What is CSR?

Why is it important?
MGMT 2130
Business Ethics and Social Responsibility
Yong H. Kim
Note: I’ll start the class with making 2-3 announcements.

©2020 All rights reserved. Yong H. Kim 1

What is CSR?
What is the purpose of the for-profit firm?

• What is the relationship between a firm

and the societies in which it operates?
• What responsibility does a firm owe
society to self-regulate its actions in
pursuit of profit?

©2020 All rights reserved. Yong H. Kim 3

1
Archie B. Carroll’s pyramid of CSR

©2020 All rights reserved. Yong H. Kim 4

What is CSR?

A working definition of CSR for this course

A responsibility among firms to meet the

needs of their stakeholders and
a responsibility among stakeholders to
hold firms to account for their actions

©2020 All rights reserved. Yong H. Kim 5

2
Why is CSR important?
Different arguments for CSR
• Examples:
• Ethical argument
• Economic argument

©2020 All rights reserved. Yong H. Kim 6

Why is CSR important?

• An ethical argument for CSR:

CSR is an argument based on two
forms of ethical reasoning--
consequentialist (utilitarian) and
categorical (Kantian).

©2020 All rights reserved. Yong H. Kim 7

3
Why is CSR important?

• An economic argument for CSR:

CSR is an argument of economic self-

interest for business.

©2020 All rights reserved. Yong H. Kim 9

Why is CSR important?

• An economic argument for CSR:

CSR adds value because…

©2020 All rights reserved. Yong H. Kim 10

4
 The Business Roundtable
What are the key differences between
BRT’s 1997 Statement and 2019
Statement?

©2020 All rights reserved. Yong H. Kim 13

Raghunandan and Rajgopal’s WSJ aritlce

https://www.wsj.com/articles/is-there-real-virtue-behind-the-business-roundtables-signaling-11575330172

Do you really believe corporations are

moving toward stakeholder theory?

[optional] Does knowing about other

peoples’ views on stakeholder theory
change your view?

©2020 All rights reserved. Yong H. Kim 14

5
Karnani’s WSJ article
https://www.wsj.com/articles/SB10001424052748703338004575230112664504890?st=j4dhj7dhwbf8pg8

Why does the author say the pleas for

corporate social responsibility are pointless?

Why does the author disagree with other

alternatives aimed at constraining corporate
behavior that reduces social welfare?

©2020 All rights reserved. Yong H. Kim 15

Why is CSR important?

Case Study

©2020 All rights reserved. Yong H. Kim 16

6
The Wells Fargo Cross-Selling Scandal

©2020 All rights reserved. Yong H. Kim 17

The Wells Fargo Cross-Selling Scandal

• In 2013, rumors circulated that Wells Fargo
employees were engaging in aggressive tactics to
meet their daily cross-selling targets.
• In September 2016, Wells Fargo announced that it
would pay US$185 million to settle a lawsuit,
admitting that employees had opened as many as 2
million accounts without customer authorization
over a five-year period.
• Optional reading:
https://papers.ssrn.com/sol3/papers.cfm?abstract_
id=2879102

©2020 All rights reserved. Yong H. Kim 18

7
The Wells Fargo Cross-Selling Scandal
• Dirty Money Series: S2E1 The Wagon Wheel
• Subject to Netflix’s terms on one-time educational
screening
• Zoom recording will pause
• For students who are registered to the class after
today’s class: office hours on Sep 25

©2020 All rights reserved. Yong H. Kim 19

The Wells Fargo Cross-Selling Scandal

• As you watch the documentary, please think about:
(for future weeks, especially weeks 3 & 4)

• Who fulfilled their responsibilities? Who did not?

• Were all stakeholders hurt? Were there any

stakeholders benefitting from this unauthorized
cross-selling?

©2020 All rights reserved. Yong H. Kim 20