Carrolls Pyramid of Social Responsibility

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Carrolls 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
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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 societys codification of right
and wrong Play by the rules ECONOMIC
Responsibilities Be Profitable
The foundation upon which all others rest
Source Carroll (1991)
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Level 1 ECONOMIC

• Responsibilities
• Be profitable
• The foundation upon which all other levels rest

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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.

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Level 2 LEGAL
Responsibilities Obey the Law Law is societys
codification of right and wrong Play by the rules
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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.

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Level 3 ETHICAL
Responsibilities Be Ethical Obligation to do what
is right, just and fair Avoid harm.

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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.

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Level 4 PHILANTHROPIC

Responsibilities Be a Good Corporate
Citizen Contribute resources to the community
improve quality of life

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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 communitys quality of
  life.

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Moral Management and Stakeholders

• Three Moral Types
• Immoral Managers
• Amoral Managers
• Moral Managers

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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
  organisations profitability or success
• Legal issues are there to be circumvented
• Strategy is to exploit opportunities for personal
  or organisational gain at any cost

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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

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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.

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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.

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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
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The Three Moral Types

• Orientation towards Stakeholders
• Shareholders
• Employees
• Customers
• Local Community

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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.

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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 firms economic, legal, ethical and
  philanthropic performance.

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Issues, Questions and Reflections

• Marketing Ethics
• Social Responsibility
• Moral Management

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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.

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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)
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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, dont.
• Read the article in the reading list
  entitled Ethics - a view from the trenches

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Social Responsibility

• Look at the principles of key companies -
  Shell, Lockheed Martin and Body Shop
• The new Philanthropy

Shells principles can be found in the Shell
folder in Readings
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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 Timberlands 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?

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Timberlands 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 Carrolls
  model and moral types ?

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Moral Management Cartel - 1999 Style
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Vitamins Inc - An International Cartel
Featuring Europes 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
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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 others figures
• Police the cartels targets with regular
  telephone calls
• Review each years performance at a
  shareholders meeting of top executives

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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 ?