The aim of this paper is to show to what extent companies have an interest in social engagement and whether this actually conflicts with the pursuit of profit maximization.
"There is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."
This quote comes from the American economist and later Nobel Prize winner Milton Friedman, with his statement he limited the responsibility of the company to only one function, the profit maximization. For Friedman, the social commitment of a company contradicted the goal of every economic company to maximize profits. From his point of view, corporate social responsibility meant that companies act fairly towards their stakeholders on the free market. This raises the question of the extent to which companies have scope to implement Corporate Social Responsibility measures and to what extent these measures and their effects can be evaluated.
Table of contents
List of figures
1. Introduction
2. Definition CSR
3. Implementation of CSR and motives
4. Implementation of CSR as an example of Zalando
5. Conclusion
Bibliograpahy
List of figures
Figure 1 Triple Bottom Line
1. Introduction
„There is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.“1
This quote comes from the American economist and later Nobel prize winner Milton Friedmann2, with his statement he limited the responsibility of the company to only one function, the profit maximisation. For Friedman, the social commitment of a company contradicted the goal of every economic company to maximise profits. From his point of view, corporate social responsibility meant that companies act fairly towards their stakeholders on the free market. This raises the question of the extent to which companies have scope to implement CSR measures and to what extent these measures and their effects can be evaluated.
Corporate Social Responsibility (CSR) is not a new topic, but it is becoming more and more important due to social pressure and increasing competition in the market. The concept of sustainability is increasingly becoming a prerequisite for economic trade, as climate protection has become an everyday topic in people's minds. This topic will only intensify in the future and will present companies with special challenges. The aim of this paper is to show to what extent companies have an interest in social engagement and whether this actually conflicts with the pursuit of profit maximisation.
The work is divided into 5 parts. At the beginning it is discussed what CSR is in detail, in point 3 it is explained which options are available to companies to implement a good CSR programme. In particular, chapter 4 deals with how Zalando has handled this topic. Finally, the results are evaluated and the initial hypothesis is taken up again.
2. Definition CSR
There is no uniform definition of the term “corporate social responsibility”. Milton Friedman, the economist quoted at the beginning, also believed that "The social responsibility of business is to increase is profit."3 However, this opinion is not supported by the definition of CSR by the European Commission. Nowadays, they see the responsibility of companies from a broader perspective. Ecological aspects are becoming more and more important due to climate change. The European Commission summarized the term CSR as a guiding principle for companies, which should serve to integrate social and ecological aspects of society and stakeholders into their business activities.4
3. Implementation of CSR and motives
In the course of globalisation, the majority of companies have relocated their production abroad in order to save costs and maximise profits. One consequence of this relocation is the loss of control. Companies hire third parties to regularly control them abroad, but it is still very limited. Companies must be able to rely on their business partners to ensure that they comply with health and safety regulations.
The aim of this chapter is to show how companies can systematically develop an individual CSR programme. The concept, which should help with this decision, is divided into five steps. In order to analyse Friedman's initial hypothesis, it is also necessary to consider what motives exist for companies to decide on a CSR programme.
In order to determine a suitable program, the company must first become aware of the goal of social engagement. What motives does the company pursue with the measures? The next step is to identify the target group in order to make a strategic adjustment to them. In the third step, the company must consider how it wants to advertise these measures on the market. In addition, point four deals with the detailed design of CSR measures, whereby care must be taken to ensure that the company and its intentions are credible. In the final step, the company must ensure that the productivity of the measures can be permanently monitored.5
The triple bottom line can be described as the foundation for the development of CSR goals. In this model, which was presented by the Brundtland Commission in 1987, the three pillars of corporate social responsibility are constructed. The first pillar stands for economic, the second for ecological and the third for social responsibility towards society. Ecological sustainability means a sustainable use of resources by using them only to the extent that they regenerate. Economic sustainability involves an economic approach that can be pursued on a long-term basis. A society should therefore not live beyond its resources, as this would result in losses for future generations. Social sustainability means that the organisation of a society should be so well organised that conflicts do not end in escalation, but are settled in a peaceful way. Only when a company takes on all these areas of responsibility it can call itself sustainable. Because if a company acts from purely economic intentions, it cannot meet its social and ecological requirements. On the other hand, a pure focus on social and ecological aspects without taking economic aspects into account cannot allow a company to survive on the market in the long term.6 The dependence of the three factors is illustrated in the following illustration.
Figure 1 Triple Bottom Line
Abbildung in dieser Leseprobe nicht enthalten
Source: Elkington (1997)7
From this, further motives for the companies can be divided into four main motives. On the one hand, there are ecological motives, the main focus of the company is on maximising profits. Accordingly, the company's CSR measures are primarily aimed to this goal. This motive corresponds to Friedman's initial hypothesis, in which he affirms that responsibility of companies towards society is limited to the maximisation of profits.8
Management-related motives are based on the interest in optimising relations with the various stakeholders, including business partners, employees, customers and suppliers and also society. CSR thus serves to strengthen the social integration of the company. In terms of the political motives, the core idea is that companies hope to gain social acceptance through CSR measures. This motive includes the approach of corporate citizenship, which reinforces the desire of companies to be part of society. The fourth group of motives, the ethical motives, includes the approaches of business ethics, sustainability and codes of conduct. The aim of the companies is to act ethically correct towards the environment and society. This primarily involves the observance of human rights and investment in environmental protection.9
4. Implementation of CSR as an example of Zalando
As an example of successful action management with regard to CSR, I would like to mention the mail-order company Zalando. It was founded in 2008 and is one of the largest online mail order companies in Germany with approx. 15,000 employees operating throughout Europe and an annual turnover in 2019 of approx. 6.48 billion Euros. Zalando employs staff who are committed to ensuring that these guidelines are observed. Various guidelines have been developed specifically for this purpose.10 There is a code of conduct, a code of ethics, an annual modern slavery statement and ethical sourcing standards. In the following I will go more into detail about the Code of Conduct and the Code of ethics.
On the one hand, there are the "Codes of Conduct", which contains guidelines relating to working conditions, environment, health & safety and fair & ethical business. Main aspects of the "Codes of Conduct" are that the working conditions are morally acceptable, i.e. no forced and prison labor, as well as slavery labor are prohibited. For child labor there is also a requirement that business partners should support children in their education and may only hire them when they reach adulthood. Other important points with regard to working conditions are anti-discrimination and disciplinary practices and, this means that nobody is disadvantaged because on the base of race, caste, union membership, social and national origin, color, gender, age, disability, political or sexual orientation. Further specific regulations which must be observed, such as the working hours of a maximum of 48 hours per week and no more exceptional overtime of 12 hours per week. Another point is employment, which contains that employees are bound by their contract. Compensation is about fair remuneration of employees. And lots of other points regarding the protection of the human being.11
The “code of ethics” is internal, aimed at employees. The guidelines in this code relate to the respectful treatment of each other and to compliance with legal standards in everyday work. The most important points are anti-corruption, data protection, antitrust and insider compliance.12
[...]
1 Friedman, M., http://umich.edu/~thecore/doc/Friedman.pdf, accessed 16/05/2020
2 see: Wikipedia, Milton Friedman, https://de.wikipedia.org/wiki/Milton_Friedman, accessed 16/05/2020
3 Friedman, M., http://umich.edu/~thecore/doc/Friedman.pdf accessed, 16/05/2020
4 see: European, http://www.csr-kompetenz.de/fileadmin/dokumente/CSR_TRAINING_DE.pdf, accessed 16/052020
5 see: Dinh, H.V.D. :Corporate Social Responsibility- Determinanten der Wahrnehmung, Wirkungsprozesse und Konsequenzen, Gabler Verlag, 1st edition 2011 Wiesbaden, p. 220- 240
6 see: Fischbach, B, Ksiezak, P.: Triple Bottom Line: The Pillars of CSR, https://www.researchgate.net/profile/Barbara_Fischbach/publication/325599995_Triple_Bottom_Line_The_Pillars_of_CSR/links/5c2dc49492851c22a3566c65/Triple-Bottom-Line-The-Pillars-of-CSR.pdf?origin=publication_detail, accessed 20/05/2020
7 see: ResearchGate, https://www.researchgate.net/figure/The-Triple-Bottom-Line-Model-Source-Elkington-1997_fig2_318215853 accessed 16/05/2020
8 see: Friedman, M., http://umich.edu/~thecore/doc/Friedman.pdf accessed 16/05/2020
9 see: quoted Matten, D. (2006) in Dinh, H.V.D.: Corporate Social Responsibility- Determinanten der Wahrnehmung, Wirkungsprozesse und Konsequenzen, Gabler Verlag, 1st edition 2011 Wiesbaden, p. 220- 240
10 see: Zalando, Code of Ethics, https://corporate.zalando.com/sites/default/files/media-download/Zalando-SE_Code-of-Ethics.pdf, accessed 20/05/2020
11 see: Corporate Communications Zalando, Code of Conduct, https://corporate.zalando.com/sites/default/files/media-download/Zalando%20SE_Code%20of%20Conduct.pdf, accessed 20/05/2020
12 see: Zalando, Code of Ethics, https://corporate.zalando.com/sites/default/files/media-download/Zalando-SE_Code-of-Ethics.pdf, accessed 20/05/2020
- Quote paper
- Alina Böhm (Author), 2020, The Social Responsibility of Businesses. The Example of Zalando, Munich, GRIN Verlag, https://www.grin.com/document/922408
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