++

Managing Business EthicsChapter 9

Treviño & Nelson – 5th Edition

++Chapter 9 Overview Introduction

Why Corporate Social Responsibility?

Types of Corporate Responsibility

Triple Bottom Line and Environmental Sustainability

Is Socially Responsible Business Good Business?

Conclusion

++Corporate Social Responsibility

Responsibility beyond economic and legal obligations – to act ethically and to contribute in a positive way to society

++Why Corporate Social Responsibility?

Pragmatic To maintain legitimacy, protect reputation, viability We must use power responsibly or risk losing it

Ethical As a part of society, we have the responsibility to behave

ethically and to contribute to the greater good

Strategic Being socially responsible creates shared value and can

differentiate one from competitors When society prospers, business prospers – they are

partners

++Stakeholder Perspective

++Types of Corporate Social Responsibility

Economic ResponsibilitiesEconomic Responsibilities

Legal ResponsibilitiesLegal Responsibilities

Ethical ResponsibilitiesEthical Responsibilities

Philanthropic ResponsibilitiesPhilanthropic Responsibilities

++Triple Bottom Line

EconomicEconomic SocialSocial EnvironmentalEnvironmental

The Merck Case The Merck Case Economic ResponsibilityEconomic Responsibility

In the Merck case, how might we In the Merck case, how might we think about the firm’s think about the firm’s economic economic responsibility? responsibility? The potential costs/benefits of the The potential costs/benefits of the

investment? investment? Must Merck justify the investment Must Merck justify the investment

to shareholders? Financially, to shareholders? Financially, Ethically?Ethically?

Legal ResponsibilityLegal Responsibility

Companies have a Companies have a responsibility to obey the law. responsibility to obey the law. Is there anyIs there any legal legal responsibility for Merck here? responsibility for Merck here? Any legal penalty for not Any legal penalty for not doing so?doing so?

Does Merck have an Does Merck have an ethicalethical responsibility to develop the drug?responsibility to develop the drug?

Think stakeholders, harms and Think stakeholders, harms and benefits, greater goodbenefits, greater good

Think duties, obligations, ethical Think duties, obligations, ethical valuesvalues

Ethical ResponsibilityEthical Responsibility

Do Merck’s Philosophy/Values Do Merck’s Philosophy/Values Play a Role?Play a Role?

““We try never to forget that We try never to forget that medicine is for people. It is medicine is for people. It is not for profits. The profits not for profits. The profits follow, and if we have follow, and if we have remembered that, they have remembered that, they have never failed to appear”never failed to appear”

George W. Merck & www.merck.comGeorge W. Merck & www.merck.com

++Stakeholder Perspective

++ Duties, obligations?

Do ethical duties differ by Do ethical duties differ by industry? Does it matter that it is industry? Does it matter that it is a pharmaceutical company?a pharmaceutical company?

Philanthropic ResponsibilityPhilanthropic Responsibility

Is philanthropy a social Is philanthropy a social “responsibility” of business? “responsibility” of business?

Executive Decision-MakingExecutive Decision-Making

If you were CEO, what would If you were CEO, what would you decide?you decide?

What would be the major bases What would be the major bases for your decision?for your decision?

Case TakeawaysCase Takeaways• Decisions are not single events Decisions are not single events

Decision to pursue research led to…decision Decision to pursue research led to…decision to provide drug for free forever…to decision to provide drug for free forever…to decision to develop logistics plans…to expertise in to develop logistics plans…to expertise in providing drugs in developing world providing drugs in developing world (currently used in AIDS drugs)(currently used in AIDS drugs)

• Organizational valuesOrganizational values can and should can and should guide social responsibility decisionsguide social responsibility decisions

• Employees’ values Employees’ values should be taken into should be taken into account.account.

• Organizations can be ethical leadersOrganizations can be ethical leaders and other firms will often followand other firms will often follow

++Case

You have a long-standing consulting relationship with a large consumer products company. This company represents 50 percent of your consulting revenues and is clearly your most important client. The CEO has called to ask you to commit a significant amount of time over the next couple of months to assist with a large merger project. The company is merging with a large conglomerate whose primary business is the sale and distribution of tobacco products. The CEO is relying on you to assist in facilitating a smooth integration of the two companies. You promised yourself that because your father died of lung cancer, you would never work for a tobacco company. Is there a way that you can accept the consulting assignment and still keep your promise to yourself? How will you handle this dilemma if you decide that you cannot work for the tobacco company?