ADMN 201 — Ch3: Conducting Business Ethically and Responsibly
Ch3 argues that responsible business starts with individual ethics and scales up to organizational CSR. The 2008–2009 financial crisis is the motivating case: individual ethical failures aggregated into a systemic collapse because organizational CSR structures were absent or ignored.
Key Concepts
BusinessEthics · CorporateSocialResponsibility · OrganizationalStakeholders · SustainableDevelopment
1. Ethics vs. CSR — The Core Distinction
| Ethics | CSR | |
|---|---|---|
| Level | Individual | Organizational |
| Question | ”Should I do this?" | "Should our company do this?” |
| Example | Should I lie on an expense report? | Should we cut emissions even if it costs more? |
Mnemonic: E = Individual. SR = Organization.
2. Personal Ethics
Where they come from: family, culture, religion → education and peers → experience (hardship, role models, mistakes).
In the workplace, a code of ethics aligns individual standards where personal values diverge. Without it: trust erodes, teamwork fails, reputations suffer.
Key ethical violations:
- Conflict of interest — activity benefits employee at employer’s expense
- Insider trading — using confidential info to trade stock
- Whistle-blower — individual who exposes wrongdoing
3. Organizational Stakeholders
Stakeholders = groups directly affected by the firm’s practices.
- Internal: employees, managers, board
- External — market: customers, suppliers, investors
- External — non-market: communities, government, environment
CSR is the practice of balancing these competing interests. Stakeholder conflicts are inevitable; ethics and policy are the tools for navigating them.
4. Four Approaches to Responsibility (ODAP)
| Level | Approach | Behaviour |
|---|---|---|
| 1 | Obstructionist | Deny, cover up, do as little as possible |
| 2 | Defensive | Follow the law — nothing more |
| 3 | Accommodative | Respond to stakeholder pressure beyond legal minimums |
| 4 | Proactive | Actively seek to do social good |
Most firms sit at defensive/accommodative. Proactive CSR (Patagonia, TOMS) is a strategic choice and competitive differentiator.
5. Implementing CSR — Four Steps
- Commit at the top — leadership visible support
- Write a code — ethics/CSR policy
- Train and communicate — shared understanding of standards
- Monitor — social audits track effectiveness
Social audit = systematic review of how CSR funds are spent and whether they’re achieving their goals.
6. Environmental Responsibility
- Sustainable development: meet current needs without compromising future generations
- Pollution: introducing harmful substances into the environment
- Recycling: converting waste into useful products
- Fair trade movement: fair pay for developing-world workers
- Consumerism: movement protecting consumer rights
7. Small Business CSR
Less resources, but stronger community ties and direct stakeholder relationships. A local bakery sourcing locally, paying fair wages, and composting waste can build loyalty that justifies slightly higher prices — a CSR dividend large firms can’t easily replicate.
Connections to PHIL 252
- Argument-BusinessEthics — ethical decision-making is applied argument construction; rationalization is a cogency failure
- ClassificationSystems-CSR — the ODAP scale is a classification system; applying classification rules reveals its limits
mindmap root((Ch3: Ethics\n& CSR)) Business Ethics Individual level Code of ethics Conflict of interest Insider trading Whistle-blower CSR Organizational level Four domains Environment Customers Employees Investors ODAP Scale Obstructionist Defensive Accommodative Proactive Four Steps Commit · Write · Train · Monitor Stakeholders Internal External market External non-market Sustainable Development Meet needs now Protect future generations Fair trade · Recycling