.
• Assume the reader does not know the theory. You
  need to explain what the philosopher meant.
• Critical thinking may include criticism.
• You may introduce other theories but you must
  also demonstrate understanding of the theory from
  class
• You are graded on the quality of your analysis
  not the quantity of theories covered.

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Frameworks
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A Guide to Defining MomentsSource The
Discipline of Building Character p. 61
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A theoretical framework for ethical
decision-making

• What decision would a virtuous person make?
  (Aristotle)
• What will maintain an image of goodness. Is
  temptation a factor? (Plato)
• Which decision is more likely to produce the
  greatest good for the greatest number? (Mill)
• What principles inform each alternative? Would I
  be willing to make this principle a universal
  rule? (Kant)
• If the roles were reversed, would I want the same
  course of action to be followed? (Kant)
• What is the right decision? Have I taken myself
  out of this equation? (Rawls)
• What will be most effective? (Machiavelli)

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Stakeholder Analysis

• Who is affected (stakeholder analysis)?
• Who do the stakeholders represent?
• What are my obligations to them? What are their
  claims on me (rights)?
• What are the companys obligations to them? What
  are their claims on the business?
• Which stakeholders voice is the loudest?
• Which stakeholder is most important?

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Values

• A value is a belief, principle, or virtue held so
  deeply (consciously or unconsciously) that it
  guides behavior, decisions and action.

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Shameful Profit

• The more men value money-making, the less they
  value virtue. Socrates

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Confucius

• The superior man understands what is right the
  inferior man understands what will sell.

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Adam Smith, The Theory of Moral Sentiments
(1759), pp. 47-8

• How selfish soever man may be supposed, there are
  evidently some principles in his nature, which
  interest him in the fortunes of others, and
  render their happiness necessary to him, though
  he derives nothing from it, except the pleasure
  of seeing it.
• He is certainly not a good citizen who does not
  wish to promote, by every means in his power, the
  welfare of the whole society of his
  fellow-citizens.

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New Testament

• It is easier for a camel to go through the eye
  of a needle than for a rich man to enter the
  kingdom of God.
• The love of money is the root of all evil

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T H E B U S I N E S S M I N D Alfred North
Whitehead,1933

• The behavior of the community is largely
  dominated by the business mind. A great society
  is a society in which the people of business
  think greatly of their functions.

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Corporate Social Responsibility Definitions
There is no agreed upon definition of
CSR Governments and business must show that
economics properly applied, and profits wisely
invested, can bring social benefits within reach
not only for the few but for the many, and
eventually for all. (Kofi Annan message to the
World Social Forum - Porto Alegre, February 4,
2002) Achieving commercial success in ways that
honor ethical values and respect people,
communities, and the natural environment. (Busine
ss for Social Responsibility) Meeting the needs
of the present without compromising the ability
of future generations to meet their needs. (1987
Brundtland Report of the UN World Commission on
Environment and Development) The commitment of
business to contribute to sustainable economic
development, working with employees, their
families, the local community, and society at
large to improve their quality of life, in ways
that are both good for business and good for
development. (World Bank) A concept whereby
companies integrate social and environmental
concerns in their business operations and in
their interaction with their stakeholders on a
voluntary basis. (Commission of the European
Communities, Green Paper Promoting a European
framework for Corporate Social Responsibility,
July 18, 2001)
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Business Importance

• Improved Financial Performance
• Reduced Operating Costs
• Enhanced Brand Image and Reputation
• Increased Sales and Customer Loyalty
• A 2001 HillKnowlton/Harris Interactive poll
  showed that 79 of Americans take corporate
  citizenship into account when deciding whether to
  buy a particular company's product 36 of
  Americans consider corporate citizenship an
  important factor when making purchasing
  decisions.
• A 2002 Cone Corporate Citizenship Study found
  that of U.S. consumers who learn about a firms
  negative corporate citizenship practices, 91
  would consider switching to another company, 85
  would pass the information to family and friends,
  83 would refuse to invest in that company, 80
  would refuse to work at that company and 76
  would boycott that companys products.
• Increased Productivity and Quality
• Increased Ability to Attract and Retain Employees
  
• Reduced Regulatory Oversight
• Access to Capital

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Key Developments

• Increased stakeholder activism
• More sophisticated stakeholder engagement
• Proliferation of codes, standards, indicators and
  guidelines
• Accountability throughout the value chain
• Transparency and reporting
• Growing government interest and action - europe
  is leading the way
• Convergence of CSR and governance agendas
• Growing investor pressure and market-based
  incentives
• Advances in information technology
• Pressure to quantify CSR return on investment

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Where does CSR Sit
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Kathryn McNeil Learning Points

• Work-life balance is a business and social issue.
• Foley attempts to balances his responsibilities
  to shareholders with his responsibilities to his
  employee.
• Good intentions on the part of managers are not
  enough They must be able to impact corporate
  policy (Machiavelli)
• Always think creatively about alternatives
  (Badaracco)
• The way a corporation treats its Ees is a
  critical component of its ethics
• Corporate decisions have broad social impacts.
• Commitments to stakeholders should be honored.

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RU 486 Lessons Learned

• There are bottom line outcomes to ethical
  decisions.
• Combination of shrewdness, creativity and
  tenacity can help a leader transform their vision
  into reality (Badaracco- Defining Moments).
• Moral Externality-affecting the welfare of those
  who dont consume it.
• Example of conservative pressure.

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CA Space Heaters Lessons Learned

• Environmental decisions have bottom line
  consequences.
• Business decisions should take into account that
  government regulation changes- iow setting the
  bar at regulation means the bar will shift with
  change in administrations.
• Explores, What is the price of safety?
• Similar to the Ford Pinto case, 1 in a million
  deaths is 1 too many.
• Example of decision with several options- a
  continuum of safety.

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Badaracco and RU486

• What makes this third type of defining moment so
  difficult is that executives are asked to form,
  reveal and test not only themselves and their
  work groups but also their entire company and its
  role in society.
• Badaracco, p. 61 in reader