{"id":675,"date":"2016-01-27T16:24:37","date_gmt":"2016-01-27T15:24:37","guid":{"rendered":"https:\/\/blog.iese.edu\/ethics\/?p=675"},"modified":"2016-01-29T10:19:12","modified_gmt":"2016-01-29T09:19:12","slug":"csr-what-are-the-reasons-of-so-much-skepticism","status":"publish","type":"post","link":"https:\/\/blog.iese.edu\/ethics\/2016\/01\/27\/csr-what-are-the-reasons-of-so-much-skepticism\/","title":{"rendered":"CSR: What are the reasons of so much skepticism?"},"content":{"rendered":"<p><b>Consumers are suspicious of business ethics \u2013 especially corporate social responsibility (CSR) programs.<\/b>\u00a0 What are the counter-arguments and managerial solutions to address this skepticism?<\/p>\n<h3><b>Arguments Against CSR<\/b><\/h3>\n<p>First up, the hidden agenda behind business ethics and CSR programs is often called into question. A recent survey by the Center for Business in Society shows over 80% of those interviewed (around 500) believe\u00a0<b>at least 70% of CSR initiatives are purely cosmetic programs to support corporate reputation<\/b>.<\/p>\n<p>Offsetting this perception is hindered by most of these programs being run by marketing and communication departments.<\/p>\n<p>Secondly, too many CSR programs are designed at the consumers&#8217; expenses. In other words,\u00a0<b>firms get the good reputation, consumers get the full cost<\/b>. An example is the &#8220;<strong>keep the bed linen<\/strong>&#8221; program. Hotels ask us to consider whether we really want to have our beds changed every day. Officially the program is aimed at reducing environmental damage. But, we know very well\u00a0<strong>the underlying objective is cost reduction at the expenses<\/strong>\u00a0of a lower quality service for consumers.<\/p>\n<p>Nobel laureate Milton Friedman\u2019s\u00a0<a href=\"http:\/\/www.colorado.edu\/studentgroups\/libertarians\/issues\/friedman-soc-resp-business.html\" target=\"_blank\">article<\/a>\u00a0The Social Responsibility of Business is to Create its Profit,\u00a0published in\u00a0<i>The New York Times Magazine<\/i>, September 13, 1970, pointed out three important issues:<\/p>\n<ul>\n<li>Managers\u2019 responsibility lies in the interests of shareholders. In other words, managers are hired and paid to maximize the profits of each stakeholder. They are not entitled to spend corporate profits on CSR or charitable initiatives.<\/li>\n<li>Social issues are the government\u2019s responsibility \u2013 not lower level institutions such as firms. That\u2019s why we pay taxes. Isn\u2019t it?<\/li>\n<li>Moral responsibilities belong to the individual. Pinning responsibility on organizations makes no sense.<\/li>\n<\/ul>\n<p>Finally, Albert Z. Carr likened\u00a0<b>economic transactions to poker back in 1968<\/b>\u00a0in his<i>\u00a0Harvard Business Review<\/i>\u00a0<a href=\"https:\/\/hbr.org\/1968\/01\/is-business-bluffing-ethical\">article<\/a>\u00a0\u201cIs Business Bluffing Ethical?\u201d.\u00a0<b>You cannot expect other players to tell you the truth<\/b>. Bluffing is an intrinsic part of this game. Truth and ethics are not. This way, business ethics can be viewed as just another trick cooked up by smart managers ready to steal even more money from your pocket.<\/p>\n<h3><b>Arguments in Favor<\/b><\/h3>\n<p><b>Let\u2019s start by looking at it from a legal perspective.<\/b>\u00a0Since the start of the 21<sup>st<\/sup>\u00a0century, lawyers and policy makers have agreed that laws should favor business when business favors the community and society. It\u2019s not about profits. It\u2019s about people and serving the community.<\/p>\n<p><strong><a class=\"inline-twitter-link inline-tweet-click\" href=\"#\" onclick=\"inline_tweet_sharer_open_win('https:\\\/\\\/twitter.com\\\/intent\\\/tweet?url=https%3A%2F%2Fblog.iese.edu%2Fethics%2Fwp-json%2Fwp%2Fv2%2Fposts%2F675%2F&text=There+is+no+service+without+attention+to+ethics+and+social+responsibility%21+');\" title=\"Tweet This!\">There is no service without attention to ethics and social responsibility! <span class=\"non-dashicons\"> <\/span><\/a><\/strong><\/p>\n<p>Utilitarian though it may seem,\u00a0<b>business ethics and CSR are essential for maintaining a minimum level of trust in consumer\u2013firm relationships<\/b>. No trust, no business. Even street markets in areas plagued by mafias and organized crime guarantee some minimal level of trust (such as product quality). \u00a0So, there is no way to escape from business ethics and CSR.<\/p>\n<p>Recent empirical studies show\u00a0<b>our global society\u2019s expectations of corporate practices is on the up<\/b>. Our grandmothers\u2019 expectations of firms&#8217; production procedures, carbon emission, labor conditions, etc. were much lower.\u00a0<b>Business ethics and CSR address stakeholders&#8217; ethical expectations<\/b>. They can also be<b>\u00a0leveraged to develop a sustainable competitive advantage.<\/b><\/p>\n<p><b>Strategic or operational strategies based on irresponsible or even immoral assumptions are unsustainable<\/b>. Immoral or illegal acts are always bring with risk, i.e. the risk of legal action, consumer boycotts, strikes, etc.\u00a0<b>Don\u2019t underestimate the power of responsible consumers!<\/b><\/p>\n<p>Several multinational companies, such as\u00a0<b>Nike<\/b>\u00a0and\u00a0<b>Nestl\u00e9<\/b>\u00a0<b>have paid enormous reputational, operational and financial costs for this error<\/b>. Remember: the more ethically problematic practices a firm pursues, the higher the probability of stakeholders reacting.\u00a0Also, we know very well that <a class=\"inline-twitter-link inline-tweet-click\" href=\"#\" onclick=\"inline_tweet_sharer_open_win('https:\\\/\\\/twitter.com\\\/intent\\\/tweet?url=https%3A%2F%2Fblog.iese.edu%2Fethics%2Fwp-json%2Fwp%2Fv2%2Fposts%2F675%2F&text=managers+should+stay+away+from+any+immoral+or+unethical+temptation+');\" title=\"Tweet This!\">managers should stay away from any immoral or unethical temptation <span class=\"non-dashicons\"> <\/span><\/a>.\u00a0<b>Whenever someone in an organization starts playing dirty, the snowball effect is almost unstoppable!<\/b><\/p>\n<p>Finally, recent studies prove\u00a0a firm\u2019s\u00a0<b>business ethics and CSR performance directly affects employees&#8217; happiness.<\/b>\u00a0And happiness is in turn a main driver of creativity, innovation capabilities and the individual willingness to improve corporate efficiency. So,\u00a0<b>business ethics and CSR have a positive mid to long term impact on corporate performance<\/b>.<\/p>\n<h3><b>Some Pointers for Managers and Policy Makers<\/b><\/h3>\n<p>The discussion above provides some\u00a0<b>important indications for managers and policy makers<\/b>:<\/p>\n<ol>\n<li><b>Be authentic!<\/b>\u00a0CSR initiatives should aim at making a\u00a0<b>real<\/b>\u00a0impact on society. Employees, consumers and other stakeholders expect your company to\u00a0<b>be fully and authentically committed to making a better society<\/b>. Several studies show if your CSR effort is genuine, consumers and employees are more willing to support your initiative.<\/li>\n<li><b>Design win-win programs<\/b>. If you ask consumers to keep the bedlinen, you have to give something back. For example, the money saved going to an environmental NGO.<\/li>\n<li><b>Be transparent about your mission and commitment towards social issues<\/b>. Shareholders have the right to know how you plan to use corporate profits. And which percentage will be used to achieve socially-oriented objectives.<\/li>\n<li><b>Remember that \u201cour\u201d people must always be the center of business: consumers, employees and the community where we operate<\/b>.<\/li>\n<\/ol>\n<blockquote><p><b>\u201cThe business of business is the human person,\u201d the rest is irrelevant.<\/b><\/p>\n<p>Prof. Lloyd\u00a0Sandelands<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Consumers are suspicious of business ethics \u2013 especially corporate social responsibility (CSR) programs.\u00a0 What are the counter-arguments and managerial solutions to address this skepticism? Arguments Against CSR First up, the hidden agenda behind business ethics and CSR programs is often called into question. A recent survey by the Center for Business in Society shows over [&hellip;]<\/p>\n","protected":false},"author":354,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[362,473],"tags":[91597,455,91600,38871,28129],"coauthors":[],"class_list":["post-675","post","type-post","status-publish","format-standard","hentry","category-business-ethics","category-csr","tag-business-etghics","tag-corporate-social-responsibility","tag-impact-on-society","tag-shareholders","tag-stakeholders","megacategoria-mc-business-ethics-and-corporate-social-responsibility"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/posts\/675","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/users\/354"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/comments?post=675"}],"version-history":[{"count":9,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/posts\/675\/revisions"}],"predecessor-version":[{"id":685,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/posts\/675\/revisions\/685"}],"wp:attachment":[{"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/media?parent=675"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/categories?post=675"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/tags?post=675"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/coauthors?post=675"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}