Question

Define Friedman’s and Freeman’s perspectives on Corporate Social Responsibility (CSR). Using examples to illustrate your answer, describe how the Moral Minimum perspective assists an organisation to achieve sustainability and accountability in their operations. (900 words)

Answer 1

The concept of Corporate Social Responsibility (CSR) is included in the definition of Sustainability

The various CSR approaches all lead to some type of corporate activity integrated into the organization's business model whereby the business would ensure its adherence to law, ethical standards, and international social norms (i.e., expected patterns of behavior) and would include businesses accepting responsibility for the impact of their activities, regardless of legality, on

• the environment,
• consumers,
• employees,
• communities,
• stakeholders and
• all other relevant members of the public sphere.

Essentially, CSR is the deliberate inclusion of public (societal) interest into corporate decision-making.

It is the "How" this should be done that leads to the diversity of international CSR models which range from

• corporations independently defining their level of contribution for societal development to
• formal and in formal institutions (from governments to NGUs to common interest groups) agreeing on public interests which are then transformed into mandatory requirements for corporations

This is most clearly seen in comparing the approaches in America and Europe. Jeremy Moon, and Stanislav Grafski, in their section of The Report On Social Investments In Russia 2004, compared and contrasted the approaches to CSR by America, Europe, Great Britain, and Russia:

"Corporate social responsibility is often regarded as an American phenomenon based on the principles of self-help and participation. The culture of philanthropy in America can be traced to the early 20th century and provides an excellent outline of its historical evolution (e.g., from Rockefeller's public libraries and Carnegie's initiatives to Bill & Melinda Gates Foundation). Due to the nature of American entrepreneurship, which is based on maximizing the freedom of participants, there are a number of self-regulating mechanisms in contemporary American society. Thus, employer-employee relations are mainly the subjects of bilateral agreements between the respective parties. The right to health protection is regarded as an individual choice, i.e. to acquire health insurance or not (hence, voluntary medical insurance).

"The Government guarantees the fundamental rights of citizens in this sphere. Likewise, all CSR initiatives are carried out on a purely voluntary basis by corporations. America has developed numerous mechanisms through which the private sector participates in social support initiatives, such as through corporate funds that address various social problems.

"It is well-known that higher education in the USA is sponsored by the private sector to a far greater extent than in most other countries"¹. For example, during the 1950s to 1980s, General Motors not only had an excellent tuition refund program for its employees and had outreach programs to Colleges and Universities, it also established and ran its own four year college, the General Motors Institute in Flint Michigan. Basic research (i.e., research without any predetermined commercial applications) was also supported by many American companies, such as Western Electric, General Motors, etc. Education financing patterns can partially be accounted for by the motives of corporations to voluntarily support education, pension and insurance schemes for the staff, and other socially important programs.

"Socially responsible corporate behavior is often underpinned by appropriate fiscal incentives that are statutory by law. It is important to point out that the American Government has a "hands-off" approach when engaging with the private sector.

Any discussion of sustainable business practice needs to be set within a framework of understanding of business ethics. Sustainability at the organisational level will be introduced for one or more reasons. It may be that organisation leaders have a deep commitment to sustainable business practice and this commitment is translated into the organisational mission, objectives, and goals. On the other hand, it may be that they recognise a market segment that is pro-sustainability and will seek out these hotels, or perhaps a growing concern amongst the general public for evidence of more sustainable business practice. Finally, it may be that legislation has been created that requires hotels and others to be more sustainable in their business practices