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Corporate Social Responsibility in Practice

REWE and Fairtrade

Written by Jana Voth

Paper category

Term Paper


Business Administration>General




Term Paper: Business Ethics and Corporate Social Responsibility As early as the 1990s, many people doubted whether business ethics was just a fashion. In fact, in 2007, a well-known business writer from Fortune magazine wrote an article claiming that business scandals such as the Enron scandal are now a thing of the past and business has changed. However, a year later, he was proven wrong. The collapse of the U.S. financial system in 2008 not only brought huge problems to the U.S. economy, but also caused huge problems to other economies in the world. Most activities that lead to crises do not violate the law, but are unethical and violate ethical principles such as responsibility and fairness. 13 In the following sections, the importance of business ethics and the company's social and ethical obligations will be addressed and explained in the following ways to outline the concept of CSR. 2.1 The importance of business ethics To understand the further discussion, it is important to define business ethics. Business ethics "focuses on the ethics and fairness of behaviors, actions, and practices that occur in a business environment. [...] Business ethics is the study of organizational practices and seeks to determine whether these practices are acceptable." 14 However, define business ethics There is no insight into why this field of research is important. Crane and Matten (2010, pp. 9-13) pointed out that companies have realized that ethics may also be beneficial to the company, and provided eight reasons for the importance of business ethics: these reasons for the importance of business ethics mean that the company undertakes more than Responsibility for delivering specific products, hiring people, or paying taxes. 16 However, is this a legal claim? This will be analyzed in the next section by asking whether the company has ethical and social responsibilities, and if so, what these responsibilities mean. 2.2 The company's ethics and social responsibility Some people believe that the company as a whole cannot bear moral responsibility because the individual makes a decision. 17 However, the company acts as a whole and these behaviors can be evaluated ethically. Most importantly, their behavior affects other people. Therefore, companies have ethical responsibilities, but the degree of responsibility is different from that of individuals. 18 What moral obligations stem from this responsibility? De George (2010, p. 193) outlines the four general ethical obligations of companies. The first is the obligation not to harm others, especially people. This obligation mainly affects the company's operations. The next one comes from the free enterprise system on which enterprises depend, so we should appreciate the "value of freedom and system." 2.3 Corporate Social Responsibility The discussion of corporate social responsibility can be traced back to the 1920s 31, but it was not until the 1950s that the concept of corporate social responsibility began to become more important. 32 For a long time, American writers, literature, and conceptualization have focused on the concept of CSR. 33 However, recently this concept has begun to influence business practices in Europe 34 and Germany, as can be seen on various German web pages. 35 Although the concept of CSR differs from country to country36, it is now widely accepted and used.37. So, what are the reasons for companies to participate in CSR? The main reason is sometimes referred to as "enlightened self-interest", that is, companies should participate in corporate social responsibility in order to promote their own interests. This means that companies can benefit from a better brand reputation and thus get more or more satisfied customers. In addition, corporate social responsibility may attract new employees who are more willing to work for companies with a sense of social responsibility. Another implication of corporate social responsibility is more independence from the government and less supervision, because companies have voluntarily formulated measures in their corporate social responsibility efforts. Finally, investing in society, such as by creating a better educated and safer community, can lead to a stable environment. Competing in a stable environment is beneficial to enterprises. 38 In addition, companies participating in corporate social responsibility can avoid negative consequences. The argument behind this rationale is “proactive rather than reactive.” 39 This means that it may be more practical and cheaper to take preventive measures before problems arise. 40 Therefore, it is beneficial for companies to participate in CSR for a variety of reasons. But what does CSR mean, and what type of responsibility does this concept refer to? The term CSR has different meanings41. In the academic literature alone, Carroll has identified more than 25 different ways of defining corporate social responsibility. 42 The following definition given by Carroll and later improved by Buchholz and Carroll is based on the “four-part model of corporate social responsibility” proposed by Carroll43, which is widely accepted. 44 About CSR Further discussion will be based on this definition: “The [corporate] social responsibility of an enterprise includes the economic, legal, ethical, and discretionary (charitable) expectations of the society at a specific point in time.” 45 This definition identifies four different types of Responsibility. Read Less