Responsibility and Practice in Notions of Corporate Social Responsibility

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Responsibility and Practice in Notions of Corporate Social Responsibility Responsibility and Practice in Notions of Corporate Social Responsibility by Denise Kleinrichert A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy Department of Philosophy College of Arts and Sciences University of South Florida Major Professor: Stephen P. Turner, Ph.D. Joanne Waugh, Ph.D. Charles Guignon, Ph.D. Martin Schönfeld, Ph.D. Walter Nord, Ph.D. Sharon Hanna-West, J.D. Date of Approval: March 30, 2007 Keywords: accountability, biosocioeconomic, corporate community involvement, environmental footprint, human well-being, sustainability © Copyright 2007 , Denise Kleinrichert Acknowledgments I would like to express gratitude to my dissertation committee, who collectively have expected nothing short of excellence in my thinking, writing, and being – they have each contributed a spark to spur me forward. Stephen P. Turner, Ph.D. has my guiding professor over the past 5 ½ years and is the individual who, thankfully, got me into all of this. Joanne Waugh, Ph.D. introduced me to Philosophy and the good life. Charles Guignon, Ph.D. expanded my view of myself and others, and re-ignited my interest in economics and human well-being. Martin Schönfeld, Ph.D. introduced me to Kant and all things environmental, dynamic, and holistic. Sharon Hanna-West, J.D. brought my interests in the social and ethical for corporate endeavors full circle. Walt Nord, Ph.D. expanded my view of the corporation as integrated with its socio-environment. Carolyn Eichner, Ph.D. granted me the latitude to see the social and revolutionary ways I can make a difference in the world. Finally, Eileen Kahl, M.A. has been my editor and muse in the development of this labor. Table of Contents List of Figures iii Abstract iv Introduction: Corporate Social Responsibility – What Does It Mean? 1 Chapter One: Economic Theories 14 Classic Economic Views of Corporate Responsibility 19 Adam Smith & Moral Markets 20 Profit as Responsibility Theories 29 Milton Friedman & Profit Model 31 John Kenneth Galbraith & Profit Model 38 Chapter Two: Business – Society Theories 45 Corporations and Society 47 Eugene Schlossberger & Dual Investors 47 Christopher Stone & Social Control of Corporate Behavior 53 Stakeholder Theory 61 R. Edward Freeman & the Stakeholder Model 61 Chapter Three: Critique of Perfect Markets and Ideals of Capitalism 71 How did Classic Theory become Stockholder Views? 72 Rejection of Economic Man 72 Models of Economic Efficiency and Ideological Responsibility 79 Utilitarian Applications of Responsibility 86 Economic Harmonies 89 Sidney C. Sufrin, Milton Friedman & Reflex Responsibility 90 Kantian Applications to Market Agency 94 Stakeholders and Moral Strategy 98 Chapter Four: Corporations – Responsibility, Community, & Sustainability 104 Corporate Social Responsibility & Meaning 105 Can Economic Motivation be Moral Responsibility? 109 CSR Revisited: Communities 114 Ally-building & Corporate Social Responsibility 115 Ethical Considerations of Corporate Community Involvement 122 Corporate Social Responsibility & Sustainability 127 i Reciprocal Relationships & Communities 132 Cultivation as Sustainability 135 Case Study: Starbucks Coffee Company 138 Economic Footprints & Responsibilities 139 Environmental Footprints & Responsibilities 142 Social Footprints & Responsibilities 148 Conclusion – Biosocioeconomic Sustainability 159 Bibliography 165 About the Author End Page ii List of Figures Corporate Social Responsibility Models 166 Biosocioeconomic Sustainability 166 iii Responsibility and Practice in Notions of Corporate Social Responsibility Denise Kleinrichert ABSTRACT This treatise presents a transcendental argument for corporate social responsibility. The argument is that corporate social responsibility, or CSR, is best understood as a collective moral practice that is a precondition for sustainable business. There are a number of theories and definitions of CSR in the contemporary business literature. These theories include considerations of economic, legal, social, and environmental notions of what a corporation ought to take responsibility for based on either motives or concerns of accountability for corporate acts. This work focuses on economic theories. I analyze the distinction between the technical terms “responsibility” and “accountability” found in these theories. This enables me to explicate the meaning of corporate responsibility as it relates to the conditions of sustainable business activity. These conditions necessarily include moral content. In other words, this is an applied ethics project. First, I inquire into the intellectual history of the broader sense of corporate responsibility and review various contemporary notions of corporate social responsibility. My concern is whether these notions presuppose broader forms of moral responsibility to others as an obligation, moral responsibility for acts, or to be held morally responsible (i.e., accountable) based on moral tendencies, particular motives, or resulting outcomes. iv This concern forms the basis of my consideration of the notions of individual and collective responsibility. The following work includes an analysis of the notion of human choice as a collective endeavor of institutional relationships and practice in the economic market system. I argue that corporate motives for moral interrelationships are necessarily implicit in biosocioeconomic multinational market enterprise. I conclude that an analysis of corporate community involvement may be found in a case study of Starbucks Coffee Company’s efforts to practice CSR in particular coffee bean farming communities in developing countries. v Introduction Corporate Social Responsibility – What Does It Mean? …any given responsibility of action of business could have economic, legal, ethical, or discretionary motives embodied in it. (Archie B. Carroll 1979, p. 500) I believe it all has something to do with the meaning of responsibility. Perhaps it is because my early academic training was in economics, or perhaps because I ended up in a variety of corporate functions related to analyzing risks, responsibility, and delving into human resources that I decided to tackle this subject. Nevertheless, I ended up teaching business ethics and trying to understand how all of these activities, my own and those of corporate endeavors, hang together. Therefore, I intend to discuss the history of the meaning of notions of corporate social responsibility. At first glance, we could argue that this phrase merely means some sort of human choice to be responsible within institutional relationships. But, this discussion fails to consider notions of economic and social arrangements in society, or of the nuances of individual and collective responsibility. I am curious about the moral implications regarding corporate-societal relationships and the theories on which these hinge. Does the consideration of the meaning of corporate social responsibility entail an account of corporate moral practice? In other words, is this account contingent on some sort of notion of moral responsibility based on the meaning and development of an ethical, economic purpose? 1 I will argue that corporate social responsibility, in order to have an ethical purpose, must be developed as a holistic, deliberative action based on choices and on duties to develop motives for moral interrelationships in multinational economic enterprise in communities. I am concerned with voluntary initiatives of corporate social responsibility, which can be developed as sustainable socioeconomic moral projects. In other words, this dissertation will define and apply economic theories of responsibility to corporate enterprise that is relational and mutually beneficial to the communities in which these corporations choose to do business. Finally, I intend to analyze a corporate social responsibility project in a case study of Starbucks Coffee Company’s small loan and social development efforts in particular coffee bean farming communities in developing countries. In the following essay, I will examine what it means to say a corporation, as an economic entity, has moral responsibility to others in society, as opposed to claiming moral responsibility for its acts, or to be held morally responsible. I believe these distinctions are important to understanding what we mean by the attribution “corporate social responsibility.” I argue that what we are actually meaning in the two latter phrases, “moral responsibility for” and “to be held morally responsible,” is that an entity is accountable for the consequences of human decision-making that have an effect on others, or the Kantian notion of imputation or judgment (Kant [1797a, 6:227] 1996, p. 19). Accountability may be considered in moral terms, as we may argue from a utilitarian perspective, but accountability may also be considered in nonmoral aspects, as in determinations of financial accounting for profit in a corporation’s annual statements. Moreover, philosopher James Brummer traces the usages of the term “responsibility” 2 settling on the definition of a corporation being held accountable as an evaluative, rather than discretionary, definition of corporate social endeavors (1991, p. 15). It is this latter determination that often is confused with the meaning of corporate social responsibility. Moreover, it is this confusion in the meaning of responsibility that I believe is a problem. What I am seeking in this work is the basis of any sense of social responsibility – that of human tendencies and
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