MGT230 - Exploring Corporate Social Responsibility and Business Law

This essay explores the concept of Corporate Social Responsibility (CSR) within the framework of business law, examining arguments for and against its implementation. It discusses the responsibilities of organizations to society and shareholders, referencing Milton Friedman's perspective on profit maximization versus social responsibility. The essay analyzes the narrow and broad views of CSR, highlighting the ethical dilemmas faced by businesses, particularly in industries with potential negative social impacts, using the documentary 'Blood, Sweat and T-shirts' as a case study. It further examines the ethical implications of sourcing clothing from sweatshops, the responsibilities of retailers, and the application of Kant's ethical theory to these situations. The essay concludes by considering the balance between legal obligations and moral duties in business decision-making.

Running Head: BUSINESS LAW
Business Law
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Author Note

1BUSINESS LAW
Answer 1
An organization is a citizen of the society which has come into existence through the
operation of law. It is a separate legal person, although artificial which has been created by law
and has an identity distinguished from its owners. It has been argued by (Schwartz, 2017) that
all organizations being the citizens of the society has a responsibility to act in the best interest of
the society in the same way as any other natural person. This is because it has a duty of care
towards the society as the society can be directly injured by the actions of the organization.
Large organization operates at an extensive scale through the use of the resources provided by
the society. It is their duty to ensure that they provide adequate return for using such resources to
the society by taking care of its needs. Thus a part of the profit earned by the organization should
be directed towards the betterment of the society. The organizations must ensure that they work
ethically so that those associated with the organization will also incorporate ethical values into
their behavior which would directly ensure the dominance of ethics in the society as most of its
citizens are associated with the organization. On the other hand an argument has been provided
against the approach of CSR by Milton Friedman in his book “Capitalism and Freedom.
According to the arguments provided by Friedman the approach of CSR should not be adopted
by an organization in relation to its activities. This is because the organizations only have a
responsibility towards the shareholders who have made investment in it. It is the responsibility of
the organization to provide adequate profits to the people who had made investment in it.
Moreover as per Friedman it is the responsibility of those shareholders who are associated with
the organization to be responsible towards the society in which they reside (Tai & Chuang,
2014).
Answer 2

2BUSINESS LAW
(Carroll, 2015) defines Corporate Social Responsibility or CSR is as a self imposed
corporate regulation which has been added to business models of organizations. The principles
provided by CSR operate as a self-regulatory mechanism through which an organization keeps a
look upon and ensures compliance of law, national and international norms and ethical standards
actively. A few models provides that the CSR of an organization should not be merely restricted
to statutory and compliance requirements but also to actions which are for the social good of the
society and more than the interests of the organization. The choice of going beyond the statutory
and compliance requirements is upon the organization, however where the organization is
involved in some kind of nuisance such as an issue related to the environment it is the duty of the
organization to ensure that they indulge in social good for the society to compensate for their
actions. Thus the approach if CSR is applicable on all businesses which operate in the society
and specifically those whose actions considerably impact the society.
The approach of CSR can be further divided into two perspectives which are narrow view
and a broad view. The narrow view of CSR argues against the principles of organization
displaying CSR. It provides that the primary objective of the organization is only to maximize
their profit. On the other hand the broad view of CSR provides that the organization does not
only have the responsibility of maximizing profit but also towards the community and society
where they continue their operations in relation to compensating any potential negative impact of
their activity. It has been argued by (Poussenkova, et al., 2016) that the supporters in relation to
the narrow view of CSR have declined considerably in the recent years as the focus on CSR
related issues have considerably increased which are attracting the interest of various
stakeholders (Clapp & Rowlands, 2014).

3BUSINESS LAW
Answer 3
It has been provided through the documentary Blood, Sweat and T-shirts that the workers in the
Indian textile industry have been subjected to significantly detrimental working environment.
The demand for cloths in the light of changing fashion has enhanced considerably and due to the
competition in the UK clothing industry the suppliers are under pressure to get the cloths at the
lowest possible price. It has been provided through the documentary that six young fashion
lovers were shocked to discover the state of the workers who are employed in Indian cloth
factories and backstreet workshops from which cloths are manufactured for British stores. The
workers in the factors are forced to work in soaring temperatures and a very dirty environment.
This form of working environment causes significant heath issues for the workers who do not
have adequate resources to address the issue. They are provided with significantly low wages
through which they are not even able to purchase the basic requirements of survival. The average
wages which are provided to the workers in only £1.50 to £1.75 per day with such amounts they
only can purchase food for themselves and their families.
In the given situation it can be stated that English clothing retailers have significant social
responsibility towards the workers as their operations are directly affecting the workers. They at
least must have the responsibility that the factories from which their products are sourced have a
healthy and safe working environment which is in compliance with the legal requirements. It is
clear from the given situation that as the retailers are not taking care of the issue faced by the
workers they are taking a narrow view of CSR. This is because they are only indulging in the
process of profit maximization and no taking any responsibility towards the impact which their
activities have in the society (Shaw, Barry, Issa, Catley, & Muntean, 2016).

4BUSINESS LAW
Answer 4
An argument has been provided that in case factories are boycotted, the circumstances in which
the factory workers are will become worse. This argument is provided in the basis that if the
retailers in England boycott the factories the workers would lose their source of income. It has
been depicted through the documentary that the workers are forced by their needs to work in
such a degrading environment as they do not have any other source of income. They have to earn
in order to survive and purchase the basic necessities of life. In the given situation it has been
seen that child labor is also predominant in the industry. This further signifies that the workers
do not earn enough to able to support their families or afford education for their children. If the
factories are boycotted and they are not provided with any further work the little which is earned
by the workers in the factories would end and their problems would worsen. They would not
even be able to pay for food and shelter which they can at least pay for presently. On the other
hand if the status quo is maintained which has been for a long period there is no chance that the
conditions of the workers are going to improve. They would still be subjected to poor working
environment where their health would always be at stake. Their wages would not be increased in
the light of inflation and their problems would eventually worsen. There would not be any
enhancement in technology which is being used in the factories and the labors would have to
sweat out the production of clothing. In the given situation both the status quo as well as
boycotting the factories would not turn out to be an effective way of addressing the issue. What
can be done in relation to the situation is that the retailers can increase the pressure on the factory
owners for enhancing the situation of the workers. It is evident that the factory owners keep the
majority of the income to themselves and ignore the workers. The retailers should ensure that
they incorporate the strategy of rewards and recognition while dealing with the factory owners. If

5BUSINESS LAW
incentives are provided to the owners for maintaining a healthy work environment and it is
ensured that regular inspection is made and proper recognition is done than there are significant
possibilities that the condition of the workers will enhance.
Answer 5
a) An ethical dilemma takes place when a person is not able to make a rational choice in
relation to an ethical decision (Ferrell & Fraedrich, 2015). In the given situation I have
been provided with the task of sourcing cloths for sweatshops similar to those which have
been observed in the Blood, Sweat and T-shirts documentary. This is an ethical dilemma
to me because I have been subjected to two questions which are that whether to observe
my duty as an employee and work according to the instructions of the manager or I
should comply with my ethical responsibility and not source the clothing from the
sweatshops. As an employee I have a fiduciary relationship with the manager and the
organization as an employee and I have to work in the best interest of the organization.
On the other hand as a responsible citizen of the society I also have the responsibility of
ensuring that all individuals in the society have to be paid adequately for their work
through which they can at least appropriately support them. If I sources the cloths from
the described sweatshops than I would be working against my personal ethical principles
towards the society as it would encourage the shop owners to continue their detrimental
actions to the workers. On the other hand if I do not work according to the instructions of
the manager I would not be complying with my duty as an employee.
b) As a business professional I do not have any legal obligations towards the factory
workers. This is because I do not have any direct control over them. However as a
business professional I have ethical and moral obligation towards the workers. It is my

6BUSINESS LAW
moral duty to ensure that no injustice is done to them. It is also my legal duty not to get
associated with any business which intentionally does not comply with regulatory
requirements (Poussenkova, et al., 2016). I have the duty to ensure that the workers are
paid adequately for their work through which they can at least appropriately support
them. It is also my duty to ensure that I do not support mal practices like child labor and
non compliance with health and safety requirements. Thus although it is not my legal
duty to look after the workers, at least I have to morally ensure that I do not add to their
problems.
Answer 6
According to the theory provided by Immanuel Kant consequences should not be the basis on
which ethical decisions should be taken. The theory is based in categorical imperative which
means unconditional command. A person has an unconditional duty which is applicable to
everyone without any exception (Kant, 2017). Thus in order to be an ethical decision based
on Kant’s theory the decision has to comply with the following criteria
1. Good will- This has been described as the process of acting from, or on, principle
2. Universal acceptability- “A rule that every rational being would accept”
3. Humanity as an end, never as merely a means to an end- not using other to achieve one
goals (Broad, 2014).
In the current situation analyzing the sweatshops based on the element of good will it can be
stated that they are not at all relying on principles, for making a decision or deriving their
actions from them as principles do not allow a person to be inadequately paid or be provided

7BUSINESS LAW
with worse than poor working conditions. No principles allows for child labor or
disrespecting human rights and humans working for someone.
In addition on the basis of the element of moral acceptability it can be stated that all persons
on earth would not considered what is happening in the sweat shops as ethical and
acceptable. This is because if everyone is exploited like it is done in the sweatshops the
world would not be a safe place to reside in. Thus based on the second element the
sweatshops are morally incorrect.
Moreover here it is clear that the workers are being exploited by the owners and not being
seen as an end themselves but as means of an end. Thus the application of the third element
also signify moral wrong on the part of the sweatshops.

8BUSINESS LAW
Bibliography
Broad, C. D. (2014). Five types of ethical theory (Vol. 2). Routledge.
Carroll, A. B. (2015). Corporate social responsibility. Organizational dynamics, 44(2), 87-96.
Clapp, J., & Rowlands, I. H. (2014). Corporate social responsibility. The Essential Guide to
Global Environmental Governance. London: Routledge.
Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. . Nelson
Education.
Kant, I. (2017). Kant: The metaphysics of morals. Cambridge University Press.
Poussenkova, N., Nikitina, E., Loe, J. S., Wilson Rowe, E., Wilson, E., & Fjaertoft, D. (2016).
Corporate Social Responsibility. Russian Analytical Digest (RAD), 181.
Schwartz, M. S. (2017). Corporate social responsibility. . Routledge.
Shaw, Barry, Issa, Catley, & Muntean. (2016). Moral issues in business.
Tai, F. M., & Chuang, S. H. (2014). Corporate social responsibility. Ibusiness, 6(03), 117.