every year who might otherwise not have done so, funding is provided for many unprofitable sports
including women’s programs, and sports revenues often support academic programs.
What Have We Lost?
What have people lost when the innocence and idealism of sports are forfeited in favor of profit? Or
are innocence and idealism simply a myth? Perhaps people are better off when corporate and
personal profit—the free market—drives sports. Or is the pursuit of profit the route to the slow but
sure death of meaningful sports?
Marketing
Novelist Bill Morris recently bemoaned the “tsunami” of commercialism in college football. In writing
about the football bowl season, Morris pointed to the “dozens of brand names being spray-painted
onto fields.” This explosion of advertising caused Morris to argue that people should all pause to
think about what the college bowl season says about the nation’s soul.
High School Next?
People should not be surprised that business values and practices having spread from professional
sports to college athletics, the same influences are rapidly emerging in high school sports as well.
Elite high school teams travel the country to play in special events, more and more games are
televised, and high school sports facilities attempt to mimic the glow of college and professional
experiences.
Practicing Ethics: The Sports Business and Compromised Values?
I. Beer
At this writing, 22 of the 120 major college football stadiums sell beer at football games, a total that
has more than doubled in the past 10 years. For some schools, beer is sold largely to make the
total experience more attractive to fans. The National Collegiate Athletic Association bans beer
sales and alcohol-related signs at its championship events.
II. Nike
Timothy Egan in The New York Times commented on Nike’s relationship with Pittsburg Steelers
quarterback Ben Roethlisberger, who was accused in 2010 of sexual assault on a 20-year-old
woman. No criminal charges were filed in the case, but Roethlisberger was suspended by the
National Football League for four games, and the owner of the company that marketed “Big Ben’s
Beef Jerky” reportedly ended his company’s endorsement relationship with the quarterback.
America’s Soul?
Critics contend that the power of the business community has become so encompassing that
virtually all dimensions of American life have absorbed elements of the business ethic. Values
commonly associated with businesspeople (competition, reliance on technology, faith in growth)
have overwhelmed traditional humanist values (cooperation, individual dignity, human rights,
meaningful service to society). Charles Reich, former Yale University law professor, addressed the
loss of self in his influential book of the Vietnam War era, The Greening of America.
Part Two—Corporate Social Responsibility
I. Introduction
The broadly shared perception of business misdeeds or indifference, in conjunction with the growing
influence of business values throughout American life, has led in recent decades to the development of
the doctrine of corporate social responsibility (CSR—sometimes also referred to as corporate citizenship).
Similar philosophies such as the triple bottom line and the sustainable corporation have powerful appeal
to many students and managers.
A. Social Enterprise/Social Entrepreneurship
Drew Chafetz, in his mid-twenties and a huge soccer fan, did not turn directly to the job market
following college graduation. Rather, he cofounded love.futbol [see http://www.lovefutbol.org], an
organization to help build safe soccer fields for children in impoverished nations who otherwise might
be forced to play in the streets or other unsafe spaces.
Still others believe they can make socially responsible contributions by taking mainstream, high-paying
jobs that help build power stations in developing nations, improve financing opportunities for inner-city
entrepreneurs, or enable medical care to more affordably reach poorer patients, for example. [For an
introduction to B Corps—benefit corporations—a “new type of corporation that uses the power of
business to solve social and environmental problems,” see http://www.bcorporation.net/about]
B. A New Ideology
The ascendance of the social responsibility doctrine represents a striking ideological shift. Historically,
business was expected to concentrate on one goal—the production and distribution of the best
products and services at the lowest possible prices. In the 21st century, expectations for business in
society have been radically altered. Profit-seeking remains central and essential, but for most
businesspeople, social responsibility must be a consideration. [For the Business for Social
Responsibility home page, see www.bsr.org]
II. What Is Social Responsibility?
The sweeping notion of corporate social responsibility is not readily reduced to a brief definition, but Davis
and Blomstrom some years ago captured the core ingredients: “The idea of social responsibility is that
decision makers are obligated to take actions which protect and improve the welfare of society as a
whole, along with their own interests.”
Figure 3.1 depicts a continuum and is best understood by reading “backward” from right to left. On the
right side of the spectrum lies the free-market view holding that profit maximization is the best measure of
social responsibility. Across the middle (long-term company interest) lies a hybrid, blended perspective
where profits are the first consideration, but where satisfied workers, customers, and community
members are also of importance, within some reasonable limits, to secure the firm’s long-term survival.
On the left side of the spectrum lies the triple bottom-line/sustainability movement that calls for a
revolutionary re-visioning of corporate goals and practices such that profit maximization is only one of
three key measures of success. [For the “Global Reporting Initiative” on sustainability practices around
the world, see http://www.globalreporting.org]
Profit Maximization
The dominant concern is maximizing shareholders’ interests. From a profit maximization point of
view, the only responsible and moral course of behavior is to reap the highest return possible,
within the law. Nobel prize-winning economist Milton Friedman was the most prominent advocate of
the profit maximization view. Friedman, employing free-market reasoning, believed the firm that
maximizes its profits is necessarily maximizing its contribution to society.
Long-Term Company Interest
Across the broad middle ground of the social responsibility continuum lie those firms, doubtless the
great majority, who believe that a strong bottom line, in many cases, requires considerations
beyond the immediate, short-run, profit-maximizing interests of the firm. In a sense, these
managers are merely taking a longer term view of profit maximization. They recognize the
imperative of a strong return on the shareholder’s investment, but they also believe that achieving
that return may require heightened sensitivity to the welfare of employees, consumers, and the
community. [For the United Nations’ initiative to encourage responsible corporate citizenship, see
http://www.unglobalcompact.org.]
Triple Bottom Line/Sustainability
The triple bottom-line/sustainability approach employs free-market principles and recognizes the
necessity for financial success but also argues that social and environmental responsibilities are of
equal importance. According to sustainability advocates, corporations giving close attention to both
social and economic duties have a powerful competitive advantage that will contribute to
organizational and societal sustainability. Building a just, healthy, sustainable future makes a lot of
sense, but reasonable people continue to differ about the most effective path to that goal. For many
companies, shorter term profit motives continue to dominate. [For a critique of triple bottom-line
thinking, see www.businessethics.ca/3bl.]
“Green” Jeans?
The ocean of apparel that Americans buy annually is the product of globe-spanning supply chains
that consume enormous amounts of water, energy, chemicals, cotton, oil, and other resources
while casting off equally enormous amounts of waste. Now the Sustainable Apparel Coalition,
which represents more than one-third of the global apparel and footwear industries and includes
prominent companies is building a system to measure the environmental impact of the apparel
production process. The Coalition is attempting to measure the apparel industry’s environmental
footprint.
Source: Tom Zeller, “Clothes Makers Join to Set ‘Green Score,’” The New York Times, March 1,
2011 [http://www.nytimes.com/2011/03/01/business/01apparel.html].
A. Social Responsibility Pyramid
Professor Archie Carroll proposed another way of visualizing socially responsible business practice as
depicted in Figure 3.2. Socially responsible business practice necessarily begins at the foundation of
the pyramid with the duty to make a profit in a lawful fashion; but simultaneously the socially
responsible firm moves (up the pyramid) beyond the fundamental demands of economics and law to
pursue the ethical course of action—the behavior best suited to the demands of virtue and moral
principle. In striving for profitable, lawful, ethical conduct, that company may also choose to engage in
discretionary philanthropic efforts to build a better community. While the social responsibility pyramid
has been criticized and revised, it remains a useful way of thinking about corporations’ expanding
duties.
Toyota and the Social Responsibility Pyramid
Toyota’s safety struggles of recent years have caused the powerful company to thoroughly review its
practices and philosophies. Toyota has topped the U.S. auto industry in safety recalls in three of four
recent years. In applying Carroll’s Social Responsibility Pyramid reasoning, it can be seen that Toyota
has struggled to fulfill its economic responsibilities, and has failed to meet at least some of its legal
responsibilities. Trying to restore its performance and ethical/reputational posture, Toyota has
delegated more decision making authority to subsidiaries, overhauled its quality control methods, and
expanded the power of executives in charge of safety. Although problems linger, Toyota regained the
top spot in world auto sales in 2012.
Sources: Ken Bensinger and Ralph Vartabedian, “Toyota to Pay Record Fines for Disclosure Delay,”
latimes.com, December 20, 2010 [latimes.com/business/la-fi-toyota-fine-20101221,0,2995009.story];
Ken Bensinger, “Toyota Recalls 2.17 Million More Vehicles Over Sudden-Acceleration Problems,”
latimes.com, February 24, 2011
[latimes.com/news/nation-and-world/la-fg-india-bhopal3-2009dec03,0,3728767.storylatimes.com/busin
ess/la-fi-toyota-recall-20110225,0,6731783.story]; Chester Dawson and Yoshio Takahashi, “Toyota
Makes New Push to Avoid Recalls,” The Wall Street Journal, February 24, 2011, p. B1; Norihiko
Shirouzu, “Toyoda Rues Excessive Profit Focus,” The Wall Street Journal, March 2, 2010, p. B3; and
Norihiko Shirouzu, “Inside Toyota, Executives Trade Blame Over Debacle,” The Wall Street Journal,
April 13, 2010 [http://online.wsj.com/]; and Hiroko Tabuchi and Bill Vlasic, “Battered by Expensive
Crises, Toyota Declares a Rebirth,” The New York Times, January 2, 2013 [http://www.nytimes.com/].
B. Corporations Practicing Social Responsibility
In recent years the corporate community seems to have become increasingly convinced that it needs,
for various reasons, to take a more active role in addressing those problems. Those efforts can take
many forms. For example, American corporations responded quickly to the January 2010 earthquake
in Haiti by promising $43 million in aid within 72 hours after the quake struck.
C. Google’s Multiple CSR Strategies
Google, through its $2 billion charitable arm, Google.org, makes many generous charitable
contributions, but its version of CSR reaches beyond philanthropic efforts to attack some of the world’s
biggest problems by investing in businesses, lobbying for political causes, and directing portions of its
employees’ time to developing business and technology solutions for those problems. Google aids
nonprofits by providing Google products free or at steep discounts and helps with disaster relief. Many
companies view social responsibility as workable only if it contributes to the strategic mission of the
business and ultimately to the bottom line.
Finding an Employer with a Conscience
Surveys of young people in recent years suggest that employers trying to replace millions of retiring
baby boomers may need to demonstrate a social commitment in order to be fully competitive in the
hiring market. One of those surveys found that two-thirds of respondents 18 to 26 prefer jobs that
would permit them to make a contribution to nonprofit groups.
D. CSR: Two Big Questions
I. Is CSR Good Business?
The evidence is at least mildly supportive of the idea that the market rewards socially responsible
performance by business. A 2009 meta-analysis of 251 studies found a “positive but small”
relationship between corporate social performance and corporate financial performance.
II. Do We Have a Better Alternative? Creating Shared Value
Michael Porter, highly influential professor and corporate consultant, and others have recently been
arguing for moving beyond CSR to a business model labeled creating shared value (CSV). They
see creating shared value as a new form of capitalism that enhances economic competitiveness
while simultaneously advancing social returns. They argue that
CSR has often been treated merely as a necessary expense and a way to improve a firm’s
reputation. Shared value advocates see businesses as the most powerful institutions for social
change, but they also expect those businesses to recognize that their goal must be creating shared
value rather than profit per se.
Part Three—Managing Social Responsibility
I. Stakeholder Approach
Many corporations, particularly those of great size, are confronting the practical notion of how best to
manage the firm’s response to social issues. Corporations are increasingly considering what scholars
have labeled the stakeholder model of social responsibility. Under that model, the corporation identifies all
of the groups that may significantly affect the firm’s performance or be affected by it.
Manage or Collaborate?
While many companies now acknowledge the importance of their stakeholder relationships,
their dominant goal often amounts to little more than controlling those relationships. An
alternative and arguably more “progressive” approach to stakeholders involves a collaborative
strategy in which stakeholder relationships are regarded as being mutually defined, cooperative,
and reciprocal. The firm endeavors to understand and balance the interests and needs of all
stakeholders with the view that this collaborative effort results in enhanced firm performance
over the long term while building a healthier society.
Stakeholder Results
Assessing the success of social responsibility efforts is very difficult, but various measurement
systems have emerged including, most prominently, Social Accountability 8000 (SA8000), the
first global standard measuring companies’ social and environmental records. Social
Accountability Accreditation Services in New York City accredits companies that meet the
SA8000 standards in the areas of child labor, forced labor, health and safety, freedom of
association, discrimination, disciplinary practices, working hours, collective bargaining wages,
and management systems.
Bhopal: A Social Responsibility Failure?
One way of measuring the results of stakeholder activism is to review how the business
community responds when wrongs occur. The devastating 1984 chemical spill at Bhopal, India,
was one of the great tragedies in global industrial history.
Sources: “Asia: Bhopal’s Deadly Legacy; India,” The Economist, November 27, 2004, p. 76;
Manjeet Kripalani, “Dow Chemical: Liable for Bhopal?” BusinessWeek, June 9, 2008, p. 061,
Mark Magnier, “Anguish Lingers in Bhopal, 25 Years after Chemical Disaster,” latimes.com,
December 3, 2009
[latimes.com/news/nation-and-world/la-fg-india-bhopal3-2009dec03,0,3728767.story], and
Susan Warren, “Chemical Companies Keep Lessons of Bhopal Spill Fresh,” The Wall Street
Journal, February 13, 2001, p. B4; and and Julien Bouissou, “Why the Bhopal Disaster Site, 28
Years Later, Is Still a Toxic Killer,” Le Monde/Worldcrunch, October 8, 2012
[http://www.worldcrunch.com/].
II. Shareholder Approach
Stakeholder theory and corporate social performance have gained great credibility with academics and
many managers. Others, however, argue that profits and shareholders must remain the consuming
concerns of management, and that a skilled focus on the bottom line will, incidentally but inevitably, result
in the greatest good for society.
The shareholder/stakeholder debate is well illustrated by the heated competition between massive
retailers Walmart and Costco. Each week Walmart saves money for millions of Americans by its relentless
focus on the bottom line and hence on the interests of its shareholders. Costco, on the other hand, has
drawn great praise from management scholars for its close attention to worker welfare.
A. Critics
Walmart, the target of relentless criticism, is accused of widespread sex discrimination and failure to
pay legally mandated overtime. (Costco has faced similar problems.) In response to these public
relations shortcomings, Walmart has initiated new sustainable, green practices including slashing solid
waste and greenhouse-gas emissions and significantly reducing energy consumption. Clearly,
Walmart has felt harsh, market-based pressure to respond to social issues, but its shareholder
orientation is intact and remains a strategic contrast to Costco’s stakeholder approach.
Part Four—Social Responsibility Cases
A. Case One: Guns
Many scholars and journalists have suggested that the firearms industry should police itself as a
means of reducing gun violence. They argue that the industry has been negligent in failing to take
measures that would reduce the distribution of guns to criminals.
When many guns used in crimes come from a particular source, law enforcement officials suspect
possible gun trafficking. Police, lawmakers, and others have pressed the firearms industry to enforce
policies voluntarily in their distribution chain that would reduce the number of guns diverted into
criminal use.
I. Social Responsibility Cases Two to Four: Wages
B. Case Two: Fast-Food Pay Unfair/Unconscionable?
Caroline Durocher, a fast-food server at a Taco Bell restaurant in Seattle, Washington, joined
co-workers in walking off the job in late May 2013, thus shutting down the restaurant. Seattle became
at least the seventh U.S. city facing strikes by fast-food workers. Seattle strikers also targeted
Wendy’s, McDonald’s, Subway, and others. Chicago, New York City, St. Louis, and Detroit are among
the other cities where fast-food workers went on strike, rallied, and demonstrated for $15 per hour
wages and the right to organize without retaliation.
C. Case Three: Pay More Than the Law Requires?
In 2010, during very difficult economic times, the Hobby Lobby retail chain with 455 stores in 36 states
raised its company minimum wage for full-time employees to $11 per hour; nearly $4 more than the
$7.25 required under federal law. Hobby Lobby had raised its minimum wage to $10 per hour in 2009,
and the results were so positive that the company decided to provide another raise in 2010.
D. Case Four: Making a Profit—Reduce Wages?
Three hundred workers at the Mott’s apple juice plant (a Dr. Pepper Snapple subsidiary) in Williamson,
New York, waged a 16-week strike when the company demanded a $1.50 per hour pay cut even
though Snapple had produced a $555 million profit in the previous year (2009) and increased its
dividend by 67 percent in May 2010.