CHAPTER 5

Ethical behaviour and

social responsibility
LEA RN IN G OBJE CTIVE S

5.1 What is ethical behaviour?

5.2 How do ethical dilemmas complicate the workplace?
5.3 How can high ethical standards be maintained?
5.4 What is organisational social responsibility?
5.5 How do organisations and government work together in society?
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 Taking corporate social responsibility to the
next level

In Australia, the charity and not‐for‐profit sector makes up a $55 billion industry owing to Australian
tax payers’ generous values and billions of dollars in tax concessions. There are a plethora of registered
charities for Australians to choose from when electing to ‘dig deep’ — in 2016 there were more than
54  000 registered charities.1
Many corporations that subscribe to the quadruple bottom line of being accountable for their finan­
cial, environmental and social performance, and staff wellbeing want to give something back and
so make donations to one or more of these registered charities. McDonald’s sponsoring of Ronald
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McDonald Houses is a well‐documented example of a business donating to a worthy charitable cause.

Ronald McDonald Houses are ‘attached to major women’s or children’s hospitals and provide a home
away from home for seriously ill children and their families’.2 Notwithstanding attacks on the fast‐food
chain for contributing to unhealthy eating habits and obesity, it does provide a good example of how a
business can help a worthwhile cause.
But how do you decide upon what is a worthwhile charity? Given that it is such a huge industry in
Australia and elsewhere in the developed world, aspersions are sometimes cast and questions raised
about how much money actually gets through to the needy once salaries, administrative costs and govern­
ment commissions have been deducted. For this reason, the alternative presented by Richard Branson’s
Branson Centre for Entrepreneurship is an attractive one. Taking as its springboard the misery caused
by unemployment, the charity provides seeding loans to small businesses in townships in developing
countries. While this is not a brand new idea — the Nobel prize‐winning Grameen bank was founded

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 in 1976 to give microloans to impoverished Bangladeshis, effectively founding a business on corporate
social responsibility (CSR) principles — Branson says:

For too many years we’ve been trying to solve the world’s issues by pouring trillions of dollars into aid.
While this has been (and still is) absolutely necessary to ensure we stop human suffering in times of
emergency, we all need to start looking beyond the emergencies, to stop constantly trying to save the
world and instead look at reinventing how we live in the world. It can no longer be about putting sticking
plasters on issues and hoping they will go away; it has to be about creating opportunities for people so
that they can build the lives they deserve. And who better to create opportunities than entrepreneurs?
Every time I visit our Branson Centre of Entrepreneurship in South Africa I leave feeling that I just
emerged from the epicentre of hope in the world.3

One might think that these loans would never be paid back, but perhaps somewhat surprisingly
95 per cent of them are.4

QUESTION
Can a case be made for companies to continue donating to charities as part of their CSR obligations? Or should
they only help clean up the environment and provide seeding loans to budding young entrepreneurs in developing
countries or outlying communities?

Introduction
The good news is that some organisations employ ‘environmental’ managers to work on everything from
a company’s recycling program to long‐term corporate environmental policies. Global warming, global
sustainability and environmental protection are all on the agenda as organisations pursue what some
call ‘the greening of the bottom line’.5 More and more companies are engaging in social outreach and
including environmental issues and social concerns among top corporate goals.6 Says the CEO of one
large firm:

A lot of the blue‐chip multinationals have a long tradition of charitable and community programs that
date back to their foundation. What is new is that corporate responsibility is being written into the busi­
ness model.7

Lend Lease is a good example. A statement on the company’s website reads:

Sustainability has been an integral part of our culture for more than 50 years. Today, our employees insist
that making a difference in our communities, improving health and safety standards, and reducing our
environmental impacts are central to our business strategy.8

Perhaps one of the ‘best’ news stories in recent years was the willingness of Australian businesses
and sports heroes to make substantial donations to victims of the horrific bushfires that affected Victoria
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in 2009. Telstra employees worked around the clock to restore damaged telephone lines, and the com­
pany donated $500  000 to the bushfire appeal fund, promising to match dollar for dollar any donations
made by its employees. Wesfarmers donated the profits from a day of trading in its Coles supermarkets
to the appeal, while Cricket Australia donated the proceeds from a one‐day match played between
Australia and New Zealand in Adelaide.9 Australian soccer players handed match fees to the fund too.
More recently, many Australians and Australian businesses even donated money to the victims of the
Fukushima disaster via the Save the Children Fund.10 Another good news story is Richard Branson’s
strategy of making small loans to help create employment, which could provide the impetus for partici­
pation by more companies.
There are many other examples, which are too numerous to mention. The bad news is that not all
stories from the corporate world are positive examples. Consider these actual reports from past news
stories: ‘Firm admits lowering phone contract bid after receiving confidential information from an

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 insider that an initial bid “was not good enough to win”’; ‘Company admits overcharging consumers
and insurers more than $13 million for repairs to damaged rental cars’; ‘Executives get prison terms for
selling adulterated apple juice — the juice labelled “100% fruit juice” was actually a blend of synthetic
ingredients’. In Eastern China, Zhang Yujun, a cattle farmer, allegedly made $1.5 million from selling a
toxic concoction that milk buyers used to doctor dairy products and increase profits. He was sentenced
to death after eight babies died and nearly 300  000 children were harmed.11 Perhaps one of the worst
examples of ethical misconduct in recent times is the News of the World voicemail hacking scandal.
And that is not all. Consider these words from an address delivered some years ago at a well‐known
US business school: ‘Greed is all right’, the speaker said. ‘Greed is healthy. You can be greedy and
still feel good about yourself.’ The students, it is reported, greeted these remarks with laughter and
applause. The speaker was Ivan Boesky, once considered the ‘king of the arbitragers’.12 It was not long
after his speech that Boesky was arrested, tried, convicted and sentenced to prison for trading on inside
information.
It is time to get serious about the moral aspects and social implications of decision‐making in
organisations. In your career and in the work of any manager, the ultimate task must be more than
simply meeting performance expectations. Performance goals must always be achieved through eth­
ically and socially responsible action. The following reminder from Desmond Tutu, the former arch­
bishop of Cape Town, South Africa, and a winner of the Nobel Peace Prize, is applicable to managers
everywhere:

You must take a stand on important issues: the environment and ecology, affirmative action, sexual
harassment, racism and sexism, the arms race, poverty, the obligations of the affluent West to its less‐
well‐off sisters and brothers elsewhere.13

5.1 What is ethical behaviour?

LEARNING OBJECTIVE 5.1 What is ethical behaviour?
For our purposes, ethics can be defined as the code of moral principles that sets standards of good or
bad, or right or wrong, in a person’s conduct and thereby guides the behaviour of that person or group.14
These principles guide behaviour and help people make moral choices among alternative courses of
action. In practice, ethical behaviour is that which is accepted to be ‘good’, ‘right’ and ‘proper’ as
opposed to ‘bad’, ‘wrong’ or ‘improper’ in the context of the governing moral code.

Law, values and ethical behaviour

It makes sense that there should be a legal component to ethical behaviour; that is, you would expect that
any legal behaviour should be considered ethical. Yet the White Australia Policy — which determined
Australia’s approach to immigration from the time of Federation until the latter part of the 20th century
and which favoured applicants from certain countries — was once law in Australia.15 That does not
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mean the policy was ever ethical; it was clearly not. Furthermore, just because an action is not strictly
illegal doesn’t make it ethical. Living up to the ‘letter of the law’ is not sufficient to guarantee that your
actions will or should be considered ethical.16 Is it truly ethical, for example, for an employee to take
longer than necessary to do a job? to make personal telephone calls on company time? to call in sick to
take a day off for leisure? to fail to report rule violations by a co‐worker? None of these acts is strictly
illegal, but many people would consider any one or all of them to be unethical.
Most ethical problems in the workplace arise when people are asked to do, or find themselves about
to do, something that violates the dictates of their conscience. For some, if the act is legal they proceed
with confidence. For others, the ethical test goes beyond the legality of the act alone. The ethical ques­
tion extends to personal values — the underlying beliefs and attitudes that help determine individual
behaviour. To the extent that values vary among people, we can expect different interpretations of what
behaviour is ethical or unethical in a given situation.

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 Alternative views of ethical behaviour
There are many different interpretations of what constitutes ethical behaviour. Figure 5.1 shows four views
of ethical behaviour that philosophers have discussed over the years.17 The first is the utilitarian view.
Behaviour that would be considered ethical from this perspective delivers the greatest good to the greatest
number of people. Founded in the work of 19th century philosopher John Stuart Mill, this is a results‐
oriented point of view that tries to assess the moral implications of decisions in terms of their consequences.
Business decision makers, for example, are inclined to use profits, efficiency and other performance criteria
to judge what is best for the most people. A manager may make a utilitarian decision to cut 30 per cent of a
factory’s workforce in order to keep the factory profitable and save jobs for the remaining 70 per cent.

Individualism view
Does a decision or
behaviour promote
our long-term
self-interests?
Moral-rights view Utilitarian view
Does a decision or Does a decision or
behaviour maintain behaviour do the
the fundamental rights greatest good for
of all human beings? the most people?
Justice view
Does a decision or
behaviour show
fairness and
impartiality?

FIGURE 5.1 Four views of ethical behaviour

The individualism view of ethical behaviour is based on the belief that our main commitment is to
the advancement of long‐term self‐interests. When people pursue individual self‐interests, they suppos­
edly become self‐regulating. For example, such things as lying and cheating for short‐term gain should
not be tolerated. If one person does it, everyone will do it, and no‐one’s long‐term interests will be
served. The individualism view is supposed to promote honesty and integrity. But in business practice it
may result in a pecuniary ethic, described by one business executive as the tendency to ‘push the law to
its outer limits’ and ‘run roughshod over other individuals to achieve one’s objectives’.18
Ethical behaviour under a moral‐rights view is that which respects and protects the fundamental rights
of people. For example, the rights of all people in Australia, New Zealand, the United States, the United
Kingdom and other countries to life, freedom and fair treatment under the law are considered inviolate. In
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many organisations today, this concept extends to ensuring that employees are always protected in their
rights to privacy, due process, free speech, free consent, health and safety, and freedom of conscience. The
issue of human rights, so characteristic of ethical concerns in the international business environment, is cen­
tral to this perspective. The United Nations stands by the Universal Declaration of Human Rights passed by
the General Assembly in 1948. Peter Drucker would probably subscribe to this view because he:

recognised and preached that people are not a cost; they are a resource. He concluded that considerations
for workers in and out of the workplace were the responsibility of the corporate leader just as much as
the profits, survival, and growth of the business or organisation.19

Starbucks, for example, seeks to enhance the lives of the small independent coffee bean farmers who make
up their suppliers, and mentioned them first in an annual report, while shareholders were mentioned last.20

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 Finally, the justice view of moral behaviour is based on the belief that ethical decisions treat people
impartially and fairly according to guiding rules and standards. This approach evaluates the ethical
aspects of any decision on the basis of whether it is ‘equitable’ for everyone affected.21 One justice issue
in organisations is procedural justice — the degree to which policies and rules are fairly administered.
For example, does a sexual harassment charge levied against a senior executive receive the same full
hearing as one made against a first‐level supervisor? A second issue is distributive justice — the degree
to which outcomes are allocated without respect to individual characteristics based on ethnicity, race,
gender, age or other criteria. For example, does a woman with the same qualifications and experience as
a man receive the same consideration for hiring or promotion? A third issue is interactional justice —
the degree to which others are treated with dignity and respect. For example, does a bank loan officer
take the time to fully explain to an applicant why he or she was turned down for a loan?22

ETHICS

Sustainability at CSR Limited

CSR Limited (CSR), founded in 1855 as the
Colonial Sugar Refinery, has diversified and
grown to become one of Australia’s leading
publicly listed companies. It is now Australia’s
largest sugar producer, a leading supplier of
building products (including plasterboard,
cement, bricks, roof tiles and insulation) to the
construction industry, and smelts aluminium. It
has operations for its three principal businesses
throughout Australia as well as in New Zealand
and Asia. It describes its charter as a commit­
ment to act responsibly, ensuring staff deal
appropriately with the communities in which
they operate, in order to gain their support. CSR Limited places strong emphasis on corporate social
responsibility and sustainability initiatives. Employees at the
This philosophy is consistent with the general
company have pledged funds to various charitable causes in
business notion of corporate social responsi­ recent years, including to the Queensland Premier’s Disaster
bility, which often also goes by the abbreviation Relief Appeal for flood-affected areas.
‘CSR’, and is the focus of much of this chapter.
Sustainability is a related concept, requiring the use of resources to enable society to satisfy current
needs without compromising the ability of future generations to meet their needs.
Corporate social responsibility and sustainability initiatives are in evidence in CSR’s activities. The com­
pany has a Workplace Giving program in which the company matches employee contributions to charity —
dollar for dollar. CSR’s employees have selected 14 charities that benefit from this initiative and in its first
11 years of operation until 2015, $2.6 million was donated. In addition, CSR donated more than $30  000 of
building products and installation services to the Habitat for Humanity organisation, which helped to build
12 homes for needy Australians. CSR also contributed $50  000 to the Queensland Premier’s Disaster
Copyright © 2016. Wiley. All rights reserved.

Relief Appeal for communities affected by floods in the north of the state, and donated laptops and
secondary schooling packages to the Youth off the Streets organisation, one of its three main partner
charities, for its scholarship program. It has also assisted Youth Off the Streets provide short‐ and long‐
term accommodation. CSR Sugar pledged $30  000 over six years for university scholarships to econ­
omically and educationally disadvantaged Australian South Sea Islanders in North Queensland.
Ancestors of this ethnic group had been brought into Australia as indentured labourers to work on sugar
plantations in the late 19th century. CSR supports Assistance Dogs Australia and the Salvation Army, its
other two major partner charities. The company also planted 300 trees and removed harmful weeds at its
Gyprock site at Coopers Plains in Queensland. It undertakes regular testing upstream from the site in an
effort to improve water quality. Since 2011 CSR employees volunteered 970 hours of their time for men­
toring in the community. The company reduced its total greenhouse emissions by 13 per cent, its solid
waste by 33 per cent and potable water usage by 13 per cent between 2011 and 2014.23

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 QUESTION
What are some other ways that the company could contribute to corporate social responsibility? Do you
think the company does enough considering in 2015 it earned A$2 billion in revenue and its statutory net
profit was A$125.5 million?24

Cultural issues in ethical behaviour

The influence of culture on ethical behaviour is increasingly at issue as businesses and individuals travel
the world. Corporate leaders must master difficult challenges when operating across borders that are cul­
tural as well as national. Those who believe that behaviour in foreign settings should be guided by the
classic rule of ‘when in Rome, do as the Romans do’ reflect an ethical position of cultural relativism.25
This is the notion that there is no one right way to behave and that ethical behaviour is always deter­
mined by its cultural context. When it comes to international business, for example, a Western executive
guided by rules of cultural relativism might argue that the use of child labour is okay if it is consistent
with local laws and customs.
Figure 5.2, however, contrasts this position with the alternative of universalism. This ethical position
suggests that if a behaviour or practice is not okay in your home environment, it shouldn’t be accept­
able practice anywhere else. In other words, ethical standards are universal and should apply absolutely
across cultures and national boundaries. Critics of such a universal approach claim that it is a form of
ethical imperialism, or the attempt to externally impose your ethical standards on others.

Cultural relativism Ethical imperialism

No culture’s ethics are superior. Certain absolute truths apply everywhere.

The values and practices of the local Universal values transcend cultures
setting determine what is right or wrong. in determining what is right or wrong.

When in Rome, do as the Romans do. Don’t do anything you wouldn’t do at home.

FIGURE 5.2 The extremes of cultural relativism and ethical imperialism

Source: Based on information in Thomas Donaldson, ‘Values in Tension: Ethics Away from Home’, Harvard Business Review,
Copyright © 2016. Wiley. All rights reserved.

vol. 74 (September–October 1996), pp. 48–62.

Business ethicist Thomas Donaldson discusses the debate between cultural relativism and ethical
imperialism. Although there is no simple answer, he finds fault with both extremes. He argues instead
that certain fundamental rights and ethical standards can be preserved while values and traditions of a
given culture are respected.26 The core values or ‘hyper‐norms’ that should transcend cultural boundaries
focus on human dignity, basic rights and good citizenship.27 With a commitment to core values creating
a transcultural ethical umbrella, Donaldson believes international business behaviours can be tailored
to local and regional cultural contexts. In the case of child labour, for example, the Western executive
might ensure that any children working in a factory under contract to his or her business would be given
schooling as well as employment. See Manager’s notepad 5.1 for Donaldson’s suggestions on how cor­
porations can respect the core or universal values.28

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 MANAGER’S NOTEPAD 5.1

How multinationals can respect universal values

Respect for human dignity
• Create a culture valuing employees, customers and suppliers.
• Keep a safe workplace.
• Produce safe products and services.
Respect for basic rights
• Protect rights of employees, customers and communities.
• Avoid any threats to safety, health, education and living standards.
Be good citizens
• Support social institutions, and economic and educational systems.
• Work with governments and institutions to protect environment.

CRITICAL ANALYSIS

1. Some corporate social responsibility initiatives of CSR Limited were outlined earlier in the chapter.
Interestingly, in its annual Corporate Sustainability Report it also lists direct and indirect donations
to political parties to support the democratic process as an initiative.29 Do you believe this is
acceptable in a sustainability program? Why or why not?
2. Can you think of any business actions that are unethical but not illegal?

5.2 Ethics in the workplace

LEARNING OBJECTIVE 5.2 How do ethical dilemmas complicate the workplace?
‘Ethical business is good business’ is a classic quote. The same can be said for all persons and insti­
tutions throughout society. But the real test is when managers or workers encounter a situation that chal­
lenges their ethical beliefs and standards. Often ambiguous and unexpected, these ‘ethical dilemmas’ are
part of the challenge of modern society.

What is an ethical dilemma?

An ethical dilemma occurs when our own behaviour, or the behaviour we witness from others, con­
flicts with our values and beliefs. Such dilemmas cause stress to us until they are resolved. An ethical
dilemma arises when action must be taken but there is no clear ‘ethically right’ option. The burden
is on the individual to make good choices. An engineering manager, speaking from experience, sums
it up this way: ‘I define an unethical situation as one in which I have to do something I don’t feel
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good about’.30

Ethical problems faced by managers

There are many potential sources of discomfort in managerial decision‐making, including those with
ethical overtones. Some of the problem areas or situations where managers can get caught in ethical
dilemmas include:
•• discrimination — where a manager denies promotion or appointment to a job candidate because of
the candidate’s race, religion, gender, age or other criterion not relevant to the job
•• sexual harassment — where a manager makes a co‐worker feel uncomfortable because of inappropriate
comments or actions regarding sexuality; or where a manager requests sexual favours in return for
favourable job treatment

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 •• conflicts of interest — where a manager takes a bribe or kickback or extraordinary gift in return for
making a decision favourable to the gift giver
•• customer confidence — where a manager has privileged information regarding the activities of a
customer and shares that information with another party
•• organisational resources — where a manager uses official stationery or a company email account to
communicate personal opinions or requests to community organisations.31
In a survey of Harvard Business Review subscribers, many of the ethical dilemmas reported by man­
agers involved conflicts with superiors, customers and subordinates.32 The most frequently occurring
issues involved dishonesty in advertising and communications with top management, clients and govern­
ment agencies. Problems in dealing with special gifts, entertainment and kickbacks were also reported.
Significantly, the managers’ bosses were singled out as sometimes pressuring their subordinates to
engage in such unethical activities as supporting incorrect viewpoints, signing false documents, over­
looking the boss’s wrongdoings and doing business with the boss’ friends.

Rationalisations for unethical behaviour

Why might otherwise reasonable people act unethically? Think back to the earlier examples and to those
from your experiences. Consider the possibility of being asked to place a bid for a business contract
using insider information, paying bribes to obtain foreign business, falsifying expense account bills,
and so on. ‘Why’, you should be asking, ‘do people do things like this?’ In fact, there are at least four
common rationalisations that are used to justify misconduct in these and other ethical dilemmas.33
1. Convince yourself that the behaviour is not really illegal.
2. Convince yourself that the behaviour is really in everyone’s best interests.
3. Convince yourself that nobody will ever find out what you’ve done.
4. Convince yourself that the organisation will ‘protect’ you.
After doing something that might be considered unethical, a rationaliser says, ‘It’s not really illegal’.
This expresses a mistaken belief that your behaviour is acceptable, especially in ambiguous situations.
When dealing with ‘shady’ or borderline situations in which you are having a hard time defining pre­
cisely what is right and what is wrong, the advice is quite simple. When in doubt about a decision to be
made or an action to be taken, don’t do it.
Another common statement by a rationaliser is: ‘It’s in everyone’s best interests’. This response
involves the mistaken belief that because someone can be found to benefit from the behaviour, the
behaviour is also in the individual’s or the organisation’s best interests. Overcoming this rationalisation
depends in part on the ability to look beyond short‐term results to consider longer term implications, and
to look beyond results in general to the ways in which they are obtained. For example, in response to
the question ‘How far can I push matters to obtain this performance goal?’, the recommended answer is
often, ‘Don’t try to find out’.
Sometimes rationalisers tell themselves: ‘No one will ever know about it’. They mistakenly believe
that a questionable behaviour is really ‘safe’ and will never be found out or made public. Unless it is
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discovered, the argument implies, no crime was really committed. Lack of accountability, unrealistic
pressures to perform and a boss who prefers ‘not to know’ can all reinforce such thinking. In this case,
the best deterrent is to make sure that everyone knows that wrongdoing will be punished whenever it is
discovered.
Rationalisers may proceed with a questionable action because of a mistaken belief that ‘the organ­
isation will stand behind me’. This is misperceived loyalty. The individual believes that the organ­
isation’s best interests stand above all others. In return, the rationaliser thinks that top managers will
condone the behaviour and protect the individual from harm. But loyalty to the organisation is not an
acceptable excuse for misconduct; organisational loyalty should not stand above the law and social mor­
ality. You should keep in mind that to rationalise the dilemma is only one option. People can change
their values and beliefs (which is very hard to do), change the behaviour of themselves or attempt to
change the behaviour of others.

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 Factors influencing ethical behaviour
It is easy to confront ethical dilemmas from the safety of a textbook or a classroom. In practice, people
are often challenged to choose ethical courses of action in situations where the pressures may be contra­
dictory and great. Increased awareness of the factors influencing ethical behaviour, shown in figure 5.3,
can help you deal with them more appropriately in the future.

Manager as a person Employing organisation External environment

● Family influences ● Policies, codes of conduct ● Government regulations
● Religious values ● Behaviour of supervisors, ● Norms and values of
● Personal standards and peers society
needs ● Organisational culture ● Ethical climate of industry

Ethical managerial
behaviour

FIGURE 5.3 Factors influencing ethical managerial behaviour — the person, organisation and environment

The person
Family influences, religious values, personal standards and personal needs, financial and otherwise, will
help determine a person’s ethical conduct in any given circumstance. Managers who lack a strong and
consistent set of personal ethics will find that their decisions vary from situation to situation as they
strive to maximise self‐interests. Those who operate within strong ethical frameworks (personal rules
or strategies for ethical decision‐making) will be more consistent and confident since choices are made
against a stable set of ethical standards.

The organisation
The organisation is another important influence on ethics in the workplace. The first port of call is at the
staff selection stage. Unethical or unsavoury characters should not be recruited and appointed in the first
instance. We noted earlier that a person’s immediate supervisor can have an important effect on the employ­
ee’s behaviour. Just exactly what a supervisor requests, and which actions are rewarded or punished, can
certainly affect an individual’s decisions and actions. The expectations and reinforcement provided by peers
and group norms are likely to have a similar impact. Formal policy statements and written rules are also very
important in establishing an ethical climate for the organisation as a whole. They support and reinforce the
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organisational culture, which can have a strong influence on members’ ethical behaviour.
The late Anita Roddick, founder of The Body Shop, created an 11‐point charter to guide the com­
pany’s employees:

Honesty, integrity and caring form the foundations of the company and should flow through everything
we do — we will demonstrate our care for the world in which we live by respecting fellow human
beings, by not harming animals, by preserving our forests.

The fact that The Body Shop still has to respond to occasional criticisms about its operations demon­
strates the inadequacy of formal policies alone to guarantee consistent ethical behaviour. A visit to The
Body Shop website, however, shows the firm’s ongoing ethical commitments and provides answers to fre­
quently asked questions regarding such controversial issues as animal testing in the cosmetics industry.34

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 The environment
Organisations operate in external environments composed of competitors, government laws and reg­
ulations, and social norms and values, among other influences. Laws interpret social values to define
appropriate behaviours for organisations and their members; regulations help governments monitor these
behaviours and keep them within acceptable standards.
The climate of competition in an industry sets a standard of behaviour for those who hope to prosper
within it. Sometimes the pressures of competition contribute further to the ethical dilemmas of man­
agers. The late Australian billionaire Richard Pratt, founder of the multibillion dollar cardboard and
packaging company Visy, provided a prime example of this. Although widely known as a generous
philanthropist throughout his life, in his later years Pratt became embroiled in a price fixing scandal.
His company was forced to pay a fine of $36 million after Pratt signed a statement admitting guilt in
colluding with competitors to fix the price of cardboard, forcing customers to pay artificially high prices.
Subsequent criminal charges against Pratt were dropped on health grounds just a day before he passed
away from prostate cancer in 2009.35

CRITICAL ANALYSIS

1. What types of conflicts between superiors and subordinates and staff and customers might
constitute ethical dilemmas?
2. In what ways can an organisation improve ethical behaviour in the workplace?

SUSTAINABILIT Y

BHP’s Ok Tedi mine in Papua New Guinea (PNG)

The Ok Tedi mine is a classic example in
the study of ethics, sustainability and social
responsibility, as both sides of the argument
are presented in this case. BHP, the operator
of the mine until 2002, did not build a sug­
gested tailings dam to retain noxious sediment,
resulting in massive pollution of the Fly River
and the surrounding environment on which
many local villagers depended for their liveli­
hood. High concentrations of cyanide and acid
rock drainage in the river killed many fish. Many
trees along the river course also died. How­
ever, the company provided employment for
Copyright © 2016. Wiley. All rights reserved.

many villagers, built infrastructure — including

BHP’s Ok Tedi mine is a classic example in the study of
a hospital — and helped increase life expec­
ethics, sustainability and social responsibility. As part of
tancy and reduce the malaria and infant mor­ the project, BHP provided employment and health facilities
tality rates. for villagers. However, the company was also responsible
BHP left the mine early in 2002, shifting the for massive pollution of the Fly River and the surrounding
company’s 52 per cent stake to a trust fund for environment — an ecosystem on which many villagers
Papua New Guinea’s people. The PNG govern­ depend on for their livelihood.
ment took over ownership of about 30 per cent
of the stake in the mine. Agreement was reached that the mine should be closed in 2010, although this
was later extended to 2025, with the government seizing 100 per cent ownership in 2013. A class action
by law firm Slater & Gordon in Melbourne, on behalf of 50  000 PNG villagers whose environment was
severely damaged by the mining operations, was abandoned in early 2004.

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 Nevertheless, the mine proved very profitable, producing about 10 per cent of PNG’s gross domestic
product (GDP) and contributing 20 per cent of its export income. Also, it is argued that life expectancy
increased in the area near the mine from about 30 years to more than 50. Malaria decreased more than
fourfold for children and from 35 per cent to less than 6 per cent for adults in the region near the mine.
The infant mortality rate improved from 129 per 1000 live births to 15 per 1000 live births.
However, the environmental concerns were not fully addressed, other than continued dredging of the
polluted Fly River and the planting of some new trees by local villagers. When the PNG government took
full ownership of the mine in 2013 they also passed legislation that removed BHP’s immunity in relation
to environmental claims.36

QUESTION
Does BHP’s social responsibility programme of employment, building of a hospital and other infrastructure
and health improvements let it off the hook for the damage it did to PNG’s environment?

5.3 Maintaining high ethical standards

LEARNING OBJECTIVE 5.3 How can high ethical standards be maintained?
Progressive organisations support a variety of methods for maintaining high ethical standards in work­
place affairs. Some of the most important efforts in this area involve ethics training, whistleblower pro­
tection, top management support, formal codes of ethics and strong ethical cultures.

Ethics training
Ethics training, in the form of structured programs to help participants understand the ethical aspects of
decision‐making, is designed to help people incorporate high ethical standards into their daily behaviour.
An increasing number of university curricula now include courses on ethics, and seminars on this topic
are popular in the corporate world. But it is important to keep the purpose of ethics training in perspec­
tive. An executive once put it this way:
We aren’t teaching people right from wrong — we assume they know that. We aren’t giving people moral
courage to do what is right — they should be able to do that anyhow. We focus on dilemmas.37

Many ethical dilemmas arise as a result of the time pressures of decisions. Ethics training is designed
to help people deal with ethical issues while under pressure.
Manager’s notepad 5.2 presents a seven‐step checklist for making ethical decisions when confronting
an ethical dilemma. It offers a convenient reminder that the decision‐making process includes responsi­
bility for double‐checking a decision before taking action. The key issue in the checklist may well be
step 6 — the risk of public disclosure of your action and your willingness to bear it. This is a strong way
to test whether a decision is consistent with your personal ethical standards.
Copyright © 2016. Wiley. All rights reserved.

MANAGER’S NOTEPAD 5.2

Checklist for making ethical decisions

Step 1.
Recognise the ethical dilemma.
Step 2.
Get the facts.
Step 3.
Identify your options.
Step 4.
Test each option: Is it legal? Is it right? Is it beneficial?
Step 5.
Decide which option to follow.
Step 6.
Double‐check decision by asking follow‐up questions:
‘How would I feel if my family found out about my decision?’
‘How would I feel about this if my decision were printed in the local newspaper?’
Step 7. Take action.

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 Whistleblower protection
Erin Brockovich, a legal clerk, was instrumental in constructing a case against the Pacific Gas & Electric
Company in California for contaminating drinking water. Her actions were later portrayed in a popular
Hollywood film starring Julia Roberts. Jeffrey Wigand exposed his US tobacco company’s practice of
intentionally manipulating the effect of nicotine in cigarettes (this was also turned into a film starring
Russell Crowe).38 Toni Hoffman, a nurse in charge of the Intensive Care Unit at Bundaberg Base Hospital
in Queensland, tried for two years to raise concerns about the lethal activities of a surgeon, Jayant Patel,
who was committed to stand trial on 14 charges involving the death of three people, in 2009. Patel was
sentenced to seven years’ jail but served only 2 years and 3 months before the High Court overturned his
medical negligence convictions in 2012.39 Detective Sergeant Simon Illingworth spent four years working
for Police Internal Affairs in Victoria, weeding out crooked police and putting his life at risk.40 They were
whistleblowers, people who expose the misdeeds of others in organisations in order to preserve ethical
standards and protect against wasteful, harmful or illegal acts.41 Whistleblowers face the risks of impaired
career progress and other forms of organisational retaliation, up to and including dismissal. Many workers
become whistleblowers unintentionally when reporting workplace fraud, corruption or maladministration.
Today, federal and state laws in countries such as Australia and New Zealand increasingly offer whis­
tleblowers some defence against ‘retaliatory discharge’. But although signs indicate that the courts are
growing supportive of whistleblowers, legal protection for them can still be inadequate. Laws vary from
state to state, and federal laws mainly protect government workers. Furthermore, even with legal protec­
tion, potential whistleblowers may find it hard to expose unethical behaviour in the workplace. Some
organisational barriers to whistleblowing include a strict chain of command that makes it hard to bypass
the boss, strong work group identities that encourage loyalty and self‐censorship, and ambiguous pri-
orities that make it hard to distinguish right from wrong.42
In the attempt to remove these and other blocks to the exposure of unethical behaviours, some
organisations have formally appointed staff members to serve as ‘ethics advisers’. Others have set
up formal staff units to process reported infractions. One novel proposal goes so far as to suggest
the convening of moral quality circles to help create shared commitments for people to work at their
moral best.43

Ethical role models

The late Anita Roddick, founder and former executive director of The Body Shop International opened
the business’s first store in Brighton, England, in 1976. By 2016 there were over 2500 stores worldwide.
Undoubtedly one of the world’s most outspoken business leaders, Roddick was also an activist. She
devoted most of her working life to finding new ways of doing business and looking for ways business
can take the lead in making the world a better place.
Top managers in large and small businesses have the power to shape their organisation’s policies and
set its moral tone. They also have a major responsibility to use this power well. They can and should
Copyright © 2016. Wiley. All rights reserved.

serve as role models of appropriate ethical behaviour for the entire organisation. Not only must their
day‐to‐day behaviour be the epitome of high ethical conduct, but top managers must also communicate
similar expectations throughout the organisation, and reinforce positive results. Unfortunately, communi­
cation from the top may subtly suggest that top management does not want to know about deceptive or
illegal practices by employees, or simply doesn’t care.
Even though top managers bear a special responsibility for setting the ethical tone of an organisation,
every manager is also in a position to influence the ethical behaviour of the people who work for and
with them. This means that all managers must act as ethical role models and set an ethical tone in their
areas of responsibility. Care must be taken to do this in a positive and informed manner. The impor­
tant supervisory act of setting goals and communicating performance expectations is a good case in
point. A surprising 64 per cent of 238 executives in one study, for example, reported feeling under
pressure to compromise personal standards to achieve company goals. A Fortune survey also reported

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 that 34 per cent of its respondents felt that the head of a company can create an ethical climate by
setting reasonable goals ‘so that subordinates are not pressured into unethical actions’.44 Clearly, any
manager, in his or her relationships with subordinates, may unknowingly encourage unethical practices
by exerting too much pressure for them to accomplish goals that are too difficult. Part of the manager’s
ethical responsibility is to be realistic in setting performance goals for others.

Codes of ethics
Formal codes of ethics are official written guidelines on how to behave in situations susceptible to
the creation of ethical dilemmas. They are found in organisations and in professions such as engi­
neering, medicine, law and public accounting. In the professions such as accounting and engineering,
ethical codes try to ensure that individual behaviour is consistent with the historical and shared norms
of the professional group. Most codes of ethical conduct identify expected behaviours in terms of
general organisational citizenship, the avoidance of illegal or improper acts in a person’s work, and
good relationships with customers. In a related survey of companies with written codes, the items
most frequently covered included workforce diversity, bribes and kickbacks, political contributions,
the honesty of books or records, customer–supplier relationships and the confidentiality of corporate
information.45
In the increasingly complex world of international business, codes of conduct for manufacturers and
contractors are becoming more prevalent. At Gap Inc., global manufacturing is governed by a formal
Code of Vendor Conduct.46 Among the many areas covered, the document specifically deals with:
•• discrimination — stating ‘Factories shall employ workers on the basis of their ability to do the job,
not on the basis of their personal characteristics or beliefs’
•• forced labour — stating ‘Factories shall not use any prison, indentured or forced labour’
•• working conditions — stating ‘Factories must treat all workers with respect and dignity and provide
them with a safe and healthy environment’
•• freedom of association — stating ‘Factories must not interfere with workers who wish to lawfully and
peacefully associate, organize or bargain collectively’.
Although interest in codes of ethical conduct is growing, it must be remembered that the codes have
limits. They cannot cover all situations, and they are not automatic insurance for universal ethical con­
duct. But they do play important roles in setting the ethical tone and expectations in organisations. When
fully integrated into the organisational culture, furthermore, the moral fabric created has a strong influ­
ence on day‐to‐day behaviour. Ultimately, of course, the value of any formal code of ethics still rests on
the underlying human resource foundations of the organisation — its managers and other employees.
There is no replacement for effective hiring practices that ensure organisations employ honest and
moral people. And there is no replacement for leadership by committed managers who are willing to set
examples and act as positive ethical role models to ensure desired results.

CRITICAL ANALYSIS
Copyright © 2016. Wiley. All rights reserved.

1. What topics would you expect to see covered in an organisation’s ethics training manual?
2. Why are whistleblowers harassed, blacklisted and shunned, even today?

5.4 Social responsibility

LEARNING OBJECTIVE 5.4 What is organisational social responsibility?
It is now time to shift our interest in ethical behaviour from the level of the individual to that of the
organisation. It is important to remember that all organisations exist in complex relationships with
elements in their external environment. In the chapter on environment and diversity we described

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 the environment of a business firm as composed of a network of other organisations and institutions
with which it must interact. An important frame of reference is the field of organisational stake-
holders, those people, groups and other organisations directly affected by the behaviour of the organ­
isation and holding a stake in its performance.47 In this context, corporate social responsibility is
defined as an obligation of the organisation to act in ways that serve both its own interests and the
interests of its many external stakeholders.48 The organisation’s stakeholders comprise government,
competitors, shareholders, customers, employees, civil society, suppliers, pressure groups and regula­
tors.49 In other words, stakeholders include anyone that can be affected by the organisation.

Through the adoption of comprehensive programs and policies that support fair and equitable treatment
of stakeholders, the organization is able to establish a clear corporate social responsibility program that
will have direct implications for the way in which the organization does business.50

Stakeholder issues and practices

The positive examples are there. You just have to look for them. Hewlett‐Packard started the e‐Inclusion
program to help rural villagers around the world gain access to technology and its advantages. The online
auctioneer eBay gave 100  000 of its pre‐IPO shares to charity and another 100  000‐plus after going
public.51 Singaporean manufacturer DuPont actively supports community causes such as the CareCancer
Society via its DuPont Community Fund. Richard Branson’s employment-creating initiative described at
the beginning of this chapter is an exciting new development.
There is increasing evidence that national governments and private corporations must make progress
on environmental issues or feel the negative response of their citizens and consumers, who will not
stand for inaction on what they see as key survival issues. The stakeholder pressures are there, too.
Consumers, activist groups, not‐for‐profit organisations and governments are increasingly vocal and
influential in directing organisations towards socially responsible practices. In today’s information age,
business activities are increasingly transparent. Irresponsible practices are difficult to hide, wherever in
the world they take place. Not only do news organisations find and disseminate the information, well‐
known activist organisations lobby, campaign and actively pressure organisations to respect and protect
everything from human rights to the natural environment. Prominent among these are Amnesty Inter­
national, Greenpeace International, World Wildlife Fund and Friends of the Earth. Increasingly impor­
tant also are investor groups, such as the Interfaith Centre on Corporate Responsibility, that publicise
and lobby for social causes through share ownership. The groups pool resources, buy shares in com­
panies and then advance resolutions and lobby corporate leadership to ensure the businesses perform in
socially responsible ways.
Ultimately, organisational leadership is a critical influence on behaviour by organisations and their
members. The leadership beliefs that guide socially responsible organisational practices have been
described as follows:
•• people — belief that people do their best in healthy work environments with a balance of work and
Copyright © 2016. Wiley. All rights reserved.

family life
•• communities — belief that organisations perform best when located in healthy communities
•• natural environment — belief that organisations gain by treating the natural environment with
respect
•• long term — belief that organisations must be managed and led for long‐term success
•• reputation — belief that the organisation’s reputation must be protected to ensure consumer and
stakeholder support.52
Organisations that subscribe to the triple bottom line of respect for people, communities and the
natural environment are arguably more sustainable over the long term. Customers may be more likely to
purchase products or services from ethically reputable companies.

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 COUNTERPOINT

Two views on nuclear energy and uranium mining

The nuclear industry is based on uranium mining out of the ground  .  .  .  Using the nuclear process, electricity
is created without any carbon dioxide, sulphurous fumes and heavy metals being spewed into the atmos­
phere as is done using the coal‐burning generators. It is also more efficient than the other renewable energy
sources.

It should be pointed out that these are

the views of a letter writer who added
that because Australia’s potential uranium
mining sites are safe, nuclear meltdowns
like those that occurred in the United
States, Ukraine and Japan will not arise.
He added, very controversially, that even
those disasters were well managed, and
the effects much less harmful than pre­
dicted. In addition, there is huge demand
for Australian uranium, and the export of
these minerals results in increased employ­
ment and massive financial gains for
mining companies. Some of his opinions
may find support from Associate Professor Kakadu National Park is under threat from mining activity.
Martin Sevior from the School of Physics at
Melbourne University. Professor Sevior is in favour of nuclear energy because of a looming oil crunch,
insufficient other options and the cleanliness of nuclear power. He said that ‘greenhouse gas emissions
resulting from nuclear power will be one per cent that of, say, coal’. Professor Sevior added ‘I don’t think
Chernobyl will ever happen again. It was a terrible design with terrible safety procedures, and the world
has learnt the lessons from Chernobyl’.54
There is, however, a countervailing view. The first of these is that it is unethical to mine uranium in
the first place, never mind use the ore in nuclear reactors to generate so‐called ‘clean’ energy. Uranium
mining in iconic Kakadu Park particularly concerns many Greens, Indigenous Australians and other
environmentalists. Indigenous Australians have traditionally referred to a mountain containing massive
uranium deposits as a ‘mountain of sickness’. Recently, the top end has experienced record rainfalls,
which caused a threat of the overflowing of contaminated water from Rio Tinto’s tailings dam at its
Ranger Uranium Mine into the Kakadu Wetlands.
Others question whether the use of nuclear energy is ethical. The Three Mile Island and Chernobyl dis­
asters in the United States and Ukraine are well documented. More recently, Japan’s tsunami and con­
sequent nuclear explosion at the Fukushima nuclear plant has really fuelled the debate. An earthquake
measuring 8.9 on the Richter scale struck Japan on 12 March 2011. This triggered a ten‐metre‐high
tsunami, which hit the north‐eastern coast. Aside from the terrible damage caused by the earthquake
and tsunami, a radiation leak was confirmed at the Fukushima plant. A survey conducted in Fukushima
in late March found that almost half of 1000 children tested returned positive results for thyroid expo­
Copyright © 2016. Wiley. All rights reserved.

sure to radiation. The leak was so serious that, some five months later, a nursery school, some sixty
kilometres away from the crippled plant, removed topsoil from its playground and banned the children
from playing outside.
As a result of such disasters, public sentiment has moved away from nuclear energy. However, the
sight of a coal‐fuelled electricity generator’s cooling towers belching smoke into the atmosphere is also
not pretty.55

QUESTION
Based on the arguments presented here, do you think Australia should go nuclear? Why?

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 Perspectives on social responsibility
In academic and public‐policy circles, two contrasting views of corporate social responsibility have
stimulated debate, with one side arguing against it and the other arguing for it.56 The classical view holds
that management’s only responsibility in running a business is to maximise profits. In other words —
the business of business is business and the main concern of management should always be to maxi­
mise shareholder value. This narrow ‘shareholder’ and ‘profit‐driven’ model was supported by Milton
Friedman, a respected free market economist and Nobel Laureate. He said:

Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by
corporate officials of social responsibility other than to make as much money for their stockholders as
possible.

The arguments against corporate social responsibility include fears that the pursuit of CSR as a goal
will reduce business profits, raise business costs, dilute business purpose, give business too much social
power, and do so without business accountability to the public. Friedman’s view was, of course, heavily
criticised. However, his supporting argument that big business is already powerful and that if it involves
itself in social issues then it becomes even more powerful, was given more credibility.
In contrast, the socioeconomic view holds that management of any organisation must be concerned for
the broader social welfare and not just for corporate profits. This broad‐based and stakeholder model is
supported by Paul Samuelson, another distinguished economist and Nobel Laureate. He states: ‘A large
corporation these days not only may engage in social responsibility, it had damn well better try to do
so’.57 Among the arguments in favour of corporate social responsibility are that it will add long‐term
profits for businesses, improve the public image of businesses, and help them to avoid more government
regulation. Businesses have the resources and ethical obligation to act responsibly.58
Today, there is little doubt that the public at large wants businesses and other organisations to act
with genuine social responsibility. Stakeholder expectations are increasingly well voiced and include
demands that organisations integrate social responsibility into their core values and daily activities.
On the research side, there is increasing evidence that high performance in social responsibility can
be associated with strong financial performance and, at worst, has no adverse financial impact. The argu­
ment that acting with a commitment to social responsibility will negatively affect the ‘bottom line’ is
hard to defend. Indeed, recent evidence suggests the existence of a virtuous circle in which corporate
social responsibility leads to improved financial performance for the firm, with any negative impact
limited to the first few years of implementation, and this in turn leads to more socially responsible
actions in the future.59 There seems little reason to believe that businesses cannot serve the public good
while advancing the financial interests of their shareholders. Indeed, Trudel and Cotte conclude that it
pays to be good, because customers will pay more for ethically produced products than for unethically
produced goods.60
Even as the research and debate continues on this important concept, these comments by management
theorist Keith Davis may still best sum up the corporate social responsibility debate:
Copyright © 2016. Wiley. All rights reserved.

Society wants business as well as all other major institutions to assume significant social responsibility.
Social responsibility has become the hallmark of a mature, global organization  .  .  .  The business which
vacillates or chooses not to enter the arena of social responsibility may find that it gradually will sink into
customer and public disfavor.61

The Corporate Responsibility Index offers a self‐assessment process for organisations in Australia and
New Zealand to voluntarily measure their level of corporate social responsibility. Although the index is
primarily for organisational self‐assessment and evaluation, companies can subsequently submit their
assessment, if they so choose, for it to be validated by an independent third party. Organisations that
have done this and been independently awarded a ‘gold star’ in terms of their corporate social responsi­
bility efforts include ANZ, Caltex, Energy Australia and Minter Ellison Lawyers.62

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 The issue of social responsibility is more challenging for developing countries in the Asia–Pacific
region, which are under pressure to exploit their economic resources and which are particularly vulner­
able to activities that can lead to environmental and social disasters. Ecologically sustainable develop­
ment and management of natural resources within the context of social responsibility must begin with
engagement of and informed decision‐making by local communities. Kleinrichert takes this a step fur­
ther by arguing that relations between a business and the community should be ‘based on reciprocity and
exchange of sustainability in a community, rather than a traditional notion of paternal responsibility to
some particular stakeholder in society’.63 Social responsibility is strengthened if allies in the community
develop because the company has the community’s wellbeing at heart, rather than by simply providing
economic support. For example, Kleinrichert points out that the CEO of Starbucks ‘establishes an inter‐
organizational ally in the communities in which his small independent supplier–farmers reside and work
towards coffee bean farming’. He does this by investing in schools, medical clinics and housing, but also
by including the farmers in decision‐making.64

Evaluating social performance

There are many action domains in which social responsibility can be pursued by business firms and other
organisations. These include concerns for ecology and environmental quality, in particular, relating to
reducing carbon emissions. According to Barker, the association between economic activity and green­
house gas emissions has long been recognised. He says that for the past couple of decades, the accumu­
lation of greenhouse gases has been noted as a side-effect of economic activity. This has the potential to
result in climate change.
This already threatens development in poor countries that are most vulnerable to climate variability. If
unchecked, it will threaten future generations with unknown but potentially catastrophic climate events,
given the availability of fossil carbon at current prices relative to carbon‐free alternatives, which could
raise concentrations to levels not seen for millions of years.65

Other action domains include truth in lending and consumer protection and aid to education. They
also include service to community needs, employment practices, diversity practices, progressive labour
relations and employee assistance, and general corporate philanthropy, among other possibilities. At the
organisational level, a social audit can be used at regular intervals to report on and systematically assess
an organisation’s resource commitments and accomplishments in these and other areas. You might think
of social audits as attempts to assess the social performance of organisations.
A formal assessment of corporate social performance might include questions posed at these four
levels.
1. Is the organisation’s economic responsibility met? Is it profitable?
2. Is the organisation’s legal responsibility met? Does it obey the law?
3. Is the organisation’s ethical responsibility met? Is it doing the ‘right’ things?
4. Is the organisation’s discretionary responsibility met? Does it contribute to the broader
community?66
Copyright © 2016. Wiley. All rights reserved.

As you move up these levels, the assessment inquires into ever‐greater demonstrations of social per­
formance. An organisation is meeting its economic responsibility when it earns a profit through the pro­
vision of goods and services desired by customers. Legal responsibility is fulfilled when an organisation
operates within the law and according to the requirements of various external regulations. An organ­
isation meets its ethical responsibility when its actions voluntarily conform not only to legal expectations
but also to the broader values and moral expectations of society. The highest level of social perfor­
mance comes through the satisfaction of an organisation’s discretionary responsibility. Here, the organ­
isation voluntarily moves beyond basic economic, legal and ethical expectations to provide leadership in
advancing the wellbeing of individuals, communities and society as a whole. For Jenkins, at this level,
business is encouraged to go beyond compliance with legislation and to assume roles previously per­
formed by government, such as becoming involved in the education and governance of communities.67

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 SOCIAL RESPONSIBILIT Y

Singapore Compact tries to cover every angle

Singapore Compact is a national society that was founded in 2005 to promote corporate social res­
ponsibility. The formation of this ‘watchdog’ increased the awareness and development of CSR on the
island city–state. Singapore Compact notes that some businesses associate CSR with philanthropy and
charity, but asserts that companies should do much more:

Corporate Social Responsibility is essentially about businesses doing well and doing good at the same
time. CSR is about the long term strategy of aligning business strategy and operations with universal values
to achieve positive and sustainable outcomes for customers, suppliers, employees, shareholders, commu­
nities, other stakeholders and as well as the environment.68

Singapore Compact suggests that if a company does this, it can look forward to increased profit­
ability over the long term, increased employee morale and pride in their company, improved perfor­
mance, and a good reputation. It adds that all of this will, in turn, prove attractive to investors.
However, Singapore Compact observes that in 2008 a Ministry of Trade and Industry survey found
that only 40 per cent of 507 companies canvassed were even aware of the term CSR. Two thirds of
these had implemented CSR activities. So, a lot more needs to be done in order to get companies
to implement Singapore Compact’s suggested CSR strategies. By 2009, it had established a website
and held an inaugural conference on corporate CSR, and in 2011 it launched an award for young CSR
leaders in Singapore.69 Certainly, the Singapore stock exchange takes CSR seriously, and in August
2010 ‘issued a policy statement on sustainability reporting and proposed guide for sustainability
reporting for its listed companies’.70
Greenpeace, however, believes that the proposals put forward by Singapore Compact and the Sin­
gapore stock exchange are not nearly enough. At the same time that the stockmarket was issuing its
policy statement, Greenpeace held its own press conference to release evidence that the palm oil arm
of the Sinar Mas company had been destroying Indonesia’s rainforests, despite previous promises by
the company to stop. Unusually, this issue was reported in the financial section of the local paper —
such confrontations with the corporate world in Singapore are rare.71 Greenpeace also issued a press
release stating that security personnel from Sinar Mas had violently assaulted anti‐logging protestors in
Indonesia. The company had also planned to acquire additional land in Papua New Guinea for logging
purposes.72
While Singapore Compact has made grounds towards increasing awareness of CSR and getting
companies to implement CSR practices, it clearly still has a long way to go.

QUESTION
What other strategies could Singapore Compact use to raise awareness of CSR in Singapore and get
more companies to implement CSR activities?
Copyright © 2016. Wiley. All rights reserved.

Social responsibility strategies

Figure 5.4 describes four strategies of corporate social responsibility. The continuum shows a desir­
able shift in emphasis from obstructionism, at the lowest level, to displaying progressive citizenship,
at the highest.73 An obstructionist strategy (‘fight the social demands’) reflects mainly economic pri­
orities — social demands lying outside the organisation’s perceived self‐interests are resisted. If the
organisation is criticised for wrongdoing, it can be expected to deny the claims. A defensive strategy
(‘do the minimum legally required’) seeks to protect the organisation by doing the minimum legally
necessary to satisfy expectations. Corporate behaviour at this level conforms only to legal require­
ments, competitive market pressure and perhaps activist voices. If criticised, intentional wrongdoing
is likely to be denied.

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 Proactive ‘Take leadership in social initiatives’
strategy Meet economic, legal, ethical and discretionary responsibilities

Accommodative ‘Do minimum ethically required’

strategy Meet economic, legal and ethical responsibilities

Defensive ‘Do minimum legally required’

strategy Meet economic and legal responsibilities

Obstructionist ‘Fight social demands’

strategy Meet economic responsibilities

FIGURE 5.4 Four strategies of corporate social responsibility, from ‘obstructionist’ to ‘proactive’ behaviour

Organisations pursuing an accommodative strategy (‘do the minimum ethically required’) accept
their social responsibilities. They try to satisfy economic, legal and ethical criteria. Corporate behaviour
at this level is congruent with society’s prevailing norms, values and expectations, but at times it may be
so only because of outside pressures. An oil firm, for example, may be willing to ‘accommodate’ with
cleanup activities when a spill occurs, but remain quite slow in taking action to prevent them in the first
place. Finally, the proactive strategy (‘take leadership in social initiatives’) is designed to meet all the
criteria of social performance, including discretionary performance. Corporate behaviour at this level
takes preventive action to avoid adverse social impacts from company activities, and it even anticipates
or takes the lead in identifying and responding to emerging social issues. One strategy might be chari­
table contributions, although cynics suggest that such philanthropic giving may be a legitimisation tool.74

SUSTAINABILIT Y

Corporate social responsibility in South‐East Asia

Traditionally, promotion of corporate social responsibility (CSR) has been local in nature. This has
changed over the past decade; however, in 2009, the CSR Club was launched by the 27 members of the
Thai Listed Companies Association, with the key objective to build networking among CSR practitioners
in Thailand.75 Similarly, in 2010, seven Singapore companies were awarded for the first time for their
special contributions to CSR at the International Singapore Compact Summit.76 The growing recognition
of the importance of CSR among organisations in the various Association of South East Asian Nations
Copyright © 2016. Wiley. All rights reserved.

(ASEAN) countries combined with the identification that there were synergies to be gained by cooperation
and also that many of the organisations had regional operations led to the formation of a new network.
In 2011, the ASEAN Corporate Social Responsibility (CSR) Network was established to encourage
firms and organisations in the region to increase their CSR efforts. The ASEAN CSR Network holds
regular workshops to further this goal. One such example was an anti-corruption workshop held in 2016
in Myanmar, hosted in partnership with the Myanmar Centre for Responsible Business. Participants
spoke candidly about their experiences of corruption, and how to handle these dilemmas appropriately,
both as individuals and businesses.77

QUESTION
Asia has quickly become the developed world’s factory. Do you think that the establishment of the
ASEAN CSR network will help put a stop to sweatshops and other exploitative work practices in Asia?

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 CRITICAL ANALYSIS

1. In what circumstances today could Milton Friedman’s view that the only responsibility of business is
to maximise profits for its shareholders, be valid?
2. Choose an organisation and outline some proactive social responsibility strategies it has or could
potentially implement. What impact might this have on its performance?
3. Pfizer assists with community housing but also with the policing of a local railway station in
Brooklyn, New York. Is this an example of a big business becoming too powerful?

5.5 Organisations and society

LEARNING OBJECTIVE 5.5 How do organisations and government work together in society?
The fact remains, not all managers and not all organisations accept the challenge of committing to a
proactive social responsibility strategy. Some may accept it, but have difficulty meeting the challenge.
Government, as the voice or instrument of the people, is often called on to act in the public behalf.

How government influences organisations

Governments often pass laws and establish regulating agencies to control and direct the behaviour of
organisations. It may not be too far‐fetched to say that behind every piece of legislation — national, state
or local — is a government agency charged with the responsibility of monitoring and ensuring com­
pliance with its mandates.
Many themes already discussed as being key areas of social responsibility are backed by major laws.
Business executives often complain many laws and regulations are overly burdensome.78 Public outcries
to ‘dismantle the bureaucracy’ or ‘deregulate business’ reflect concerns that specific agencies and their
supportive legislation are not functional. But the reality is that the legal environment is both complex
and constantly changing. Managers must stay informed about new and pending laws as well as existing
ones.
Like most other developed countries, Australia and New Zealand have many pieces of legislation
specifically designed to enforce social responsibility on businesses. These laws and regulations are
usually in the form of minimum standards that must be met in terms of work health and safety (WHS),
fair labour practices, environmental protection and the like. Regarding WHS, for example, Safe Work
Australia leads much of the push to ensure and improve the health and safety record of Australian busi­
nesses. This organisation sets national standards, provides WHS statistics, and advises on research, con­
sulting and training matters. WorkSafe New Zealand provides similar services.79
Another example of legislation that could profoundly affect businesses concerns discrimination
in labour practices. The federal anti‐discrimination legislation in Australia includes the Racial
Copyright © 2016. Wiley. All rights reserved.

Discrimination Act 1975, the Sex Discrimination Act 1984, the Disability Discrimination Act 1992,
the Equal Opportunity for Women in the Workplace Act 1999, the Age Discrimination Act 2004
and the Sex and Age Discrimination Legislation Amendment Act 2011.80 In New Zealand, anti‐
discrimination legislation is covered by the Human Rights Act 1993 and the Employment Relations
Act 2000.
Consumer protection is another area in which the government takes an active role in regulating
business affairs. In Australia, the Competition and Consumer Act 2010 aims to promote competition
and protect consumer interests. For example, it gives the government the authority to force a busi­
ness to withdraw from sale any product that it feels is hazardous to the consumer — for example,
children’s toys with small parts and flammable fabrics. In New Zealand, consumers are protected by
laws such as the Consumer Guarantee Act 1993, the Fair Trading Act 1986 and the Commerce Act
1986.81

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 How organisations influence government
The line of influence between government and organisations is not one way, with the government simply
passing legislation and acting as a regulator. Just as governments take a variety of actions to influence
organisations, so the leaders and representatives of organisations take action to influence government.
There are a number of ways in which businesses, in particular, try to influence government to adopt and
pursue policies favourable to them.
Through personal contacts and networks, executives get to know important people in government.
These contacts can be used for persuasion. Through public relations campaigns, executives can com­
municate positive images of their organisations to the public at large, with the potential for them to
speak positively on the business’s behalf. Through lobbying, often with the assistance of professional
lobbying consultants, executives can have their positions and preferences communicated directly to
government officials. It must also be admitted, however, that illegal acts sometimes occur. Executives
can unfortunately resort to use of bribes or illegal financial campaign contributions in the attempt to gain
influence over public officials.

DIVERSIT Y

Two views on 7‐Eleven: a sweatshop on every street corner or income

provider to Indian students?
Russell Withers, a long‐time member of
Australia’s Olympic Committee, and his sister
Beverley Barlow, two of the wealthiest people
in Australia, bought the franchise licence to
establish 7‐Eleven outlets in Australia in 1977.
By 2015 there were more than 600 stores
in New South Wales, Victoria, Queensland,
Western Australia and the ACT.82 The stores are
open 24 hours, 7 days a week, making salaries
a huge expense especially when accounting for
late night and weekend penalty rates. Most of
the 4000 workers employed in the stores are
students, many of them from overseas, in par­
ticular from India.83
A joint Fairfax media and ABC Four Corners investigation in mid‐2015 obtained explosive internal
documents and its review of 225 stores found that almost 70 per cent of franchisees manipulated their
rosters and had payroll compliance issues. When rosters were cross‐checked against CCTV footage,
it could be seen that several workers were not actually on the roster. Instead they were international
students who were paid in cash but at well below the legal minimum Australian wage. Many were
being paid between $11 and $15 an hour, when the legal minimum wage at the time was $24.69 during
the week and $28.49 on weekends.84 Tess Hardy notes the investigation reported that approximately
Copyright © 2016. Wiley. All rights reserved.

two‐thirds of 7‐Eleven employees have been ‘severely underpaid and grossly overworked in deliberate
contravention of key employment standards’.85 Laura Hayes reported that ‘a 7‐Eleven franchisee with
several convenience stores was investigated for several counts of immigration fraud. The immigration
investigation regarding allegations against one set of owners caused 7‐Eleven franchisees to be inves­
tigated nationwide. 7‐Eleven was subjected to significant negative publicity, and some of the news
articles likened the convenience stores to modern day plantations’.86
In the wake of this report, Professor Alan Fels, the first chairperson of Australian Competition and Con­
sumer Commission (ACCC) was appointed head of a two‐person panel, supported by independent assis­
tants from Deloitte Australia, to receive and examine claims of underpayment to 7‐Eleven employees. On
its website, 7‐Eleven stated that past and present staff should come forward and give evidence to the Fels
enquiry and that the results of their work, but not the names of individual claimants, would be made
public.87 In May 2016 7-Eleven fired Fels and the independent panel, taking the investigation in-house.

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 There is, however, another side to the story. It could be argued that these students are at least getting
some money to help them make ends meet. This is the same argument often used to justify sweatshop
labour for a dollar a day in China, namely, that a bowl of rice is better than no rice at all. This argument
is unlikely to gain much sympathy in Australia, however, as these workers could be much better paid
working for another employer that compensated them with the minimum wage. More convincingly, how­
ever, Hardy writes that once the 7‐Eleven franchisee ‘covers labour costs, meets interest repayments
and pays the necessary royalty fees to the head franchisor, the store owner – which is often a small
business operator – may make only a modest profit of about $40,000 a year’.88 For this reason, many
of the franchisees have put their stores up for sale. ‘Since the Four Corners–Fairfax Media investigation
into 7‐Eleven began, the number of stores for sale by franchisees ballooned from 50 to 76’.89

QUESTION
Discuss the argument that $11 per hour is better than nothing. Given that paying legal wages would
drive many franchisees to the wall, what would you consider to be a fair wage? Provide reasons for your
answer.

Why managers make the difference

Trends in the evolution of social values point to ever‐increasing demands from governments and other
organisational stakeholders that managerial decisions reflect ethical as well as high‐performance stan­
dards. Today’s workers and managers, as well as tomorrow’s, must accept personal responsibility for
doing the ‘right’ things. Broad social and moral criteria must be used to examine the interests of multiple
stakeholders in a dynamic and complex environment. Decisions must always be made and problems
solved with ethical considerations standing side by side with high‐performance objectives, be they indi­
vidual, group or organisational. Indeed, the point that profits and social responsibility can go hand in
hand is being confirmed in new and creative ways.
As public demands grow for organisations to be accountable for ethical and social performance as
well as economic performance, the manager stands once again in the middle. It is the manager whose
decisions affect ‘quality‐of‐life’ outcomes in the critical boundaries between people and organisations
and between organisations and their environments. Everyone must be more willing to increase the weight
given to ethical and social responsibility considerations when making these decisions. The full weight of
this responsibility holds in every organisational setting — small to large, and private or not‐for‐profit —
and at every managerial level, from bottom to top. There is no escaping the ultimate reality — being a
manager is a very socially responsible job!

CRITICAL ANALYSIS

1. Should all lobbying of government by business be outlawed?

2. Why should being a manager necessarily be a socially responsible job?
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 SUMMARY
5.1 What is ethical behaviour?
•• Ethical behaviour is that which is accepted as ‘good’, ‘right’ or ‘proper’ as opposed to ‘bad’, ‘wrong’
or ‘improper’.
•• Simply because an action is not illegal does not necessarily make it ethical in a given situation.
•• Because values vary, the question of ‘What is ethical behaviour?’ may be answered differently by
different people.
•• Four ways of thinking about ethical behaviour are the utilitarian, individualism, moral‐rights and
justice views.
•• Cultural relativism argues that no culture is ethically superior to any other.

5.2 How do ethical dilemmas complicate the workplace?

•• When managers act ethically they have a positive impact on other people in the workplace and on the
social good performed by organisations.
•• An ethical dilemma occurs when someone must decide whether to pursue a course of action that,
although offering the potential for personal or organisational benefit or both, may be considered
potentially unethical.
•• Managers report that their ethical dilemmas often involve conflicts with superiors, customers and
subordinates over such matters as dishonesty in advertising and communications as well as pressure
from their bosses to do unethical things.
•• Common rationalisations for unethical behaviour include believing the behaviour is not illegal, is in
everyone’s best interests, will never be noticed, or will be supported by the organisation.

5.3 How can high ethical standards be maintained?

•• Ethics training in the form of courses and training programs helps people better deal with ethical
dilemmas in the workplace.
•• Whistleblowers expose the unethical acts of others in organisations, even while facing career risks for
doing so.
•• Top management sets an ethical tone for the organisation as a whole, and all managers are responsible
for acting as positive models of appropriate ethical behaviour.
•• Written codes of ethical conduct formally state what an organisation expects of its employees
regarding ethical conduct at work.

5.4 What is organisational social responsibility?

•• Corporate social responsibility is an obligation of the organisation to act in ways that serve both its
own interests and the interests of its many external publics, often called stakeholders.
•• Criteria for evaluating corporate social performance include economic, legal, ethical and discretionary
Copyright © 2016. Wiley. All rights reserved.

responsibilities.
•• Corporate responses to social demands include obstructionist, defensive, accommodative and
proactive, with more progressive organisations taking proactive stances.

5.5 How do organisations and government work together in society?

•• Government agencies are charged with monitoring and ensuring compliance with the law.
•• Managers must be well informed about existing and pending legislation in a variety of social
responsibility areas, including environmental protection and other quality‐of‐life concerns.
•• Organisations exert their influence on government in many ways, including interpersonal contacts of
executives and use of lobbyists.
•• All managerial decisions and actions in every workplace should fulfil performance accountability with
commitments to high ethical standards and socially responsible means.

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 KEY TERMS
An accommodative strategy accepts social responsibility and tries to satisfy prevailing economic,
legal and ethical performance criteria.
Codes of ethics are written guidelines that state values and ethical standards intended to guide the
behaviour of employees.
Corporate social responsibility is the obligation of an organisation to act in ways that serve both its
own interests and the interests of its stakeholders.
Cultural relativism suggests there is no one right way to behave; ethical behaviour is determined by
its cultural context.
A defensive strategy seeks to protect the organisation by doing the minimum legally required to
satisfy social expectations.
Distributive justice is concerned that people are treated the same regardless of individual
characteristics.
Ethical behaviour is accepted as ‘right’ or ‘good’ or ‘proper’ in the context of a governing moral code.
An ethical dilemma arises when action must be taken but there is no clear ‘ethically right’ option.
Ethical imperialism is an attempt to impose your ethical standards on other cultures.
Ethics sets standards as to what is good or bad, or right or wrong in a person’s conduct.
Ethics training seeks to help people understand the ethical aspects of decision‐making and to
incorporate high ethical standards into their daily behaviour.
The individualism view considers ethical behaviour as that which advances long‐term self‐interests.
Interactional justice is the degree to which others are treated with dignity and respect.
The justice view considers ethical behaviour as that which treats people impartially and fairly
according to guiding rules and standards.
Lobbying expresses opinions and preferences to government officials.
The moral‐rights view considers ethical behaviour as that which respects and protects the
fundamental rights of people.
An obstructionist strategy avoids social responsibility and reflects mainly economic priorities.
Organisational stakeholders are directly affected by the behaviour of the organisation and hold a
stake in its performance.
A proactive strategy meets all the criteria of social responsibility, including discretionary performance.
Procedural justice is concerned that policies and rules are fairly administered.
A social audit is a systematic assessment of an organisation’s accomplishments in areas of social
responsibility.
Universalism suggests ethical standards apply across all cultures.
The utilitarian view considers ethical behaviour as that which delivers the greatest good to the
greatest number of people.
Values are broad beliefs about what is or is not appropriate behaviour.
Copyright © 2016. Wiley. All rights reserved.

Whistleblowers expose the misdeeds of others in organisations.

APPLIED ACTIVITIES
1 What are the alternative ways of thinking about ethical behaviour discussed in this chapter?
2 What is an ethical dilemma?
3 What are five leadership beliefs guiding socially responsible practices? Describe them.
4 What are the four stances adopted by organisations in response to demands for social responsibility?
5 Identify three ethical role models you respect. What do you most admire about these people? Search
on the internet to find out more about these people and provide examples and information to support
your choices.

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 ENDNOTES
1. Australian Charities and Not-for-profits Commission website, ‘Find a Charity on the ACNC Register’, [Link].
2. Ronald McDonald House Charities website, ‘Our Programs: Houses’, [Link].
3. Richard Branson, Screw Business as Usual, (Penguin Group, 2011), pp. 53–4.
4. ibid.
5. See Joel Makower, Beyond the Bottom Line: Putting Social Responsibility to Work for Your Business and the World (New York:
Simon & Schuster, 1994).
6. See a variety of information at Business for Social Responsibility website, [Link].
7. Information and quotes from ‘The Socially Correct Corporate’, Fortune (24 July 2000), pp. S32–S34, special advertising
section.
8. Lend Lease, ‘Welcome to Lend Lease Sustainability: Every Action Adds Up’, [Link].
9. ‘Millions of Dollars Donated to Bushfire Appeal’, ABC News (9 February 2009), [Link].
10. Save The Children Australia, ‘Current Partners’ (2010), [Link].
11. ‘Farmer to Die for $1.5 m Role in China’s Milk Scandal’, The West Australian (28 January 2009), p. 35.
12. Reported in Adam Smith, ‘Wall Street’s Outrageous Fortunes’, Esquire (April 1987), p. 73.
13. Desmond Tutu, ‘Do More Than Win’, Fortune (30 December 1991), p. 59.
14. For an overview, see Francis Joseph Aguilar, Managing Corporate Ethics: Learning from America’s Ethical Companies
How to Supercharge Business Performance (New York: Oxford, 1994); and Linda K. Trevino and Katherine A. Nelson,
Managing Business Ethics (New York: Wiley, 2011). Recent texts for suggested further reading on business ethics
include Colin Fisher and Alan Lovell, Business Ethics and Values: Individual Corporate and International Perspectives
(Harlow, England; New York: FT Prentice Hall, 2006); Damian Grace and Stephen Cohen, Business Ethics: Problems
and Cases 3e (South Melbourne: Oxford University Press, 2005); Mike Harrison, Business Ethics (Basingstoke, United
Kingdom: Palgrave MacMillan, 2005); and Peter Singer, One World: the Ethics of Globalisation (Melbourne: Text
Publishing, 2002).
15. Department of Immigration & Multicultural & Indigenous Affairs, ‘Abolition of the “White Australia” Policy’, fact sheet,
[Link].
16. Trevino and Nelson (1995), op. cit., p. 20.
17. See Gerald F. Cavanagh, Dennis J. Moberg and Manuel Velasquez, ‘The Ethics of Organizational Politics’, Academy of
Management Review, vol. 6 (1981), pp. 363–74; Justin G. Longenecker, Joseph A. McKinney and Carlos W. Moore, ‘Egoism
and Independence: Entrepreneurial Ethics’, Organizational Dynamics (Winter 1988), pp. 64–72; Justin G. Longenecker,
Joseph A. McKinney and Carlos W. Moore, ‘The Generation Gap in Business Ethics’, Business Horizons (September–October
1989), pp. 9–14.
18. Raymond L. Hilgert, ‘What Ever Happened to Ethics in Business and in Business Schools’, The Diary of Alpha Kappa Psi
(April 1989), pp. 4–8.
19. William Cohen, ‘What Drucker Taught Us About Social responsibility’, Leader To Leader, no. 51 (Winter 2009), pp. 29–34.
20. Dennis Kleinrichert, ‘Ethics, Power and Communities: Corporate Social Responsibility Revisited’, Journal of Business Ethics,
vol. 78, no. 3 (March 2008), pp. 475–85.
21. Jerald Greenburg, ‘Organizational Justice: Yesterday, Today, and Tomorrow’, Journal of Management, vol. 16 (1990), pp.
399–432; and Mary A. Konovsky, ‘Understanding Procedural Justice and its Impact on Business Organizations’, Journal of
Management, vol. 26 (2000), pp. 489–511. See also Jerald Greenburg and Jason Colquitt, Handbook of Organizational Justice,
(2005), Routledge.
22. Interactional justice is described by Robert J. Bies, ‘The Predicament of Injustice: The Management of Moral Outrage’,
in L. L. Cummings and B. M. Staw (eds), Research in Organizational Behavior, vol. 9 (Greenwich, CT: JAI Press,
1987), pp. 289–319. The example is from Carol T. Kulik and Robert L. Holbrook, ‘Demographics in Service Encounters:
Copyright © 2016. Wiley. All rights reserved.

Effects of Racial and Gender Congruence on Perceived Fairness’, Social Justice Research, vol. 13 (December 2000),
pp. 375–402.
23. CSR, ‘Facts about CSR’ and ‘Results Presentation’, [Link]; CSR, CSR Sustainability Report 2008 [Link];
CSR, ‘Community’, [Link]; CSR Community and Sustainability Pages 2010; CSR, CSR Sustainability Report
2014,[Link]; CSR, ‘Community’, [Link].
24. CSR, Annual Report 2015, [Link]
25. Thomas Donaldson, ‘Values in Tension: Ethics Away from Home’, Harvard Business Review, vol. 74 (September–October
1996), pp. 48–62. See also John Tilley, ‘Cultural Relativism’, Human Rights Quarterly, vol. 22, no. 2 (2000), pp. 501–47.
26. Thomas Donaldson and Thomas W. Dunfee, ‘Towards a Unified Conception of Business Ethics: Integrative Social Contracts
Theory’, Academy of Management Review, vol. 19 (1994), pp. 252–85.
27. See also Daryl Koehn and Alicia Leung, ‘Dignity in Western Versus in Chinese Cultures: Theoretical Overview and Practical
Illustrations’, Business and Society Review, vol. 113, no. 4, (Winter 2008), pp. 477–504. These authors argue that major
differences exist between Chinese and Western concepts of dignity but that it is possible to devise courses of action that
honour both types.

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 28. Developed from Donaldson and Dunfee (1994), op. cit.
29. CSR, ‘Facts About CSR’, [Link]; CSR, CSR Sustainabality Report 2008, [Link].
30. Reported in Barbara Ley Toffler, ‘Tough Choices: Managers Talk Ethics’, New Management, vol. 4 (1987), pp. 34–9. See also
Barbara Ley Toffler, Tough Choices: Managers Talk Ethics (New York: Wiley, 1986).
31. See discussion by Trevino and Nelson, Managing Business Ethics, (New York: Wiley, 1995), pp. 47–62.
32. Information from Steven N. Brenner and Earl A. Mollander, ‘Is the Ethics of Business Changing?’, Harvard Business Review,
vol. 55 (January–February 1977).
33. Saul W. Gellerman, ‘Why “Good” Managers Make Bad Ethical Choices’, Harvard Business Review, vol. 64 (July–August
1986), pp. 85–90.
34. The Body Shop came under scrutiny over the degree to which its business practices actually live up to this charter and the
company’s self‐promoted green image. See, for example, John Entine, ‘Shattered Image’, Business Ethics (September–October
1994), pp. 23–8; and Bert Van De Ven, Andre Nijhof and Ronald Jeurissen, Corporate Social Responsibility: A Case Study
Approach, (UK: Edward Elgar, 2009).
35. AAP, ‘Billionare Richard Pratt Dies’ (29 April 2009), [Link]; and Leonie Wood and Marika Dobbin, ‘Tycoon
Dies, Fighting To The End’, The Age (29 April 2009), [Link].
36. Alison Middleton, ‘PNG Govt Seizes Ok Tedi’, PNG Industry News (19 September 2013), [Link];
ABC Four Corners, ‘After the Gold Rush’ (Broadcast 10 April 2000), [Link]/4corners; ASAP, ‘PNG Must Plan for
OK Tedi Mine Closure Garnaut’, Business Spectator (2 June 2009), [Link]; Don Henry, ‘Leaving
the Scene of the Mine’, Australian Conservation Foundation (May 2005), [Link]; Tedi Mining, ‘Health
Improvements’, (2008), [Link]; Andrew Trounson, ‘Ok Tedi Keeps Haunting BHP’, The Australian (18 January
2007), [Link]; Jane Williams, ‘Ethics Update BHP’s View of Ok Tedi’, The Age (16 June 2004),.
37. Alan L. Otten, ‘Ethics on the Job: Companies Alert Employees to Potential Dilemmas’, Wall Street Journal (14 July, 1986),
p. 17; and ‘The Business Ethics Debate’, Newsweek (25 May 1987), p. 36.
38. The Internet Movie Database (IMBD), ‘Erin Brokovich’, [Link]; Michael Janofsky, ‘For a Trial Lacking in Drama, a
Star Witness, of Sorts’, The New York Times (1 February 2005), [Link].
39. Mark Oberhardt, ‘Doctor Jayant Patel To Face Trial On 14 Charges’, The Courier Mail (20 April 2009), [Link]
.au/couriermail; Mark Oberhardt, ‘Doctor Jayant Patel Sentenced To Seven Years in Jail’, The Courier Mail (1 July 2010),
[Link]/couriermail; Sarah Elks, ‘Jayant Patel Guilty of Fraud as Crown Gives Up Chase’, The Australian
(16 November, 2013), [Link].
40. ABC Victoria, ‘Vic Corruption Fighter Tells Of Intimidation’ (24 May 2004), [Link].
41. For a review of whistleblowing, see Marcia P. Micelli and Janet P. Near, Blowing the Whistle (Lexington, MA: Lexington
Books, 1992); see also Micelli and Near, ‘Whistleblowing: Reaping the Benefits’, Academy of Management Executive, vol. 8
(August 1994), pp. 65–72.
42. Information from James A. Waters, ‘Catch 20.5: Mortality as an Organizational Phenomenon’, Organizational Dynamics,
vol. 6 (Spring 1978), pp. 3–15.
43. Robert D. Gilbreath, ‘The Hollow Executive’, New Management, vol. 4 (1987), pp. 24–8.
44. Developed from recommendations of the Government Accountability Project reported in ‘Blowing the Whistle without Paying
the Piper’.
45. All reported in Charles D. Pringle and Justin G. Longenecker, ‘The Ethics of MBO’, Academy of Management Review, vol. 7
(April 1982), p. 309. See also Barry Z. Posner and Warren H. Schmidt, ‘Values and the American Manager: An Update’,
California Management Review, vol. 26 (Spring 1984), pp. 202–16.
46. Information from corporate website [Link].
47. See Thomas Donaldson and Lee Preston, ‘The Stakeholder Theory of the Corporation’, Academy of Management Review,
vol. 20 (January 1995), pp. 65–91.
48. For a good review, see Robert H. Miles, Managing the Corporate Social Environment (Englewood Cliffs, NJ: Prentice Hall,
1987); and Graham Hubbard and Paul Beamish, Strategic Management 4e (Frenchs Forest: Pearson, 2011).
Copyright © 2016. Wiley. All rights reserved.

49. Yves Fassin, ‘The Stakeholder Model Refined’, Journal of Business Ethics, vol. 84 (2009) pp. 113–135.
50. Arinaitwe Stephenson, ‘The Pursuit of CSR and Business Ethics Policies: Is it a Source of Competitive Advantage for
Organisations? The Journal of American Academy of Business, vol. 14, no. 2 (March 2009), p. 252.
51. Information from ‘The Socially Correct Corporate’ (2000), op. cit.; and David Kirkpatrick, ‘Looking for Profits in Poverty’,
Fortune (5 February 2001), pp. 174–6.
52. Developed from a discussion in Makower (1994), op. cit., pp. 17–18.
53. Clive Simon Eastwood, letter to the editor, Sydney Morning Herald, (12 July 2011), [Link].
54. SBS World News, ‘At‐A‐Glance: Nuclear Power — Cure or Curse?’ (1 December 2010), [Link]/news.
55. B. Cubby and G. Kwek, ‘2000 Bodies Washed Up as Japan Shaken by New Tsunami Scare and Reactor Blast’, The Age
(14 March 2011), [Link]; T. Eastley, ‘Japanese Schools Grapple with Nuclear Crisis’, ABC AM (15 August
2011), [Link]; L. Murdoch., ‘Radioactive Water Threatens Kakadu’, The Age (16 April 2011), [Link];
and ‘Japan Tsunami and Earthquake — part one’, The Guardian (12 March 2011), [Link].
56. The historical framework of this discussion is developed from Keith Davis, ‘The Case for and Against Business Assumption
of Social Responsibility’, Academy of Management Journal (June 1973), pp. 312–22; Keith Davis and William Frederick,

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 Business and Society: Management: Public Policy, Ethics, 5th edn (New York: McGraw‐Hill, 1984). The debate is also
discussed by Makower, op. cit., pp. 28–33. See also ‘Civics 101’, The Economist (11 May 1996), p. 61 and Mike Peng and
Erin Pleggenkuhle‐Miles, ‘Current Debates in Global Strategy’, International Journal of Management Reviews, vol. 11, no. 1
(March 2009), pp. 51–68.
57. The Friedman quotation is from Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962); the
Samuelson quotation is from Paul A. Samuelson, ‘Love That Corporation’, Mountain Bell Magazine (spring 1971). Both are
cited in Davis (1973), op. cit.
58. Davis (1973) and Frederick (1984), op. cit.
59. See Makower (1994), op. cit., pp. 71–5; Sandra A. Waddock and Samuel B. Graves, ‘The Corporate Social Performance —
Financial Performance Link’, Strategic Management Journal (1997), pp. 303–19; Eva‐Maria Hamann, Andre Habisch
and Harald Pechlaner, ‘Values That Create Value: Socially Responsible Business Practices in SMEs — Empirical
Evidence From German Companies’, Business Ethics: A European Review, vol. 18, no. 1 (January 2009), pp. 37–51;
and M. Victoria Lopez, Arminda Garcia and Lazaro Rodriguez, ‘Sustainable Development and Corporate Performance:
A Study Based on the Dow Jones Sustainability Index’, Journal of Business Ethics, vol. 75, no. 3 (October 2007),
pp. 285–300.
60. Remi Trudel and June Cotte, ‘Does it Pay to be Good?’, MIT Sloan Management Review, vol. 50, no. 2 (Winter 2009),
pp. 61–68.
61. Davis (1973) and Frederick (1984), op. cit.
62. St. James Ethics Centre, Corporate Responsibility Index: 2008 Index Results (2008), [Link]‐[Link].
63. Kleinrichert (2008), op. cit., p. 478.
64. ibid, p. 481.
65. Terry Barker, ‘The Economics of Avoiding Dangerous Climate Change. An Editorial Essay on The Stern Review’, Climatic
Change, vol. 89 (2008), pp. 173–94.
66. Archie B. Carroll, ‘A Three Dimensional Model of Corporate Performance’, Academy of Management Review, vol. 4 (1979),
pp. 497–505.
67. Harold Jenkins, ‘A “Business Opportunity” Model of Corporate Social Responsibility for Small‐ and Medium‐Sized
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68. Eugene Tay, ‘Corporate Social Responsibility in Singapore: Awareness and Implementation’, Green Business Times
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69. ibid; Singapore Compact, ‘CDL‐Singapore Compact Young CSR Leaders Award 2012’ (2012), [Link]/c.
70. ‘Corporate Social Responsibility in Asia Business Solutions for Global Challenges’, CSR Asia (29 August 2010),
[Link]‐[Link].
71. ibid.
72. SIIA, ‘Greenpeace and Sinar Mas’, Singapore Institute of International Affairs (30 March 2009), [Link].
73. Elizabeth Gatewood and Archie B. Carroll, ‘The Anatomy of Corporate Social Response’, Business Horizons, vol. 24
(September–October 1981), pp. 9–16.
74. Jennifer Chen, Dennis Patten and Robin Roberts, ‘Corporate Charitable Contributions: A Corporate Social Performance or
Legitimacy Strategy’, Journal of Business Ethics, vol. 82, no. 1 (September 2008), pp. 131–44.
75. [Link]
76. [Link].
77. [Link]; ‘Insights From the Anti-corruption Workshop in Myanmar’, [Link].
78. For the other side of this issue and the support available through government sources for small businesses, see ‘When
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79. Safe Work Australia website, [Link]; WorkSafe New Zealand website, ‘About Us’, [Link]
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80. Raymond J. Stone, Human Resource Management, 3rd edn (Brisbane: John Wiley & Sons, 1998), p. 693; Attorney‐General’s
Copyright © 2016. Wiley. All rights reserved.

Department, Age Discrimination Act 2004 (Canberra: Commonwealth of Australia, 2004); and Sex and Age Discrimination
Legislation Amendment Act 2011(Canberra: Australian Government ComLaw).
81. Asia Pacific Consumer Law, [Link].
82. 7‐Eleven website, ‘About Us’, [Link]/about‐us.
83. Adele Ferguson, Sarah Danckert and Klaus Toft, ‘7‐Eleven: A Sweatshop on Every Corner’, The Sydney Morning Herald
(29 August, 2015), [Link]/business.
84. ibid.
85. Tess Hardy, ‘7‐Eleven: How the Franchise System Allows Exploitation’, The Age (31 August, 2015), [Link].
86. Laura Hayes, ‘Immigration issues: A basic guide for franchise counsel’, Franchise Law Journal, vol. 34, no. 4 (2015),
pp. 587–97.
87. 7‐Eleven website, ‘Media Centre: Hotline and Website Now Available’ (9 September 2015), [Link]/
media‐centre.
88. Hardy, op. cit.
89. Ferguson, Danckert and Toft, op. cit.

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150 Management
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