carroll model
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Carroll’s Pyramid of Social Responsibility
Source: A Carroll (1991) The pyramid of corporate social responsibility, Business
Horizons, July-August, pp 39-48
Compare with the Reidenbach and Robin Model
PHILANTHROPIC Responsibilities Be a good Corporate Citizen. Contribute resources to the community; improve quality of life.
ETHICAL Responsibilities Be ethical.Obligation to do what is right,
just and fair; Avoid harm.
LEGAL Responsibilities
Obey the Law Law is society’s codification of right and wrong;
Play by the rules
ECONOMIC Responsibilities
Be Profitable The foundation upon which all others rest
Source: Carroll (1991)
The Pyramid of Social Responsibility
Level 1 ECONOMIC
ResponsibilitiesBe profitable
The foundation upon which all other levels rest
Economic Components It is important to perform in a manner consistent
with maximising earnings per share It is important to be committed to being as
profitable as possible It is important to maintain a strong competitive
position It is important to maintain a high level of
operational efficiency It is important that a successful firm be defined as
one that is consistently profitable.
Level 2 LEGAL
ResponsibilitiesObey the Law
Law is society’s codification of right and wrong; Play by the rules
Legal Components It is important to perform in a manner consistent
with expectations of government and the law. It is important to comply with various national
and supra-national laws and regulations. It is important to be a law-abiding corporate
citizen. It is important that a successful firm be defines as
one that fulfils its legal obligations. It is important to provide goods and services that
at least meet the minimal legal requirements.
Level 3 ETHICAL
ResponsibilitiesBe Ethical
Obligation to do what is right, just and fair; Avoid harm.
Ethical Components It is important to perform in a manner that is
consistent with the expectations of societal mores and ethical norms.
It is important to recognise and respect new or evolving ethical/moral norms adopted by society.
It is important to prevent ethical norms from being compromised in order to achieve corporate goals.
It is important that good corporate citizenship be defined as doing what is expected morally or ethically.
It is important to recognise that corporate integrity and ethical behaviour go beyond mere compliance with laws and regulations.
Level 4 PHILANTHROPIC
ResponsibilitiesBe a Good Corporate Citizen
Contribute resources to the community; improve quality of life
Philanthropic Components It is important to perform in a manner consistent
with the philanthropic and charitable expectations of society.
It is important to assist the fine and performing arts. It is important that managers and employees
participate in voluntary and charitable activities within their local communities.
It is important to provide assistance to public and private educational institutions.
It is important to assist voluntarily those projects that enhance a community’s ‘quality of life’.
Moral Management and Stakeholders
Three Moral Types:Immoral ManagersAmoral ManagersMoral Managers
Immoral Managers
Characterised by: managers whose decisions, actions and
behaviour suggest an active opposition to what is deemed to be right and ethical
These managers care only about their or their organisation’s profitability or success
Legal issues are there to be circumvented Strategy is to exploit opportunities for
personal or organisational gain at any cost
Amoral Managers Amoral Managers are neither immoral nor
moral but are not sensitive to the fact that their everyday business decisions may have a deleterious effect on others.
These managers may lack an ethical perspective in their organisational lives.
Typically their orientation is to the ‘letter of the law’ as their ethical guide.
Sometimes we can have a sub category - the unintentional amoral manager
Un-intentional Amoral Manager
These managers are un-intentionally amoral in their behaviour. They tend to see ethical issues are for their private lives not their business lives, where different rules apply.
They tend to believe that business activity resides outside the sphere to which moral judgements may apply.
Amoral managers here may not consider a role for ethics in business.
The Moral Manager In moral management, ethical norms that adhere
to a high standard of right behaviour are employed
Moral managers not only conform to accepted and high levels of professional conduct, they also lead on issues of ethical behaviour.
The law is seen as giving a minimal guide to ethical behaviour. The ‘spirit of the law’ in more important than the ‘letter of the law’. The objective is to operate well above what the law mandates the firm to do.
The Moral Manager Moral mangers want to be profitable and
ethical. Moral mangers will use ethical principles to
base their judgements upon - justice, rights, the Golden Rule, utilitarianism etc.
When ethical dilemmas arise, moral managers and moral companies will tend to assume leadership in their companies and industries.
Compare this model with the Reidenbach & Robin Model
The Three Moral Types
Orientation towards Stakeholders: ShareholdersEmployeesCustomersLocal Community
Moral Types and Stakeholders
Our goal is to gain a fuller understanding of what it means to engage in moral management and what this implies in terms of relationships with key stakeholders.
The next four slides are in table form showing the orientation of moral types and stakeholder orientations.
Three Moral Types and Orientation Toward Stakeholder Groups:Owners and Shareholders
Type of Management Orientation Toward Owner/ShareholderStakeholders
Immoral Management Shareholders are minimally treated and givenshort shrift. Focus is on maximising positions ofexecutive groups - maximizing executivecompensation, perks, benefits. Goldenparachutes are more important than returns ofshareholders. Managers maximise their positionswithout shareholders being made aware.Concealment from shareholders is the operatingprocedure. Self-interest of management group isthe order of the day.
Amoral Management No special thought is given to shareholders; theyare there and must be minimally accommodated.Profit focus of the business is their reward. Nothought is given to ethical consequences ofdecisions for any stakeholder group, includingowners. Communication is limited to thatrequired by law.
Moral Management Shareholders’ interest (short- and long-term) is acentral factor. The best way to be ethical toshareholders is to treat all stakeholder claimantsin a fair and ethical manner. To protectshareholders, an ethics committee of the board iscreated. Code of ethics is established,promulgated, and made a living document toprotect shareholders’ and others’ interests.
Three Moral Types and Orientation Toward Stakeholder Groups:Employees
Type of Management Orientation Toward Employee Stakeholders
Immoral Management Employees are viewed as factors of production tobe used, exploited, manipulated for gain ofindividual manager or company. No concern isshown for employees’ needs/rights/expectations.Short term focus. Coercive, controlling,alienating.
Amoral Management Employees are treated as law requires. Attemptsto motivate focus on increasing productivityrather than satisfying employees’ growingmaturity needs. Employees still seen as factorsof production by remunerative approach used.Organization sees self-interest in treatingemployees with minimal respect. Organizationstructure, pay incentives, rewards all gearedtoward short- and medium-term productivity.
Moral Management Employees are a human resource that must betreated with dignity and respect. Goal is to use aleadership style such as consultative/participativethat will result in mutual confidence and trust.Commitment is a recurring theme. Employees’rights to due process, privacy, freedom ofspeech, and safety are maximally considered inall decisions. Management seeks out fairdealings with employees.
Three Moral Types and Orientation Toward Stakeholder Groups:Customers
Type of Management Orientation Toward Customer Stakeholders
Immoral Management Customers are viewed as opportunities to beexploited for personal or organizational gain.Ethical standards in dealings do not prevail;indeed, an active intent to cheat, deceive, and/ormislead is present. In all marketing decisions -advertising, pricing, packaging, distribution -customer is taken advantage of to the fullestextent.
Amoral Management Management does not think through the ethicalconsequences of its decisions and actions. Itsimply makes decisions with profitability withinthe letter of the law as a guide. Management isnot focused on what is fair from perspective ofcustomer. Focus is on management’s rights. Noconsideration is given to ethical implications ofinteractions with customers
Moral Management Customer is viewed as equal partner intransaction. Customer brings needs/expectationsto the exchange transaction and is treated fairly.Managerial focus is on giving customer fairvalue, full information, fair guarantee, andsatisfaction. Consumer rights are liberallyinterpreted and honoured.
Three Moral Types and Orientation Toward Stakeholder Groups:Local Community
Type of Management Orientation Toward Local CommunityStakeholders
Immoral Management Exploits community to fullest extent; pollutes theenvironment. Plant or business closings takefullest advantage of community. Activitydisregards community needs. Takes fullestadvantage of community resources withoutgiving anything in return. Violates zoning andother ordinances whenever it can for its ownadvantage.
Amoral Management Does not take community or its resources intoaccount in management decision making.Community factors are assumed to be irrelevantto business decisions. Community, likeemployees, is a factor of production. Legalconsiderations are followed, but nothing more.Deals minimally with community, its people,community activity, local government.
Moral Management Sees vital community as a goal to be activelypursued. Seeks to be a leading citizen and tomotivate others to do likewise. Gets activelyinvolved and helps institutions that need help -schools, recreational groups, philanthropicgroups. Leadership position in environment,education, culture/arts, volunteerism, and generalcommunity affairs. Firm engages in strategicphilanthropy. Management sees communitygoals and company goals as mutuallyinterdependent.
Finally
Though the concept of social responsibility may change from time to time, the pyramid model gives us a framework for understanding the evolving nature of the firm’s economic, legal, ethical and philanthropic performance.
Issues, Questions and Reflections
Marketing EthicsSocial ResponsibilityMoral Management
Marketing and Ethics
From Buyer Beware to Seller Beware
See:Smith, N.C., (1995) Marketing Strategies for the Ethics Era, Sloan Management Review, Summer, pp. 85-97.
Marketing Ethics Continuum
Producer Interests Producer InterestsFavoured Less favoured
Consumer Interests Consumer InterestsLess Favoured More Favoured
Caveat Industry Ethics Consumer CaveatEmptor Practice Codes Sovereignty Venditor
Profit General business Codes of Capability Consumermaximisation practice (average individual satisfaction
across all firms) firms Information
Subject to Practices of Industry Choicelegal constraints specific industries codes
Practice of Professional best firms codes
Source: N C Smith (1995)
Some Ethical Maxims
Marketers often rely on simple maxims to evaluate their marketing practices. While useful, they generally lack specific guidance.
Do unto others as you would have them do unto you. Would you be embarrassed in front of your family/ friends/
colleagues if the media publicised your decision ? Good ethics is in the long term interests of the firm. Would an objective panel of professional colleagues view
my actions as proper ? When in doubt, don’t.
Read the article in the reading list entitled ‘Ethics - a view from the trenches’
Social Responsibility
Look at the ‘principles’ of key companies - Shell, Lockheed Martin and Body ShopThe new Philanthropy
Shell’s ‘principles’ can be found in the Shell folder in Readings
Some Issues to Consider Compare the Carroll Model with the Reidenbach and
Robin Model. Look at the similarities and differences. Read the section in the Visions folder particularly on
the articles by: Malcolm McIntosh - particularly focus on the last
paragraph which quotes Timberland’s mission statement. See next slide
Glazebrook and Birch Go to the web sites of Shell, Lockheed Martin and
Body Shop. Compare their ‘principles of business’. Where would you place them on model ? Why?
Timberland’s Mission Statement
“We do not give money to charity. Instead we try to create a return. We create values for our customers, the community and the non-profit organisations we work with. The traditional notion of philanthropy is not adequate. It is not smart or wise to approach social problems with the financial leftovers of companies.”
Consider this statement carefully, and reflect on the issues that it addresses. To what extent can this statement be be said to be ‘enlightened’? What is your position about businesses and the community and how does this relate to Carroll’s model and moral types ?
Moral Management ‘Cartel’ - 1999 Style
Vitamins Inc - An International Cartel
Featuring Europe’s Top Companies
BASF - Germany
Roche - Switzerland
Rhone-Poulnec - France
This Cartel lasted 9 years and was busted in May 1999
Members were fined $ 725m under US Anti-trust laws and a Senior Executive was jailed for 4 months and fined $100,000
See FT cuttings in Readings/Cartel Folder
Vitamins Inc: How to Run an Efficient Cartel Hold and annual summit between ‘hot shot’
executives in late summer Negotiate a budget for the year, covering prices and
sales volumes around the world Fix quarterly meetings between mid-level managers
to watch each other’s figures Police the cartel’s targets with regular telephone
calls Review each year’s performance at a ‘shareholders’
meeting’ of top executives
Questions for Reflection Where would you classify these three companies on
the Carroll and the Reidenbach and Robin Model ? What would morale and attitudes of managers be in
other parts of the these firms ? Can firms like Roche and BASF be ‘moral’ and
‘ethical’ in their other SBUs, while at the same time be manipulating the market by running an illegal cartel ? Discuss.
Would you be attracted to such a firm for a managerial opportunity ?