Good Corporation, Bad Corporation Corporate Social Corporations and their Social Responsibility

Chapter Corporations and their Social Responsibility Understanding Corporations and The subject of this book is corporate responsibility ( a broad term that refers generally to the ethical role of the corporation in society . Before we more precisely and before we explore in depth a number of case studies that illustrate aspects of the ethical role of corporations , we first need to understand exactly what corporations are , why they exist , and why they have become so powerful . Today , the global role of corporations rivals that of national or local governments . In 2000 , it was reported that , of the 100 largest economic organizations in the world , 51 were corporations and 49 were General Motors , and Chrysler all ranked higher than the nations of Poland , Norway , Finland and Thailand ( in terms of economic size , comparing corporate revenues with national gross domestic product , or ) trend has continued , and for the past decade , 40 to 50 of the worlds 100 largest economic organizations have been corporations , with the rest being national economies . In 2012 , was the largest economic organization in the world , putting it ahead of 157 For corporate employees , as for citizens living in communities dominated by large corporations , the corporation is arguably the most important form of social organization . For people such as corporate executives and shareholders , whose lives depend directly on corporations , it is not surprising that company politics often are considered more relevant than national or local politics . Corporations are also a major part of the daily lives of the worlds citizens and consumers . For devoted fans of iconic brands like Nike , Apple , cedes , or Louis , the corporation can occupy a psychological niche very much like that of a member of the family . Indeed , if many teenagers today were forced to choose between an iPhone and a memorable night out celebrating their parents anniversary , the parents would likely celebrate alone . Similarly , those parents might also be loath to part with their cherished products . Dad would not easily say goodbye to his Chevrolet Corvette or Bose stereo , and Mom might not be easily persuaded to part with her Yamaha piano or skis . At the opposite extreme , for citizens who have been harmed physically or financially by the Louisiana or Alaska residents whose beaches were fouled by Corporations and their Social

Good Corporation , Bad Corporation massive oil spills , or the thousands of small investors who found their life savings wiped out by the Ponzi schemes of Bernie investment corporation can seem as dangerous as an invading army , or as destructive as an earthquake . Despite their vast social role , corporations remain poorly understood by the worlds citizens . While school children everywhere are expected to study the structure and tory of their nations government , they are not similarly taught to appreciate the functions , motivations , and inner workings of corporations . Let us begin with a brief review of the nature of corporations . oil rig , by United States Coast Guard ( 2010 , domain ) Figure . 2010 explosion of a Petroleum ( oil rig coast of Louisiana , tbe worst environmental disaster in US . Why Do Corporations Exist ?

There were no corporations in ancient Egypt , Greece , or Rome or in imperial China or Japan or among the kingdoms of the Zulu or . The Aztecs and had no corporations , nor did the Sioux , Cherokee , or Navajo . It is true that in some classical and traditional societies were certain forms of communal and religious organizations that anticipated the organizational capacities of corporations , but strictly speaking , they were not corporations . Corporations are a re modern social innovation , with the great corporations dating from about 1600 . Since then , the growth of corporations has been phenomenal . What explains it ?

Why has the corporate structure been so successful , and ?

Here are a few of ' distinguishing characteristics of corporations . Corporations are Creatures of Law The point to ma ce about corporations is that they are not informal organizations or assemblies . In order to exist at all , corporations must be authorized by state or national laws . In their daily operations , corporations are regulated by a set of laws . Every country has laws that stipulate how corporations can be created how they must be aged how they are how their ownership can be bought , sold , or transferred and how they must treat their employees . Consequently , most large corporations have large Corporations and their Social

Goad , Baal legal and government affairs departments . Since the laws and rules that may constrain corporations are written and enforced by the government , most corporations consider it of vital importance to seek over governmental regulators and lawmakers . In most countries , the very largest corporations have privileged access to top decision makers . The extent and reach of corporate over governments is one of the most controversial aspects of corporate existence . Corporations Raise Capital for Major Undertakings The first great benefit of corporations is that they provide an organized vehicle for pooling cash and capital from a large number of investors so that they can undertake major enterprises . Thus , one great stimulus to the growth of corporations was the rapid growth of international trade between 1400 and 1700 CE . In that era , sending a large vessel across the oceans was a major financial and logistical undertaking , which was also extremely risky ships were often lost in early commercial ventures required such large capital investments that , at first , funding them was only within the reach of royalty . American schoolchildren are taught that the legendary explorer Christopher Columbus needed the royal patronage of Isabella of Spain to support the voyages that led to the of the New World . However , as new ocean trading routes were established and the vast potential for profits from trading spices became known , the first modern corporations were formed the English East India Company , chartered in 1600 , and its archrival , the Dutch East India Company , chartered in companies are considered the worlds first multinational corporations , and they possessed most of the hallmarks of corporate structure that we see today . Corporations and Other Business Structures Not all businesses or companies are public corporations . For example , in the US , it is legal to operate a business in your own name ( this is called a ra ) or with partners ( a ) Corporations also come in a bewildering array of forms . Thus , in the US , we have , also ) and limited liability ( In the UK , the term company is preferred to corporation , and we will notice that the names of most large UK companies followed by the designation or ( public limited company ) as in , while smaller companies often have the designation ( private limited company ) In France , large companies are usually designated SA ( while smaller ones may be known as ( a ) In Germany , large companies are designated AG ( while smaller ones are known as ( mit ) In Japan , the corresponding terms are ( and ( All of these terms define two basic aspects of corporations ) their limited liability ( which applies to all corporations ) and ) their status as a public or private company . Public companies are allowed to sell their shares on public stock markets and tend to be the larger type of company . The Importance of Limited Liability Why aren all businesses sole or partnerships , instead of corporations ?

The answer is found in the concept of liability , which refers to the risk of loss for debts incurred by the business , or for damages caused by the business . Corporations and their Social Good Corporation , Baal Corporation If you start a business as a sole proprietor or via a partnership , you ( or your ) are personally for any debts or damage that can be attributed to the particular business . Let us say that you have million in assets and your good friend has million in assets . Together , you agree to invest each in a pizza delivery business ( the business will start with worth of capital ) Unfortunately , in the month of operation , one of your drivers negligently causes a car accident and severely injures a family driving in another car . The family sues you for their injuries and they obtain a court ment ordering you to pay million in compensation . Even though you had intended to invest only in the business , now your entire fortune and that of your friend are likely to be wiped out in satisfying that court judgment . The same sort of result could arise if your business ran up million in debt that it was unable to pay back . Thus , the founder of a sole proprietorship exposes entire personal assets to the risk that the assets will be seized to satisfy liabilities incurred by the business . The result can be quite different for a corporation . One of the principal advantages of a corporation , from an investor point of view , is that the corporation provides a legal a shield from liability . A shareholder of a corporation only risks the stock that the holder owns . The shareholder personal assets are not in jeopardy . When a corporation suffers an adverse legal judgment and does not have funds to satisfy the judgment , the corporation simply goes bankrupt . The party or parties who have been injured can not sue the the corporation because the corporation acts as a shield from liability . Why does society allow the shareholders of a corporation to retreat behind the shield , while we do not allow the same for owners of a business in the form of a sole proprietorship ?

The main purpose of the is to encourage investment in corporations . People are more willing to invest in a corporation ( by acquiring stock ) because they need not fear that their personal assets can be seized to satisfy the business debts or underlying implication is that corporations and corporate investment provide important benefits for society , which explains why have been willing to adopt laws that protect and encourage corporate ownership . As many states learned in the nineteenth century , it can make sound economic sense to attract large corporations because they often become major employers and taxpayers . may enhance the ability of the local economy to compete with foreign economies that are supported by the productivity of their own corporations . In many instances the ability of corporations to retreat behind the corporate shield has been controversial . For example , several major airlines ( notably American Airlines ) have been accused of choosing to declare bankruptcy over finding a way to pay high wages to their pilots and cabin The airlines were attacked by labor unions as having used the bankruptcy as a tactic to avoid meeting the union demands for fair wages . Such corporations are able to benefit from an option provided by US bankruptcy law , known as reorganization , which allows them to enter bankruptcy temporarily . The courts appoint a trustee to run the corporation , and the trustee is empowered to take any necessary to reduce the corporations debts , including revoking labor agreements with employees . Such corporations can later emerge from bankruptcy with fewer employees or with employees earning lower salaries . Corporations and their Social

Good Corporation , Bad Corporation Corporations Permit Wealth Creation and Speculation in Stocks While all corporations possess limited liability , not all of them are permitted to raise money in the stock market or have their shares traded in stock markets . Here , we the important distinction between public , which may have their shares traded on stock markets , and private corporations , which may not have their shares traded on stock markets . As a rule , large corporations and multinational corporations choose to do business as public corporations because big companies have such enormous capital needs that they may best raise funds by placing stock for sale in public stock markets . However , this is not always the case there are some very large corporations that choose to remain private , which means that they raise money directly from investors rather than from making stock available on stock markets . On the whole , ownership of a corporate interest in the form of stocks is more freely and easily transferable than ownership of an interest in a sole proprietorship or partnership . If you want to sell a store , you generally have to sell the whole business you can not sell a small portion when you need to raise money . If you are one of the members of a partnership and you want to sell your share , you will generally have to get prior approval from the other partners needing to do so may discourage possible investors because they may not want to go to the trouble of seeking from your partners . However , if you inherit a thousand shares of stock in Apple from your wealthy aunt ( which , in 2013 , would have had an approximate value of ) and you that you need extra money , you can sell one hundred shares ( or about worth ) Such a transaction is easy because there are lots of investors eager to own Apple shares and you do not need anyone approval . This ease of transferability also encourages people to invest in stock instead of in other businesses , because it is so easy to sell corporate stock as needed . When a corporation grows or becomes more , the shareholders in two ways . First , the corporation will often distribute a portion of its to the shareholders in the form of , a certain annual payment per share of stock . Second , if a corporation is growing rapidly and is expected to be very in the future , more investors will want to own its stock and the price of that stock will increase . Thus , ownership of stock is an investment vehicle that provides many advantages over other types of investments . For one thing , you can own stock without having to personally take part in the management of the company . In addition , you can sell all or part of your ownership when you need the funds . Finally , if the corporation is very successful , it will not only pay a steady revenue your shares will become more valuable over time . The advantages of stock ownership as an investment vehicle explains the growth of the worlds great stock exchanges , such as the New York Stock Exchange or the Hong Kong Stock Exchange . Stock exchanges are like enormous markets for stock , because you can either buy or sell stock there . Unlike the goods available in ordinary markets , though , the price of stocks constantly , literally minute by minute . A stock that was worth 5510 last year may now be worth as much as 1000 or as little as . stock markets are also somewhat like casinos or lotteries , because they allow investors to speculate on the future . Corporations and their Social

Good Corporation , Bad Corporation Speculation has its pros and cons . The potential for wealth creation through stock ownership has spawned an important industry that employs hundreds of thousands of people and generates vast services . Stock , investment banks , and trading houses have arisen to provide expert guidance and services to investors . American colleges and universities have developed a highly collaborative and perhaps even symbiotic relationship with the financial services industry . For one thing , since there are many jobs and professional occupations in financial services , virtually all universities offer courses and majors in finance or financial economics , and many also have graduate business schools that prepare students for careers in the financial services industry . Perhaps equally importantly , most colleges and universities depend on private and charitable donations to help defray the cost of running the institution and , consequently , to keep tuition rates and fees lower ( although many students will find it hard to imagine how tuition could be any higher ) When wealthy individuals and corporations make donations or charitable contributions to colleges and universities , they often do so by giving rate stock . Even when they make a cash donation , the university may find that it is most convenient to use that cash to acquire corporate stock . As a result , the largest universities have amassed vast holdings of corporate stock , among other investments . The financial resources of a university are often held in the form of a special trust known as an endowment . Universities prefer not to sell of parts of the endowment but rather seek to cover costs by using the interest and dividends generated by the endowment . At times , the corporate holdings of universities have become quite controversial . For example , in the and , a growing student movement called on universities to divest ( to sell all their stock ) in any corporations that did business with the racist apartheid regime that controlled South Africa at that time . Many commentators believe that it was this pressure on corporations that led to the fall of the apartheid regime and the election of South Africa first black president , Nelson . Corporations Can Have Perpetual Existence It is possible but rare for businesses to remain sole for several generations more commonly , they eventually become corporations , or they are sold or transferred to a new business operator . Very often , a small business is sold when the founder dies , because the founders children or heirs either do not want to work in the family business or are not as gifted in that business as was the founder . Even in successful , businesses where a child or relative of the founder inherits the business , it still happens that after a generation or two , no further family members are qualified ( or wish ) to join the business , and the business must be sold . However , corporations are structured from the outset to have a potentially perpetual existence , because corporations do business through their and executives rather than through their owners . Although it is possible for owners to have dual roles as shareholders and as executives , it is not necessary . One common scenario is for the founder of the ration to act as its chief executive ( CEO ) until such time as the corporation becomes so large and successful that the shareholders prefer to transfer management responsibility to an executive with specific professional experience in running a large corporation . Corporations and their Social

Goad Corporation , Bad Corporation I Disadvantages of the Corporate Form Separation of Ownership and Management One potential disadvantage of the corporate form ( from the point of view of its founders ) is that , as the corporation grows , the original founders may lose control and even be pushed out of the corporation by happened to Steve Jobs , the legendary cofounder of Apple , who was pushed out of his leadership role in 1985 by Apple board of directors , only to return in the and retake his role as CEO . More recently , in 2013 , George Zimmer , the founder of the apparel retailer Mens , was as chairman of the board by his own board of directors . This situation can arise because , as a company grows , the founders may be tempted to part with some portion of their equity by selling stock to new investors . Corporations are ultimately controlled by the board of directors , who are voted into by the shareholders . If a founder allows his or her share of corporate stock to drop beneath , then the founder will no longer be able to elect a majority of the board of directors , and may become subject to termination as an by the board . The board of directors is thus a sort of committee that controls the fate of the corporation , and it does this principally by choosing a CEO and supervising the CEOs performance . Dual Taxation Although the tremendous growth in the number and size of corporations , and their social role , is due in part to their advantages as an investment vehicle , there are some financial disadvantages worth mentioning . One of the most important is dual taxation , which refers to the practice in most countries of taxing corporate profits twice once when the corporation declares a certain amount of profit , and again when the corporation distributes dividends to shareholders . The complexity of corporate tax is such that even small corporations must frequently employ specialized accountants and attorneys to handle their tax returns . Quarterly Financial Reporting for Publicly Traded Corporations Another disadvantage applies only to publicly traded corporations . Although all rations are subject to a number of government regulations , the highest degree of regulation applies to public corporations , which raise capital by selling stock in stock markets . Large corporations are often willing to submit to these burdensome regulations because there are strong benefits to being traded on a stock exchange , the most important of which is the ability to raise a great deal of initial funding when the stock is first made available for trade . This first public sale of stock is known in the US an or . In two famous recent examples , Google raised billion with its in 2004 , and Facebook raised 18 billion with its in 2012 . Despite the allure of additional financing , a company that is traded on a stock market must make a great deal of financial information publicly available , usually on a quarterly Corporations and their Social

Good Corporation , Bad Corporation basis , four times per year . This obligation can be quite onerous because it requires the corporation to employ a number of internal accountants as well as outside auditors . In addition , the information that is publicly revealed can be of strategic value to the tion competitors . Moreover , the need to make frequent quarterly reports on the ongoing can have a negative impact on corporate strategy , because executives may become on goals while neglecting goals . In light of these disadvantages , it is not surprising that some public corporations decide to take their shares the stock markets in a process that is known as , which is the opposite of an . Other corporations simply avoid going public in the , there are also some very large corporations , such as the engineering , which prefer to remain private even though they could raise investment capital with an . Such companies prefer to raise capital by other means to avoid the requirements of quarterly earnings reports and therefore not revealing information to competitors . Source Toms , by Vi ?

Love , 2009 ) Figure pair of Toms Toms gives away free to for every pair it sells . Corporate Social Responsibility In this book , we will make continual reference to the concept of corporate social , but it is important to realize that is an evolving concept that can be analyzed from multiple perspectives . The term may be used quite differently depending on whether a given speaker is looking at it from the point of view of a corporation , a ment , a charity sponsored by the corporation , a citizen employed by the corporation , a citizen who has been harmed by the corporation , or an activist group protesting abuses of corporate power . Let us review key concepts and terms related to , starting with itself . Definition We simply and broadly as the ethical role of the corporation in society . Corporations themselves often use this term in a narrower , and less neutral , form . When corporations have a director or a committee in charge , or when they Corporations and their Social

Goad Corporation , Bad Corporation tion prominently in their mission statements , they are invariably using the term to mean corporate actions and policies that have a positive impact on Corporations refer most frequently to when they speak of civic organizations they support , or to corporate environmental or social policies . One related term here is corporate Not only are large corporations to a host of governmental regulations , many of which have social objectives ( such as avoidance of discrimination , corruption , or environmental damage ) but many corporations also have set up internal guidelines . In order to make sure that a corporation respects or complies with all these laws , regulations , and norms , both internal and external , increasingly employ compliance or executives . For example , large fashion and apparel companies frequently place a specific executive in charge of human rights compliance , to ensure that its clothing was manufactured in safe factories that respect labor laws and do not employ children . Corporate Philanthropy Corporate philanthropy refers to a corporation gifts to charitable is an implication that the corporations donations have no strings attached , which is probably quite rare . At a minimum , most corporations expect that their donations will be publicly attributed to the corporation , thus generating positive public relations . When corporations make large cash gifts to universities or museums , they are usually rewarded with a plaque , or with a building or library named after the donor . Such burnish the tion public image , and in such cases we are not dealing with true corporate philanthropy , strictly speaking , but something more in the nature of marketing or public relations . Stakeholder Capitalism Stakeholder capitalism refers to a conception of the corporation as a body that owes a duty not only to its ( the predominant American view ) but also to all of its , as all those parties who have a stake in the performance and output of the corporation . Stakeholders include the employees , unions , suppliers , customers , local and national governments , and communities that may be affected by corporate ties such as construction , manufacturing , and pollution . Stakeholder capitalism is a concept that was largely developed in Europe and the widespread European attitude toward corporate governance , which accepts a great degree of government and social oversight of the corporation . The American approach is often described , in contrast , as ( meaning leave alone ) in that corporations are granted more freedom of operation than in Europe . One example of a stakeholder approach is in the German practice known as , in which corporations are required to provide a seat on the corporations board of directors for a union representative . This is intended to oblige the corporation to be more cognizant of worker needs and demands , and to ensure that corporate strategies are not concealed from workers . Marketing marketing ( refers to a corporation associating the sales of its products to a program of donations or support for a charitable or civic organization . An example is provided by the famous Red campaign , in which corporations such as Gap pledged to contribute profits from the sale of certain products to a program Corporations and their Social

Good Corporation , Bad Corporation for African development and alleviation of social problems . The basic idea of marketing is that the corporation markets its brand at the same time that it promotes awareness of the given social problem or civic organization that addresses the social problem . Another example is the pink ribbon symbol that promotes awareness and is used prominently in the marketing of special lines of by many corporations , such as Lauder , Avon , New Balance and Self Magazine . In addition to marketing products with the symbol , Lauder has made port for breast cancer awareness one of the defining features of its corporate philanthropy . Thus , Lauder also frequently refers to such charitable contributions , currently on the order of 150 million , in its corporate communications and public relations Sponsorship Sponsorship refers to a corporation financial support for sports , art , entertainment , and educational endeavors in a way that prominently attributes the support to the particular corporation . Sponsorship can be considered a form of marketing communications because it seeks to raise awareness and appreciation of the corporation in a given target audience . Arguably , of course , sponsorship society , because society appreciates sports , art , and entertainment . However , in the case of sponsorship , as opposed to philanthropy , the sponsors expect a clear return . Indeed , many corporations carefully analyze the benefits of their sponsorship activities in the same way they measure the impact of their marketing and advertising . Many prominent global sponsors are companies that find it to advertise through other channels . For example , Philip Morris , the worlds largest tobacco company and owner of the brand , which finds its global advertising restricted due to a number of bans and limits on tobacco advertising , has invested heavily in sponsorship . Philip Morris has long been the number one sponsor of Formula race car competitions , and it is impossible for a spectator to watch one of these races without observing , consciously or otherwise , huge billboards and banners featuring the famous logo . Similarly , since alcohol advertising is also increasingly scrutinized , it is not surprising that has followed a similar tactic and become the principal sponsor of NASCAR racing . have also become an area subjected to tight advertising and marketing controls therefore , the worlds largest pharmaceutical company , engages in scores of ship activities , notably in its support for the , an competition for athletes . Sustainability Sustainability has become such an important concept that it is frequently confused with . Indeed , for some companies it seems that is sustainability . This is perhaps not surprising , given the growing media attention on issues related to sustainability . Sustainability is a concept derived from environmentalism it originally referred to the ability of a society or company to continue to operate without compromising the planets environmental condition in the future . In other words , a sustainable corporation is one that can sustain its current activities without adding to the worlds environmental problems . Sustainability is therefore a very challenging goal , and many environmentalists maintain that no corporation today operates sustainably , since all use energy ( leading to the gradual depletion of fossil fuels while emitting greenhouse gases ) and all produce waste products Corporations and their Social 10

Goad , Bad I like garbage and industrial chemicals . Whether or not true sustainability will be attainable anytime in the near future , the development and promotion of sustainability strategies has become virtually an obsession of most large corporations today , as their websites will attest in their inevitable reference to the corporations sincere commitment to sustainability and responsible environmental practices . No corporation or corporate executive today will be heard to say that they do not really care about the environment . However , if we observe their actions rather than their words , we may have cause for doubt . We will explore cases related to sustainability in later chapters . For now , let us just note that , strictly speaking , is broader than environmental sustainability because it also refers to a corporation ethical relationship to its employees , shareholders , suppliers , competitors , customers , and local and foreign governments . More recently , many people have been using the term also to refer to social and political sustainability , which brings the concept closer to that of . refers to corporations that exaggerate or misstate the impact of their environmental actions . By the early a great number of consumer products were being promoted as environmentally friendly , or green , when in fact there was little or nothing to justify the claims . In 1991 , an American Marketing Association study revealed that of environmental ads contained at least one deceptive claim . As a result , many advertising regulatory bodies around the world adopted advertising codes to regulate the honesty and accuracy of environmental claims in advertising . For example , in the UK , a producer of a recycling bin advertised that it helped buyers save the rainforests by encouraging recycling of plastic and paper products . The advertisement was found to be misleading because most paper products sold in the UK were not made from wood in tropical rainforests , but from wood harvested on northern European tree farms . In Norway , car manufacturers and dealers are prohibited from claiming that their cars are green , because in the view of the Norwegian Consumer Ombudsman , it is impossible for cars to be beneficial for the environment the best they can do is reduce the environmental damage they is not only a corporate practice but a political one as well , as politicians everywhere promise to undertake actions to improve the environment . Thus , the of former US President George Bush was widely criticized for promoting legislation under the name of the Clear Skies Initiative , when in fact the purpose of the legislation was to weaken antipollution Social Entrepreneurship and Social Enterprise Social entrepreneurship and social enterprise refer to the use of business organizations and techniques to attain laudable social goals . As we will discuss further in Chapter , Blake decided to create TOMS Shoes largely as a reaction to his travels in Argentina , which had exposed him to terrible poverty that left many children without shoes . An important part of the corporate mission of TOMS Shoes lies in its pledge to give away a free pair of shoes for every pair purchased by a customer . TOMS Shoes model has been imitated by many others , including the popular online eyewear brand , Parker . The difference between social entrepreneurship and is that , with social , the positive social impact is built into the mission of the company from its Corporations and their Social 11

Good Corporation , Bad Corporation founding . Other examples of social entrepreneurship include The Body Shop , Ben . ice cream , and Newman Own . The Body Shop was founded by noted activist Anita dick who insisted that all products be derived from ingredients which were natural , organic , and responsibly sourced . Her employment policies famously allowed every employee to take off one day a month from work to engage in social or community projects . Similarly , Ben . was founded to promote the use of organic , food . The founders insisted on a policy that executives earn no more than seven times the salary of factory ( although this policy was eventually relaxed when it became to recruit a competent CEO at those wages ) Ben . engaged in a number of political activities in which they encouraged their employees to participate , such as protesting the building of the nuclear power plant in Vermont . Newman Own was founded by film actor Paul Newman and his friend Hotchner with the goal of selling wholesome products and giving away 100 of the profits to charitable ventures . To date , Newman Own has given away over 200 million . Social Marketing Social marketing refers to the use of business marketing techniques in the pursuit of social goals . Often , governments and nonprofit organizations make use of social marketing to make their points more forcefully and effectively to a wide audience . Classic examples are the extremely powerful commercials warning of the dangers of unsafe driving or of failing to use seatbelts . Cinematic techniques are employed to portray dramatic , arresting images of crumpled cars and bodies , children and mothers crying . The source of social marketing advertisements is usually a local government or nonprofit organization . Social marketing is usually used to try to convince citizens to drive more safely , eat better , report child and domestic abuse , and avoid various forms of criminality and drug use . As with ordinary advertising , social marketing can seem overdone or maudlin , and some social marketing ads have been mocked or considered silly . For example , former First Lady Nancy Reagan participated in a social marketing campaign that urged young people to Just Say No to drugs , an approach which was ridiculed as simplistic by many . Noted radical activist Abbie Hoffman said that telling drug users to just say no to drugs was like telling to just cheer Despite that , drug use in America declined over the time period that the campaign was in progress , though there is no evidence that any part of this decline was due to the campaign . Business Ethics Business ethics is an academic discipline closely related to , but one that tends to use the tools of philosophy to formally analyze the ethical role of individuals and . Although the terms are quite similar , there are differences of nuance . For example , although academics who study business ethics tend to focus on corporations , the term itself could also apply to the ethical dilemmas of sole proprietors or of individuals involved in commercial situations , such as a private party trying to sell a used car that he knows has a hidden mechanical . While the term tends to be used by corporations and social entrepreneurs in a way that assumes a positive connotation , business is used in a more neutral and even critical fashion , as one might expect , given the perspective of writers who are not beholden to corporations . Indeed , when the media uses the term business , it is Corporations and their Social 12

Good Corporation , Bad Corporation I often in a negative sense , to draw attention to instances of deception or fraud on the part of corporations or Source United Service , 2004 , public domain Figure He mug of former top executive Ken Lay . Lay wax eventually convicted on 10 county of fraud awaiting of up to in be died of a attack in 2006 . Crime crime refers to fraudulent or criminal activities by professionals or businesspeople . The term crime was coined by sociologist Edwin , who it as a crime committed by a person of ability and high social status in the course of his occupation in a 1939 speech entitled The White Collar Although the term applies to fraud committed by who are not associated with corporations , there is a strong linkage to corporations in actual practice because corporate executives are often to commit crimes of fraud and corruption . However , a distinction should be drawn between crime and corporate crime , which refers to crimes for which the corporation itself is responsible . In many cases , such as in violations of US laws against bribing foreign government , it may be unclear whether the matter is better as crime or corporate crime . In the law , it may depend on whether the corporation senior executives were aware of and supported the acts of criminality . Corporations and their Social

Goad , Bad While there is a popular perception that punishments for wealthy are less severe than for poor and criminals , the situation appears to have changed in light of the severe penalties for crime mandated by the 2002 Act , which was adopted by the US Congress in the wake of the notorious scandal . As a result , former CEO Jeffrey Skilling , the architect of frauds , was sentenced to 24 years in prison . Bernie , former CEO of , was convicted of fraudulent of billions of dollars of earnings , resulting in a sentence of 25 years . More recently , Bernie whose vast Ponzi scheme defrauded investors to 65 billion , was sentenced in 2009 to 150 years in prison for his crimes , effectively a life sentence without possibility of parole . Topic for Debate Regulation of Corporations It is one of the basic premises of this book that we do not want you merely to read and assimilate the material . We want you to engage it personally in an effort to develop and refine your own , each chapter will feature a topic for debate ( more tailed rules and suggestions for debate will be set forth in the next chapter ) Most chapters will feature an case study based on a business situation , or a fictionalized account of a real business situation or social controversy . In this chapter we will use what we will call a study sort of thought experiment , based on a simple set of facts as follows Study The Case of the Undecided Voter Your close friend , Jane Goodie , is a college student who has registered to vote in her first election . Jane father has been a lifelong Republican voter and Jane mother a lifelong Democrat . As Jane grew up , she often listened to her parents debating politics at the dinner table . More than once , ane found herself disconcerted and discouraged by the appearance of biased thinking on the part of one or both of her parents they rarely seemed to agree or listen to each other in their political debates . Sometimes , Jane even wondered to herself , Why do they vote at all , since their votes obviously just cancel each other out ?

However , since her parents have strongly urged her to vote as soon as she is old enough , and since they have also urged to make up her own mind about which candidate to choose , she is looking forward to expressing her own views at the ballot box . But first she must make up her mind . Since this is not a presidential election year , the most important up for election is that of Senator . Both senatorial candidates are very impressive and illustrious people One is a graduate of Harvard Law School , the other of Yale Law School . The Democratic , or liberal , candidate pursued an impressive career as an environmental lawyer before being elected to a position as mayor of one of the leading cities in your Republican , or conservative , candidate enjoyed an impressive career as an advisor to a number of companies before also being elected to a position as a mayor of one of the leading cities in your state . Both candidates appear to be exceptionally bright , eloquent , and dedicated to public service . In this particular campaign , they both espouse very similar views on foreign policy and social policy . In fact , the main difference between the candidates comes down to one Corporations and their Social 14

Good Corporation , Bud Corporation thing their attitude toward government regulation of business , and of large corporations in particular . The Democratic candidate , citing recent examples of fraud , pollution , and layoffs at major corporations , is calling for tighter regulation of corporations . The Republican , citing the importance of the business sector as a major taxpayer and creator of jobs , calls for a loosening and reduction of government regulation of business . Your friend does not know who to vote for , but believes that she should decide on the basis of the single issue on which the candidates differ the regulation of business . Your friend asks for your advice . You are therefore asked to develop the strongest reasons for supporting one of the following two possible responses Position Jane should vote for the Democratic candidate . Possible Arguments ' It is better to maintain tight regulation of businesses and corporations , given their propensity to cause or contribute to social ' Corporations are able to lobby governments to shield themselves from ' Corporations are able to attain more power and than citizens . Negative Position Jane should vote for the Republican candidate . Possible Arguments ' It is better to liberate businesses and corporations from onerous and expensive government ' Corporations are major employers and ' Corporations can undertake enormous projects beyond the scope of small business or ' Corporations stimulate research and innovation . Readings The readings below are meant only to stimulate your thinking about possible to take on corporations . Please supplement them with your own research . The Corporation as a Psychopathic Creature , joel . Business as Usual , in Pursuit of and Power , New Simon and , 2004 . joel . in Pursuit of and Power , New Simon and , Business leaders today say their companies care about more than profit or loss , that they feel responsible to society as a whole , not just to their shareholders . Corporate social responsibility is their new creed , a corrective to earlier visions of the corporation . Despite this shift , the corporation itself has not changed . It remains , as it was at the time of its origins as a modern business institution in the middle of the century , a legally designated person designed to valorize and invalidate moral concern . Most people would find its personality abhorrent , even psychopathic , in a human being , yet curiously we accept it in society most powerful institution . The troubles on Wall Street today , beginning with spectacular crash , can be blamed in part on the corporations institutional character , but the company was not unique for having Corporations and their Social 15

Good Corporation , Baal Corporation I that character . Indeed , all publicly traded corporations have it , even the most respected and socially acceptable . As a psychopathic creature , the corporation can neither recognize nor act upon moral reasons to refrain from harming others . Nothing in its legal makeup limits what it can do to others in pursuit of its ends , and it is compelled to cause harm when the benefits of doing so outweigh the costs . Only pragmatic concern for its own interests and the laws of the land constrain the corporations predatory instincts , and often that is not enough to stop it from destroying lives , damaging communities , and endangering the planet as a whole . Far less exceptional in the world of the corporation are the routine and regular harms caused to , consumers , communities , the corporation psychopathic tend to be viewed as inevitable and acceptable consequences of corporate in the coolly technical jargon of economics . An externality , says economist Milton , is the effect of a transaction a third party who has not consented to or played any role in the carrying out of that All the bad things that happen to people and the environment as a result of corporations relentless and legally compelled pursuit of are thus neatly by economists as , other peoples problems . Costs US Economy 353 Billion per Year Young , Ryan . costs US economy billion per year . Daily Caller . Lax ! 27 , 2012 . Transparency is the lifeblood of democracy . Washington needs more of it , in the world of regulation . The Environmental Protection Agency ( for example , is the most expensive federal agency . Its annual budget is fairly modest in Beltway terms , at a little less than 11 billion , but thats not where the vast majority of its costs come from . Complying with regulations costs the US economy 353 per than 30 times its to the best available estimate . By way of comparison , that is more than the entire 2011 national of Denmark ( 332 ) and Thailand ( 345 billion ) In the last edition of the Unified Agenda , the fall 2011 edition , the had 318 rules at various stages of the regulatory process . Nobody outside the agency knows how many rules it currently has in the pipeline . All in all , rules appeared in the Winter Agenda from . Over the same period , final rules were in the means more than final rules , which have the force of law , came into effect without first appearing in the Unified Agenda . This could indicate an important transparency problem . Thats just the annual of regulations . The agency has existed for more than 40 years . How many total rules does it currently have in effect ?

Again , the answer doesn come from the agency . Earlier this year , the Center Omar and Patrick ran text searches through the entire Code ( for terms such as shall , must , prohibited , and the like . The Title covering environmental protection alone contains at least regulatory number could be as high as Justice Louis correctly believed that sunshine is the best disinfectant . With high regulatory costs contributing to a stagnant economic recovery , it is well past time to Corporations and their Social 16

Goad Corporation , Bad I shine more light on regulatory agencies . Annual agency report cards would make a good start . Press Release from the US Consumer Product Safety Commission Consumer Product Safety Commission . Port Surveillance News Find , Stop Nearly Unsafe Products at the Start of Fiscal Year News Release . April , 0000 . Investigators Stop Nearly Unsafe Products Investigators with the US Consumer Product Safety Commission ( prevented more than half a million violative and hazardous imported products from reaching the hands of consumers in the quarter of year 2012 . Working with US Customs and Border Protection ( agents , port gators successfully consumer products that were in violation of US safety rules or found to be unsafe . and teamed up to screen more than imported shipments at ports of entry into the United States . As applicable , these screenings involved use and abuse testing or the use of an ( analyzer . Their efforts prevented more than units of about 240 different products from reaching consumers , between October , 2011 and December 31 , 2011 . Topping the list of products stopped were children products containing levels of lead exceeding the federal limits , toys and other articles with small parts that present a choking hazard for children younger than years old , and toys and articles with banned . In addition to violative toys and other children products , items stopped at import included defective and dangerous hair dryers , lamps , and holiday lights . We mean business when it comes to enforcing some of the toughest requirements for children products in the world . If an imported product fails to comply with our safety rules , then we work to stop it from coming into the United States , said Chairman Inez . Safer products at the ports means safer products in your During fiscal year 2011 , inspected more than product shipments at the ports nationwide and stopped almost million units of violative or hazardous consumer products from entering the stores and homes of US consumers . has been screening products at ports since it began operating in 1973 . In 2008 , the agency its efforts with the creation of an import surveillance division . Costs of Air Pollution in the US . Taylor , Timothy . Costs of Air Pollution in the , blog ) November , 2011 , What costs does air pollution impose on the economy ?

Nicholas Muller , Robert , and William tackle that question in the August 2011 issue of the American Economic Review . Total gross external damages the six criterion air Corporations and their Social 17 Good Corporation , Bad Corporation ants in dioxide , nitrogen oxides , volatile organic compounds , ammonia , particulate matter , and coarse particulate 182 billion . Since was about trillion in 2002 , the cost of air pollution was a bit under of the total . The effects included in the model calculations are adverse consequences for human health , decreased timber and agriculture yields , reduced visibility , accelerated depreciation of materials , and reductions in recreation services . The sectors with the biggest air pollution costs measured in terms of gross external damages ( GED ) counting the same six pollutants but again not counting carbon ) are utilities , forestry , transportation , and manufacturing . If one looks at the ratio of gross economic damages to in the sector , forestry and utilities lead the way by far with ratios above . Manufacturing has fairly high gross external damages , but the VA ratio for the sector as a whole is only . To me , a lesson that emerges from these calculations is that the costs of air tion and of burning fossil fuels are very high , both in absolute terms and compared to the of certain industries , even without taking carbon emissions into account . Environmentalists who are discouraged by their inability to persuade more people of the risks of climate change might have more luck in reducing carbon emissions if they that instead focused on the costs of these pollutants . America borne of ix being by excessive and badly written . February , Synthesis Questions The most productive discussions and debates are those that open our eyes to different perspectives and different ways of thinking . While we may not change our initial opinions , we may emerge with an enhanced understanding of the perspectives of others , or of the complexity of a particular issue . So we suggest that at the end of each chapter you answer a few questions in a way that allows you to synthesize your discussions and bringing together the strongest parts of each side of the as to arrive at a deeper , more nuanced understanding of the issues involved . Clearly , the ethical role of corporations is a vast , complex topic and allows for a great of . Here are three initial for further . Are corporations on the whole good for society ?

Do you personally like or distrust corporations ?

Why ?

How should society regulate corporations ?

Corporations and their Social 18 , Bad . Sarah Anderson and John , Top 200 The Rise Global Power , Polity , December , accessed December , 2014 , top 200 the rise of corporate global . 25 US Mega Corporations Where They Rank If They Were Countries , 27 , 2011 , accessed December , 2014 , Steven , Two Can Play the Airline Bankruptcy Game , Part , 28 April 2012 , accessed November 28 , 2014 , The Lauder Companies Breast Cancer Awareness Campaign , accessed November 28 , 2014 , Norway Outlaws Green Cars , September 11 , 2007 , accessed December , 2014 , US Senator Patrick , The of the Bush Record on the President Earth Day Visits to Maine and Florida , statement on the Senate , Washington , April 26 , 2004 ) See Sebastian Bailey , Business Leaders Beware Ethical Drift Makes Standards Slip , May 15 , 2013 , accessed December , 2014 , Corporations and their Social 19