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Jeremy Trujillo
BUS 1040
Term Paper

Ethical vs Unethical Corporate Social Responsibility

According to Peter Drucker from What Makes an Effective Executive.
Checking the results of a decision against its expectations shows
executives what their strengths are, where they need to improve, and where
they lack knowledge or information.
Researchers and experts have been baffled and debating for decades
on the views of Corporate Social Responsibility (CSR). CSR consists of several
areas such as environmental, employee incentives, philanthropy, pro-social
activities, governance, and many more programs.

Some researchers

say the popular view no longer defines CSR by the money in which a
corporation contributes to pro-social activities. Rather, the popular view
defines CSR by the corporations overall involvement with pro-social activities
that improve quality life or in another term, ethical human management
(Porter & Kramer 2006). On the other hand, economists still challenge the
popular view with their own traditional view because without unethical profit
maximizing intentions a corporation would have less of an impact on human
management if any (Coors & Winegarden 2005). However, I view CSR in the
traditional view because without profit maximizing competition then we as
consumers will pay more and corporations will sacrifice less.
Over the past decades we as consumers have challenged corporations
on the idea that they do not care about their employees, consumers, or parts

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of society as a whole. We as consumers have stated time and time again that
corporations only care about the bottom line when making decisions, costing
us consumers more. We as consumers demand CSR and are willing to pay for
it because we are loyal (Sullivan 2014). But, do these decisions cost us
consumers more than we feel should? For instance, Nestle controls one-third
of the US market and sells 70 different brand names of bottled water
including Arrowhead, Deer Park, Perrier and Poland Spring. The company
buys up pristine springs in some of the most beautiful natural spaces in
America and builds huge factories on the sites, releasing pollution into the air
and drawing enormous amounts of water out of the springs.
And, while the company claims an environmentally friendly ethic,
saying it would never harm an aquifer, thats exactly what they have done in
places like Mecosta County, Michigan, damaging the watershed with
excessive withdrawals, reaping huge profits and leaving the locals to deal
with the consequences (Rogers 2009).
Corporations must be mindful on the legal, ethical, and social
consequences of their decisions in business today. CSR is an area of
decisions that define a line between the popular view and the traditional
view. The popular view of human management intentions of CSR is getting
more attention as corporations attempt to redefine themselves from the
economist traditional view of profit maximization intentions of CSR (Coors &
Windegarden 2005). However, corporations need to redefine CSR from a
human management standpoint or they will always be viewed in the

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traditional view as profit maximizers (Porter & Kramer 2006) (Godelnik

2012).
CSR benefits the corporations as well as society at the same time. CSR
drives the growth of corporations ensuring the corporations long term future
is sustainable. Financial CSR decisions today have an impact on financial and
social results 10 years from now. Sustainability is used to cut costs of
overhead such as less packaging, less energy, and other environmental
areas (Epstein-Reeves 2012). Corporations are always looking for ways to cut
costs but rarely do corporations advertise CSR intentions as to where the
money saved or revenues gained intended utilization unless the cut is
environmental providing a convenience to a corporations CSR image.
Additionally, employees are also vulnerable to overhead cuts corporations
are developing more creativity on cutting overhead, sometimes before even
inheriting the overhead.
Potential employees look for corporations with good CSR and are
willing to take pay cuts just to work for these types of corporations creating a
cost savings in overhead. But, this does not mean that corporations have a
profit motive but that they care about the world while making profit (Balsamo
2013). Cutting overhead before obtaining the overhead is a brilliant
utilization of CSR. At the same time, corporate brilliance is also a
misconception as the corporation still isnt marketing the costs saved from
employees taking pay cuts as going into CSR programs. Additionally, the
total profits accumulated from CSR are not recycled back through CSR at

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100% because corporations keep most of the profits. Philanthropy is an

attempt to justify a good cause through simply donating. Corporations realize
they need to get involved as well because philanthropy on its own is just a
profit maximizer and cannot define CSR. There is a profit motive even when
corporations decide to donate assets or money sustaining the economists
view.
Philanthropy is an abused term for CSR because it began as a basic
strategy of donating assets used by corporations that viewed philanthropy as
doing society good to start with but later realized it was not enough
(Godelnik 2012). Corporations have still failed to redefine philanthropy or
separate it from the areas of CSR that are intended for ethical human
management leaving one of the oldest traditional views of unethical profit
maximization still labeled as is. Now we need the scientific analytics because
lets face it, we are all thinking the same thing.
Mirvis implemented studies to investigate the substantial gains
corporations received versus costs from CSR. The investigation included
environmental, governance, and social programs. All of the corporations
studied reported substantial gains from their CSR investments and a survey
of CFOs and investment professionals found that over three-fourths projected
long-term benefits in shareholder value from corporate spending on
environmental (85%), social (74%), and governance (84%) programs. The
investment pros variously estimated the effect on shareholder value to be
from 2-5% (the majority view) to over 11% (Googins & Mirvis 2001). So in

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other words, these profit percentages are not small in terms of the big
picture. Remember the beginning that corporations make decisions based on
sustainability even 10 years from now. These figures only off CSR
investments back up that statement by showing the profits made off CSR
programs. 2-5% up to over 11% is more than double the profit percentage
just off CSR investments and if corporations have true CSR intentions then a
large portion of profits should go back into CSR and not into shareholder or
CEO pockets. Although, without profit maximization competition a CSR
focused corporation cannot sustain.
Competition amongst corporations that are separated in these views is
unfair. Therefore, corporations need to compete in CSR for profit
maximization to sustain the long term. Not doing so will have a negative
impact on consumers by less surplus for greater demand increasing costs to
consumers (Coors & Winegarden 2005). A corporation focused on CSR is at
the mercy of the corporation focused on profit maximization. Consumers will
also suffer from the good CSR intentions because without competition the
profit maximizers become monopolies in their preferred lines of business.
This gives profit maximizing corporations the power to control supply and
demand as well as increase prices adding to profits since there is no
competition to give consumers another option in the long run.
CONCLUSION
One of the greatest human management minds Peter Drucker left the
corporate capitalism world in order to pursue human management because

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profit maximization took precedence. Corporations are trapped when it

comes to CSR economical concepts. Without profit maximization intentions a
corporation will not be effective at CSR than without. I agree with the
concept of philanthropy being abused as a term but it is up to corporations to
redefine the term or any other perceived term. Otherwise, CSR shall continue
its traditional unethical profit maximizing label. I do believe corporations with
true human management CSR intentions have grown and are growing vastly.
However, I also believe the traditional view takes precedence over the
popular view due to the statistical profit gains research even though some
corporations may have good CSR intentions, statistics still show profit
maximization. Additionally, corporations competing in profit maximization
are also preventing even higher costs to consumers by utilizing CSR as a
competition tool negating monopolies. Lastly, we as consumers may now
have a better understanding that profit maximization competition is actually
a good thing for the economy but be weary of primarily focused profit
maximizing unethical corporations.

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RECOMMENDATION
Limit philanthropy and focus more on humanitarian CSR. Even smaller
business can focus on local humanitarian CSR with homeless shelters,
childrens hospitals, cancer prevention, floods, sponsorships, and many other
areas. Also, focus on getting customers talking about CSR and veer away
from the media doing the talking. This can be done by involving customers
whether it be through loyalty programs, long-term relationships, B2B,
random customer winners, etc. Customers are still the most powerful
influence on advertising so utilize customers but dont manipulate or abuse
customers. Finally, have a solid mission statement and commit to that
statement both internally and externally. There are tons of companies that
have statements and pitch the values and culture to customers and
employees but do not follow through on the pitch. So stick to the values and
culture in the mission statement to make a positive impact on the
customer/work-life experience.

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WORKS CITED:
Balsamo C. Benefits of Corporate Social Responsibility Business and New
Markets 22 May 2013 web 20 July 2015
Coors A., Laffer Associates & Winegarden W., Chief economist Sterling
International, Spring 2005 web 20 July 2015
Epstein-Reeves J. Six Reasons Companies Should Embrace CSR Journal
Forbes 21 February 2012 web 21 July 2105
Godelnik R. Philanthropy, CSR and the Social Responsibility of Business
University of Delawares Business School 22 August 2012 web 22 July 2105
Googins B. & Mirvis P. CSR and Profit Maximization, Value Creation, or
Something More? Corporate Citizenship Center 13 September 2010 web 22
July 2015
Porter M. & Kramer M. Strategy and Society: The Link Between Competitive
Advantage and Corporate Social Responsibility December 2006 web 25 July
2015
Rogers S. Profits Before People: 7 of the Worlds Most Irresponsible
Companies 7 May 2009 web 1 August 2015
Sullivan P. Consumers Will Pay More For Corporate Social Responsibility
The Non-Profit Times 17 June 2014 web 24 July 2015