PHI 4301, Business Ethics 1
Course Learning Outcomes for Unit IV
Upon completion of this unit, students should be able to:
2. Explore the responsibilities of moral agents involved in all aspects of business.
2.2 Identify concepts associated with company culture and corporate social responsibility.
3. Examine the ethical foundations for controversial issues in business.
3.2 Describe how ethical business practices relate to different models of corporate social
responsibility.
5. Formulate ethical solutions for real-world situations using ethical theories and concepts.
5.2 Describe the relationship between corporate social responsibility and reputation management.
Required Unit Resources
Chapter 5: Corporate Social Responsibility
In order to access the following resources, click the links below.
Cadbury, A (1987, September). Ethical managers make their own rules. Harvard Business Review, 65(5), 69–
73.
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Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. New York
Times.
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Unit Lesson
This unit is about corporate social responsibility, or CSR as it is commonly known. There are different ways of
thinking about the extent to which corporations have moral responsibilities and what the nature of those moral
responsibilities are. However, from a philosophical point of view, there is a more fundamental issue here,
namely, whether a corporation is the kind of thing that can have moral responsibilities in the first place.
This is a question of what philosophers call moral agency. Not everything in life has moral agency. Inanimate
objects cannot be said to be good or evil, nor can plants and most (perhaps all) nonhuman animals. Not even
all humans are moral agents. Humans do not have full moral agency when they are born (there is no such
thing as an evil baby), and it takes some time for it to develop, which is why we think kids who do bad things
have diminished moral responsibility. The best model we have of a moral agent is a fully autonomous adult
human—someone who can make choices freely. To borrow a phase, with this freedom comes moral
responsibility. In philosophical parlance, this is a moral person.
The concept of CSR does not map neatly onto the concept of a person. Corporations, by definition, are not
identical to any one human being. They are not identical to a particular collection of human beings, since
stockholders, employees, and executives can change without affecting the identity of the corporation. We
could make a similar point about other types of collective entities, from sports teams to national governments.
Moral agency is relatively simple when we apply it to adult humans, but much more complicated when we
apply it to collective entities like corporations. Sorting out the conceptual complexity surrounding CSR is not
UNIT IV STUDY GUIDE
Corporate Social Responsibility
PHI 4301, Business Ethics 2
UNIT x STUDY GUIDE
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the point of this unit; however, it is important to acknowledge that most of the debate around CSR is a logical
consequence of the imperfect mapping between humans and corporations as moral agents.
When Mitt Romney said, “corporations are people” during the 2012 presidential campaign, he was met with
derision from mainstream media (as cited in Hartman et al., 2024, p. 153). In fairness to Romney, he was
correctly reflecting the consensus of business and legal opinion that corporations are, indeed, moral persons.
U.S. law protects the free speech as well as religious expression rights of corporations and holds corporations
liable for wrongdoing. We consider corporations to be moral agents, but scholars differ as to the correct model
for framing the discussion around their consequences, principles, and character.
The minimalist position—referred to variously as the economic model, shareholder model, or managerial
capitalism—says businesses have an obligation to serve the interests of their respective owners and that is it.
The title of Milton Friedman’s (1970) article “The Social Responsibility of Business Is to Increase Its Profits” is
as explicit a declaration of the shareholder model as you will find. The model is primarily concerned with
consequences. Businesses do have obligations to comply with laws and customs against fraud, but these are
not moral principles as much as the basic ground rules for entering the market. Basically, if a business makes
money for its owners, then it is good, and the more profit the better (Freidman, 1970). The primacy of
profitmaking does entail certain moral principles. Business managers have a duty to protect and promote
profits for business owners, regardless of the consequences for society. Any intervention that decreases profit
for the sake of society amounts to a violation of owners’ rights. Although nothing prevents a business from
participating in social causes, they ought to be targeted toward a reputational advantage bringing additional
profits.
In contrast to the shareholder model, the stakeholder model casts a wider net of moral concern. Sir Adrian
Cadbury (1987) stated that the ethical framework for businesses is set by society and that company leaders
must come up with codes of conduct to run companies. This puts the responsibility on both society and
business leaders. To put it more candidly, businesses that benefit from society cannot just freeload on the
moral values everyone else in society upholds. Stakeholders include not just business owners but all those
affected by business decisions. The stakeholder model entails principles that put ethical constraints on
business decisions (Hartman et al., 2024). Stakeholders are humans, humans have rights, and it is morally
wrong to violate human rights. It follows that businesses have a moral duty to operate within a set of choices
that respect human rights.
If we characterize the stakeholder model as do no harm, then we can characterize the integrative model as do
some good. This model says businesses exist within a global community having the ultimate goal of human
flourishing or, more broadly, a biosphere supporting all life (Hartman et al., 2024). In this context, business
activity is morally no different from any other activity impacting the whole. The profitability of a business is but
one metric we must use to evaluate its goodness. Other considerations must include social and ecological
benefits. The integrative model is by far the most consequentialist of the CSR models.
It is possible that, in the end, the differences between the CSR models will not matter very much. Operating in
accordance with the integrative model is, according to a growing number of studies, a highly effective way to
satisfy the aims of the stakeholder model. In other words, evidence suggests that businesses with an
expansive view of their moral agency are more profitable over time than businesses with a narrow moral
vision.
References
Cadbury, A (1987, September). Ethical managers make their own rules. Harvard Business Review.
Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. New York
Times.
business-is-to.html
PHI 4301, Business Ethics 3
UNIT x STUDY GUIDE
Title
Hartman, L. P., DesJardins, J., & MacDonald, C. (2024). Business ethics: Decision making for personal
integrity and social responsibility (6th ed.). McGraw-Hill Education.
Learning Activities (Nongraded)
Nongraded Learning Activities are provided to aid students in their course of study. You do not have to submit
them. If you have questions, contact your instructor for further guidance and information.
The nongraded resource below can be found in Blackboard beneath the study guide:
Unit IV Check Your Understanding-Self Check Quiz
