BUS8421 Report: Promoting CSR and Addressing Ethical Issues in SMEs

This report provides an analysis of the challenges of promoting Corporate Social Responsibility (CSR) and addressing ethical issues in Small and Medium Enterprises (SMEs). It uses the case study "The Parable of the Sadhu" to illustrate how business enterprises often prioritize their own interests over ethical responsibilities. The report examines the behavior of characters in the case study, drawing parallels to real-world business practices and their shortcomings in fully embracing CSR. It identifies ethical issues and relevant standards, including the Caux Round Table Principles, UN Global Compact, and GRI, highlighting the gap between stated principles and actual actions. Furthermore, the report discusses the roles of leadership and management in fostering CSR, emphasizing the importance of aligning business practices with ethical codes and creating value for all stakeholders, not just shareholders. The report concludes with a call for leaders and managers to take proactive steps in ensuring their organizations adhere to ethical standards and prioritize CSR initiatives.

Running head: PROMOTING CORPORATE SOCIAL RESPONSIBILITY
PROMOTING CORPORATE SOCIAL RESPONSIBILITY AND ADDRESSING
ETHICAL ISSUES IN SMES: A CASE STUDY OF THE PARABLE OF A SADHU
Name of the Student:
Name of the University:
Author’s Note:

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Introduction
As opined by Trevino and Nelson (2016), business ethics had become an important
catch-phrase of the modern-day business world and the business enterprises are required to
have personal responsibility for the damage that they are causing towards the planet or for
that the environment. Crane and Matten (2016) are of the viewpoint that the business
enterprises in order to take personal responsibility for their business activities and also for the
purpose of contributing in a meaningful way towards the improvement of the condition of the
planet are taking the help of the construct of corporate social responsibility (CSR). However,
it is seen that the major problem arises because of the fact that the business enterprises try to
solve or resolve the different issues which are of importance from the perspective of the
planet only upto the extent it is suitable or feasible for them (Ferrell & Fraedrich, 2015). As a
matter of fact, it had been seen that the majority of the business enterprises only supports the
different environmental causes or issues upto the point at which it does not interferes with
their profitability, business strategies and the other aspects of their business operations (Kolk,
2016). This in turn had given rise to the situation wherein it had been seen that although the
different business enterprises of the world are trying to resolve or address the diverse issues
or the challenges that the contemporary world is presently facing, none of them are taking
complete ownership for the issues or challenges. This report intends to analyse the problem
of promoting CSR and addressing ethical issues in small-scale enterprises and also the role
that the leaders and the managers in promoting ethical behaviour or the promotion of CSR
through the usage of the case study “The Parable of the Sadhu”.
Overview of the Case Study
The case study under discussion here, namely, “The Parable of the Sadhu” by Bowen
McCoy takes the help of a parable of a sadhu to highlight the manner in which the business

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enterprises support the different CSR issues or the ones which is adversely affecting the
sustainability of the planet only to the point that it fulfils their own interests (McCoy, 1997).
This is important from the perspective of the contemporary world wherein it had been seen
that although there are a plethora of issues which is adversely affecting the stability of the
world and although the enterprises are trying to resolve the same yet it had been seen that no
concrete solutions for the same have been found till now. This even happens in the case study
under discussion here wherein it is seen that although all the members of the case study are
concerned regarding the condition of the sadhu and also his well-being and even willing to
help him in their own way yet none of them is willing to go out of their way for the complete
resolution of the same. More importantly, even in the particular case of McCoy, who is the
narrator of the case stud, is really concerned about the condition of the sadhu but he too is
concerned regarding getting to the peak before the melting of the ice rather than taking the
risk of wasting time for helping the sadhu (McCoy, 1997). This as a matter of fact is
coterminous with the condition of the modern-day business world wherein it is seen that the
majority of the business enterprises are merely concerned about getting to the top and support
the different CSR issues as per their own convenience.
Analysis of the behaviour of the people in the case study
An important aspect of the case study under discussion here is the fact that rather than
explicitly stating the unethical behaviour of the business enterprises regarding the CSR
policies followed by them, the case study uses the different characters who are present in it as
symbolical representations of the different business enterprises of the contemporary times.
Furthermore, the manner in which these individual characters behave in the case study is
coterminous with the way in which the different business enterprises behave in the real-world
practical scenarios (McCoy, 1997). As a matter of fact, it is seen that McCoy and Stephen are
really concerned about the sadhu and try their best to help him yet at the same time they are

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more concerned about getting to the top before the melting of the ice (McCoy, 1997). On the
other hand, it is seen that the New Zealanders bring in the unfit sadhu and offer the required
help but at the same time after a while they leave the sadhu to go the top. In likewise manner,
the Japanese were also willing to offer the rudimentary help which was required yet at the
same time they were not willing to offer their horses for the purpose of carrying the sadhu all
the way down the cliff since this would mean that they would have to physically climb all the
way to the top on their own (McCoy, 1997). It is pertinent to note that the behaviour
displayed by these characters is a caricature form of the unethical behaviour displayed by the
business enterprises for the resolution of the issues which are really of concern to the long-
term sustainability or the growth of the planet (McCoy, 1997). In this regard, it needs to be
said that the majority of the characters as well as their behaviour in the concerned case study
displayed unethical behaviour because of the fact that it was their ethical responsibility to
help the sadhu and save his life (McCoy, 1997). However, they thought it that they display
adequate amount of ethics by merely helping him out to the limits of their own comfort zone
and by doing so they had fulfilled their ethical responsibility whereas in reality the behaviour
displayed by them was completely unethical just like the behaviour displayed by the
contemporary business enterprises.
Ethical issues and its corresponding constituencies and standards in the case study
Quarshie, Salmi and Leuschner (2016), have articulated the viewpoint that the
business enterprises have a responsibility to act ethically for the resolution of the different
issues or the challenges which is presently afflicting the world. As opined by Chell et al.
(2016), it is precisely here that the construct of the CSR gains prominence within the
spectrum of the modern-day world wherein it is seen that the different business enterprises
are using this concept for creating value for their stakeholders and also the planet. In this
regard, it needs to be said that the contemporary business enterprises taking the help of this

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particular construct are trying to contribute in a meaningful manner towards the improvement
of the condition of the environment, society and the economy (Vitell, 2015). As a matter of
fact, it had been seen that the effective usage of the construct of CSR had become an
important parameter for the business enterprises to attain competitive advantage or
sustainability (Spence, 2016). This can be explained on the basis of the fact that the brand or
the market image of the contemporary business enterprises is directly determined by the CSR
policies used by them and this in turn determines the loyalty of their customers and thereby
the profit earned by them (Tran, 2019). These in short are some of the major reasons which
propel the business enterprises to use the construct of CSR. However, the problem arises
because of the fact that the business enterprises are trying to address the different CSR issues
only to the point that it suits them and does not requires them to go out of their way and this
in turn had given rise to the ethicality of the behaviour displayed by them.
Paine, Despande, Margolis and Bettcher (2005) in their article “Up to Code: Does
Your Company’s Conduct Meet World-Class Standards?” have identified five sets of guiding
codes that the business enterprises are required to follow. These are “The Caux Round Table
Principles for Business (CRT Principles)”, the UN Global Compact, OECD Guidelines,
ICCR Principles and the Global Reporting Initiative (GRI). More importantly, they have also
stated that the business enterprises are required to create value for their stakeholders and also
the planet through their business activities, be dependent or reliable, be transparent and others
(Paine et al., 2005). However, in the particular context of the case study under discussion
here it is seen that the individuals and their behaviour are not only unethical in nature but at
the same time they are not in conjunction with the standard code of practice for the business
enterprises as well. As a matter of fact, the behaviour displayed by the individuals in the case
study is not only unethical but at the same time does not fulfil the codes of conduct given by
the authors Paine, Despande, Margolis and Bettcher (2005) in their article under discussion

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here. For example, one of the most important principles of the CRT Principles is the fact that
the “Respect Stakeholders Beyond Shareholders” (Globalhand.org, 2019). However, in the
particular context of the case study it is seen that the individuals are concerned regarding
creating value for themselves and also their shareholders rather than creating value for the
sadhu or the stakeholders. For example, had they taken into account this principle then rather
than behaving in the unethical manner in which they did, they would have helped in the
improvement of the condition of the sadhu. On the other hand, as per the Global Reporting
Initiative (GRI) the business enterprises are required to create value for their stakeholders
rather than merely focusing on personal profitability (Globalreporting.org, 2019). This
principle as a matter of fact had become one of the most important ethical standards that the
business enterprises need to comply with and also follow within the spectrum of the business
activities followed by them ((Schrempf-Stirling, Palazzo & Phillips, 2016). In the case study,
the act of helping the sadhu in an effective manner would actually have helped the
individuals to comply to comply with this ethical code of Global Reporting Initiative (GRI)
however they completely disregarded this principle by not helping the sadhu.
Roles played by leadership and management in building corporate social responsibility
The actions of the individuals in the case study under discussion here and also the
manner in which they completely disregarded the ethical action which were required of them
has important connotations for medium or small sized enterprises like Stormberg Ltd. Frynas
and Yamahaki (2016) have articulated the viewpoint that the leaders and the managers related
to the business enterprises need to take effective responsibility to ensure the fact that the
business enterprises are taking into account the different codes of conduct and also the ethical
standards which are required of them. On the other hand, Rupp et al. (2015) have noted that
the leaders or the managers also needs to ensure that the business enterprises are not
following the different CSR policies merely upto the point that it suits or serves their own

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personal interests but for the purpose of actually creating value for the environment, planet
and the stakeholders who are related to them. In this regard, one of the most important
frameworks which the leaders and the managers can take the help of for guiding the CSR
policies or practices used by the business enterprises is Archie Caroll’s Corporate Social
Responsibility Pyramid (Schrempf-Stirling, Palazzo & Phillips, 2016).
Quarshie, Salmi and Leuschner (2016) have noted that four of the most important
parameters or the entities of Caroll’s Corporate Social Responsibility Pyramid that the
managers or the leaders are required to take into account for the purpose of creating value for
their stakeholders or the wider society are the economic, legal, ethical and philanthropic
aspects. As opined by Trevino and Nelson (2016), an important responsibility of the
contemporary business enterprises is to create economic value for the nations of their
operations through their business activities. Thus, the business enterprises like Stormberg Ltd
for the attainment of sustainability or long-term growth needs to contribute in an effective
manner towards the economic growth of the nations of their operations by way of their
business operations. On the other hand, Schrempf-Stirling, Palazzo and Phillips (2016) have
suggested that the business enterprises also need to comply with the legal standards of the
nations of their operation and thereby create value for the society or the community.
Furthermore, the business enterprises and the leaders or the managers related to them needs
to ensure the fact that the activities or the actions of the enterprises are dictated by the
concepts of morals or ethics (Frynas & Yamahaki, 2016). This is important because of the
fact it is seen that the business enterprises in their bid to enhance the level of profitability or
growth often end up taking the help of the kind of business actions that are not only unethical
in nature but at the same time repudiatory from the perspective of the stakeholders who are
related to them (Rupp et al., 2015). Lastly, the leaders or the managers also have the
responsibility to influence the business enterprises to which they are related to indulge in

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different kinds of philanthropic activities which will help in the improvement of the condition
of the society and the wider community in general (Schrempf-Stirling, Palazzo & Phillips,
2016). These are some of the most important roles or job attributes that the leaders and the
managers related to the business enterprises like Stormberg Ltd need to perform so as to help
the concerned enterprises to attain sustainability or the purpose of creating value for their
stakeholders or the planet in general.
Conclusion
To conclude, the business enterprises are required to comply with the ethical
standards of business conduct and also to indulge in the kind of actions or activities which
will create value for the planet and also their stakeholders. However, the major problem
arises because of the fact that the business enterprises follow the ethical standards of conduct
or for that matter follow the different CSR policies only upto the point that it does not
interferes with the strategic goals or the objectives that they have devised. This in turn had
resulted in the kind of situation wherein it is seen that the actions or the activities of the
business enterprises are not only unethical in nature but at the same time fail to contribute in
a meaningful manner towards the improvement of the condition of the planet. In addition to
these, it is seen that the leaders as well as managers related to the different business
enterprises are required to ensure the fact that the enterprises to which they are related not
only complies with the ethical standards of business conduct but also fulfils their
responsibility as business enterprises by creating value for their stakeholders and the planet.
These aspects of the modern-day business world and the manner in which they disregard the
ethical standards of business conduct become apparent from the above analysis of the case
study “The Parable of the Sadhu” by McCoy.

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