Corporate Social Responsibility and Business Ethics

This assignment delves into the critical relationship between corporate social responsibility (CSR) and business ethics. It examines how ethical considerations influence corporate decision-making and the role of stakeholders in shaping responsible business practices. The assignment analyzes various perspectives on CSR, its impact on organizational performance, and its contribution to societal well-being.

Running Head: Ethics and Corporate Social Responsibility1
Ethics and Corporate Social Responsibility
Student’s Name
Professor’s Name
Course Name

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Table of Contents
Introduction 3
Issues in the QANTAS case 3
The Shareholder and the Stakeholder Theories of CSR: An overview 4
The Shareholder theory of CSR 5
The Stakeholder theory of CSR 6
Analysing the Qantas Campaign on Social Issues under the CSR model 7
Conclusion 10

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Introduction
QANTAS or the Queensland and Northern Territory Aerial Services Ltd. came into existence
in the year 1920 in Winton, Queensland and the company expanded into the transportation
carrier business soon. QANTAS expanded its airline operations in both the domestic and the
international markets and built upon its value proposition based on the company’s reputation
for security and safety, good customer service, and operational reliability. QANTAS soon
became one of the leading Australian brands. Alan Joyce took over as the youngest CEO of
QANTAS airlines in the year 2008 from his predecessor Geoff Dixon. Alan Joyce aims to
maintain the identity of QANTAS as a profitable yet socially responsible organisation which
upholds the fundamental values that are the identity of all the Australians (The Qantas Story,
n.d.).
Issues in the QANTAS case
A group of high-profile CEO’s in Australia, including the CEO of QANTAS Mr. Alan Joyce,
recently wrote a letter to the Australian Prime Minister extending their support for the same-
sex marriage. This led to the sparking of a debate with some ministers in the Australian
government criticising the letter and the stand taken by the CEOs of corporate Australia. In
their view, the business houses should focus on delivering the best of the services to the
customers and concentrate on providing good returns to the shareholders as this was the
primary responsibility of the business organisations and refrain from passing any kind of
political statements about the policy issues (Belot, 2017). A spokesperson on behalf of the
CEO of QANTAS, Alan Joyce, issued a statement that QANTAS would continue to support
the social issues which the company believes in including the same-sex marriage. The
statement received support from some of the prominent business names in Australia (Stefano,
& Sainty, 2017).

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The key issue that arises here is whether the corporate Australia and the CEOs of the
prominent business corporations should be involving themselves in issues related to the
public policy and using the name of the corporate brand to advocate their political opinions or
advocating social issues. Additionally, another issue emerging is that should the business
corporations restrict themselves to generating the best returns to their stakeholders and
providing the best of the services to the customers and keep themselves away from the
political and social policy issues (Serafeim, 2013). This paper will analyse the aspects of the
key issues here by using the Stakeholder and the Shareholder theories of Corporate Social
responsibility.
The Shareholder and the Stakeholder Theories of CSR: An overview
The contemporary business organisations in the modern era are continuously evaluating their
policies and approaches that can help the company to leverage its position better in the
market. Due to the prevalence of ambiguity and uncertainty in the global economy,
organisations have to embrace policies and develop strategies that can provide them with a
cushion to support the company during lean times. CSR or Corporate Social Responsibility is
one such strategy that can provide an organisation with new opportunities and give the
necessary competitive edge over rivals to an organisation (Baumgartner, 2014).
CSR or Corporate Social Responsibility can be broadly defined as the social initiatives taken
up by the business organisations that are voluntary and transcend the compulsory legal
regulations. These social initiatives can be in various forms like acts of charity,
environmental activism, humanitarian activism, community service, and much more. There
are two different approaches or theories to define the Corporate Social Responsibility. One is
the Shareholder theory and the second approach is the Stakeholder approach (Malik, 2015).

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The Shareholder theory of CSR
The shareholder theory of CSR takes a narrow approach to the CSR of a company by stating
that the sole responsibility of a business organisation is to maximise the returns for its
shareholders by conducting the business within the legal framework of the law. The company
is extending a beneficial service to the society if it is providing the goods and services at
reasonable prices to the customers. Since the shareholders have invested their money in a
company they are entitled to get a good return from the company (Flammer, 2015).
Therefore, the companies should not try to engage themselves in any philanthropic pursuits
and social causes that use the financial resources belonging to the shareholders of the
company. Any philanthropic pursuits which reduce the cash flow to the investors should not
be followed by the company but any kind of CSR initiatives that help in increasing the profits
of the company can be pursued by the company. The shareholder theory advocates that social
concerns like environmental protection, helping communities, and other such socially
valuable projects are the responsibility of the government and not the business organisations
(Cheers, 2011).
The main business or concern of a business organisation is wealth generation for its
shareholders and in turn the society. The shareholder theory is backed by an argument that
any kind of social initiatives is the prime responsibility of the political and social institutions
of a nation and not the business organisations. Scholars advocating the Shareholder theory
argue that the government of a country determines the moral obligations of a business
organisation with its rules and regulations (Costa, & Menichini, 2013).

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The stakeholder theory of CSR
The stakeholder theory, on the other hand, takes a much wider perspective of the Corporate
Social Responsibility or the CSR of an organisation. This theory takes the view that a
business owes a responsibility to not just its shareholders and investors but to all the people
groups who have a stake in the business or any claims on the organisation. This includes the
shareholders, employees, suppliers, customers, and the community. The stakeholder’s theory
advocates taking a more socially aware view of the Corporate Social responsibility of a
business keeping in mind the sensitivities of the various stakeholder groups associated
directly or indirectly with the business. The advocates of the stakeholder’s theory hold the
view that a business should use its vast resources voluntarily to propagate social good
(Argadona, 2011).
The scholars and thinkers in favour of the stakeholder’s theory advocate that the focus of the
modern day business organisations goes much beyond the classical view of profit
maximisation for its shareholders to the concept of a business organisation trying to create
value for its stakeholders. The value to be created can be bifurcated into the economic
values, an intangible extrinsic value, a psychological intrinsic value, transcendent values, and
values that are made of both negative and positive externalities. This notion of value creation
goes beyond the traditional meaning of economic value and includes the other forms of
values which are the need of the stakeholders, for different uses and in different proportions
(Moriarty, 2016).
A business organisation affects the community and the society as a whole in a number of
ways. Therefore, in the modern world, the business corporations face a number of
sustainability issues from its different stakeholders. These issues can sometimes include
concerns about the environmental defence, corruption, product safety, biodiversity, political

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lobbying, human rights issues, and much more. Different stakeholders place a different
importance on these sustainability issues depending on the importance of the issue to
different stakeholder groups (Park, & Ghauri, 2015). Therefore, advocates of the stakeholder
theory claim that a company can continue to ensure its success in the modern age by
maintaining a balance between the interests of all its stakeholders and not just by following
the norms of profit maximisation as prescribed by the shareholder theory. Maintaining the
Altruistic and the Strategic Corporate Social Responsibility is necessary for the business
organisations today to ensure goodwill and positivity towards the organisation (Malik, 2015).
Analysing the Qantas Campaign on Social Issues under the CSR model
The campaign which has been supported by the QANTAS CEO Alan Joyce involves a lot of
external and internal stakeholders. As explained by the Stakeholder theory, the modern day
business organisations do not function in isolation and are dependent on the various
stakeholders for their success. The business organisations today are responsible for serving a
wider range of societal concerns and not just maximising the shareholders’ value. The
different stakeholders would be affected by the altruistic CSR of the business organisations in
campaigning for social issues in different ways (Crane, & Matten, 2016). Some of these are:
Employees: The employees are one of the most important stakeholder groups in any business
organisation today. An ethical practice by the leadership of an organisation is a significant
factor in attracting the best talent in the industry. Studies have shown that a dwindling faith in
the ethics, values, and leadership of an organisation, are the main factors behind low level of
employee loyalty and increasing employee turnover in the organisations. To build a corporate
culture that strengthens employee relations, organisations need to invest more into
establishing a values-oriented corporate culture with principles of equality, human dignity,

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fair work, trust, concern, and care for the employees and ensure a work culture that promises
equal respect for all employees (Enderle, 2015).
Studies have shown that people who work in organisations with strong ethical values, policies
of social responsibility, and with a culture of high-integrity, are less prone dissatisfaction and
stress. This personal level of satisfaction results in more happy and productive employees. It
has been seen that in organisations that are piloted by ethical values, the employees are more
inclined to work as teams for the achievement of the organisational goals and objectives
instead of being engaged in turf battles professionally. This automatically serves to improve
the efficiency and productivity of the organisation at all levels, helping them to serve the
customers in a much better manner and generate better profitability for the investors and
shareholders at the same time (Jackson, Wood, & Zboja, 2013).
Consumers and brand identity: The consumers today favour the brands, suppliers, and
producers who practice social responsibility and demonstrate ethical practices. The studies
and the empirical evidence gathered from research shows that the consumers’ concern about
corporate citizenship has been steadily gaining momentum. A good CSR and ethical conduct
can help an organisation gain significant competitive advantage over its rivals in the minds of
the consumers gaining customer loyalty, resulting in higher returns (Costa, & Menichini,
2013).
It takes a company a long time to establish its brand name, identity, and reputation, but, in the
global business world of today and the age of the internet, even a single scandal at times can
destroy the company’s goodwill. The organisations which have a strong ethical base are less
prone to the damage caused by scandals and other such legal or social concerns. If the
organisation has strong ethical values in place, it becomes much easier for such a firm to deal
with any such scandal in an honest manner. Consumers and markets are more open to

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forgiving organisations which have a genuine interest in addressing the problems in the right
and ethical manner, instead of organisations which do not try to address the root cause of the
problem (Floyd, Xu, Atkins, & Caldwell, 2013).
Existing Shareholders: The altruistic CSR investments by the business organisations in
concerning themselves with the larger social issues help the companies in developing a
positive stakeholder reputation, which is essential for a firm to succeed and maintain its
profitability. Without a positive stakeholder reputation, the companies are likely to suffer
from competitive disadvantages which could result in a loss of sales and profit, discontented
employees, negative publicity, directly impacting the shareholders return from the
organisation. Therefore, taking the view of the shareholders’ theory, the companies should
engage in CSR activities which work to enhance its profit (Ford, & Richardson, 2013).
Potential Investors: While choosing an organisation to associate with, the potential investors
look at the integrity of the organisation and the responsible behaviour exhibited by the
company, along with the profitability statements. Ethical practices cultivate trust and that is
one of the important deciding factors for the potential investors while deciding upon the kind
of organisation they want to associate with (Crane, & Matten, 2016).
Society and Communities: For a long time the traditional business view held on to the ideas
of profit maximisation and aggressive competitor management to succeed in the business
world. The other ‘stakeholders’ in the business like the community and society was kept
marginalised in the domain of Corporate Social Responsibility (Mahlab, 2017). But in the
changing times, the margins have diminished and the society and community have taken the
centre in the business strategy of the modern day corporations. The business corporations in
the modern day are powerful entities that have the power and the opportunity to make a
change and bring resilience to the delicate balance of the fragile world in which they are

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functioning. The business corporations will only flourish if the community and the society
around them are flourishing (Wilkins, 2017).
The society and the community provide the resources to the business and are the source of a
business organisation’s profitability; therefore, it becomes a moral and ethical obligation of
the business organisations to promote the society’s interests in turn. The corporate world has
the resources to engage in pursuits and raise their voices to solve social issues which are
beneficial to the whole society, provided it does not hinder the basic function of revenue
maximisation of the business organisation (Gratton, 2014).
Conclusion
Challenges of the modern societies like the climatic change, social issues, gender inequality,
human rights for all, and other such societal concerns have a trajectory of corporate impact in
some way or the other and the business organisations of today realise this factor. The
business organisations of today are not just the agents of the shareholders but can be regarded
as the harbingers of stakeholder relations (Baumgartner, 2014). In the digital world of today’s
business which is connected deeply by the social media, the business leaders of the
corporations are expected by the society to act as the catalysts of change not just within the
organisation but also in the larger social arena, because of the larger resources at the disposal
of the business and much better networks, which can lend a powerful voice to the social
causes like in this case of the QANTAS CEO and other prominent CEOs in Australia lending
their support for the cause of same-sex marriage (Wilkins, 2017).
The commercial and the social domains are coming closer to each other as the demarcation
lines between the two are becoming diminished. Campaigning for a social cause that
resonates with the majority of consumers and other stakeholders’ values is not just a novelty

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for the companies but is fast becoming the central strategy to build the trust in the brand
name of a company and the values of the company (Crane, & Matten, 2016).

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