5A. Actor Paul Newman Sets the Standard in Corporate Social Responsibility
In 1982 Newman's Own, Inc. began with Mr. Newman's famous Oil & Vinegar Salad Dressing. Newman's Own now offers an expanded line of salad dressings, pasta sauces, popcorn, lemonade, ice cream, and steak sauce.

... he gives away all profits, after taxes, from the sale of the products to educational and charitable organizations, both in the U.S. and foreign countries where his products are sold.

Over 1,000 charities have received donations from Paul Newman as a result of the sale of Newman's Own products worldwide. $100 million has been donated since 1982.

Excerpted from "The Legend of Newman's OwnŽ," http://www.newmansown.com.

Questions: Are you inspired by this case of corporate social responsibility? Explain. Should we be asking for more from our corporations and ourselves? Explain.

For further information about the interactive annotations in this chapter, visit our Web site (/business/kreitner/management/9e/students/annotations).

Author Notes 5-A: Actor Paul Newman Sets the Standard in Corporate Social Responsibility I remember when the Newman's Own brand started. It was an amusing sideline from a well-respected but definitely nontraditional actor. There were a lot of jokes, but no one expected the company, or Newman's interest, to last. Well, they now carry Newman's salad dressing at Costco, and there are probably a number of younger people who think of Paul Newman as a guy who owns a food company rather than a great foil for Robert Redford. While it's not reasonable to expect the average company to give away all its post-tax profits--this is a sure way to lose shareholders fast--there seems to be some evidence that companies that operate as good corporate citizens can also be successful. I think we should reward those companies that are committed to doing more than making money by buying things from them. As for Paul Newman's company, as the firm grew, he really didn't have to stick to his original plan to give all the post-tax profits away, but he did, and it is inspiring. Almost as inspiring as those baby blues of his.

5B. Jack Speaks
General Electric's recently retired CEO, Jack Welch, when asked "How do you define 'social responsibility'?":

Win. By winning, being highly profitable. Only then can you be a socially responsible company. If you are worried about your job, you can't give anything back.

As quoted in Del Jones and David Kiley, "Welch Gives Book Launch Another Try," USA Today (October 22, 2001): 7B.

Questions: How does this align with the distinction between the classical economic and socioeconomic models of business? Do you agree or disagree with Welch? Explain.

Author Notes 5-B: Jack Speaks Welch is definitely a believer in the classic economic model of business. If there was no profit in it, he couldn't see a reason to do it. During his tenure at GE, the stock shot up at an unprecedented rate and continued to hold and grow beyond expectations. At the same time, GE old-timers talked about the exciting innovative programs for the future that Welch squelched in his near-term drive for stock appreciation. I think Welch underestimates the capabilities of companies. There's no denying that a company first has the responsibility to stay in business and support its employees and shareholders. But if it is no more than that, it's a sad company, no matter how successful it looks on paper.

5C. Back to the Opening Case
Which arguments for and against corporate social responsibility are evident in this case? Explain with specific examples.

Author Notes 5-C: Back to the Opening Case Jim Rogers seems to be one of the few in the electric industry that is willing to admit the truth of the situation--something is going to have to be done about CO2 emissions. The other energy companies seem to be taking the same strategic approach taken by the cigarette manufacturers--hold off the inevitable as long as possible. They have the "give them an inch" philosophy, and they could be right, but on the other hand, they've never willingly given an inch. Rogers is the only one who sees the shortsightedness of this route. Better to work with the people who are going to be there anyway--make it work for everyone as well as possible, and get on with running your company. In this situation, the case for corporate responsibility resonates with good sense. It seems that the other electric companies are running too scared to see it.

5D. Back to the Opening Case
Which of the four social responsibility strategies are evident in this case? Explain.

Author Notes 5-D: Back to the Opening Case Jim Rogers seems to be somewhere between an Accommodation and a Proaction strategy. I'm not convinced that he would be tackling this situation as willingly if he thought he had a choice in the long run. However, unlike his reactive counterparts, once he saw the handwriting on the wall, he has jumped in and taken as proactive approach to the situation as possible--to the point that he seems to be unnerving the other electric companies. Brave guy!

5E. Back to the Opening Case
What role, if any, does enlightened self-interest play in this case? Explain.

Author Notes 5-E: Back to the Opening Case Enlightened self-interest plays a fairly significant part. By cooperating with the environmentalists, lobbying money and time is saved, and as Rogers points out, not knowing what's going to be in store in terms of environmental regulations is actually harder to work with than a plan that is less than ideal. For Rogers, this also gives him a chance to look like a far-sighted and fair CEO, who really cares about the environment even as his company helps to pollute it. Of course, I don't really care about the reasons for his stance, as long as it helps the environment in the long-run.

5F. A Bad Case of "Enronitis"?
Survey results:

Half of adults say the practices of top Enron executives are the norm for at least some other large corporations. And one-fourth say they're the norm for most.

Thomas A. Fogarty, "Poll Find Many Think Other Execs Act Like Enron's," USA Today (February 12, 2002): 1B.

Questions: What is your general opinion about the present state of business ethics? Explain. What needs to be done to improve business ethics?

Author Notes 5-F: A Bad Case of "Enronitis"? I think most companies aren't as bad as Enron, but many aren't as good as we'd like to think they are either. I don't think it is as easy to get to the top if you're honest and ethical as it is if you're willing to compromise your values. It's kind of a self-select process. Are you enough of a street fighter to be a top manager? If not, find yourself a good berth in middle management and go home to your family at night with a clean conscience. At the same time we read about the Enron disgrace, we're reading about on-campus cheating, and how many teachers and schools don't do anything about it for fear of litigation, which appears to be justified. Have you ever cheated in school? Do you know others who have? Ask yourself, if someone would compromise their honor to get a better grade on a test, how much more likely are they to compromise to get ahead, make more money, even become the CEO. If you want business ethics to improve, you've got to start at the beginning, with today's students who will be running the Enrons of tomorrow.

5G. Where Do You Draw the Line?
Kevin Gibson, philosophy professor, Marquette University:

Morality is not a question of counting heads, and opinion polls do not reflect moral correctness. The fact that most people in a company feel that mocking obese coworkers is morally acceptable will not make it morally correct.

Kevin Gibson, "Excuses, Excuses: Moral Slippage in the Workplace," Business Horizons, 43 (November-December 2000): 67.

Questions: What instances of the majority being morally wrong have you observed lately? Do you have the courage to act on your convictions, or do you pretty much just go along with the crowd to avoid being seen as a troublemaker? Explain.

Author Notes 5-G: Where Do You Draw the Line? There's the quote--I'm not sure where it's from--that goes something like, "They came for the Jews, but I was not Jewish, so I said nothing. Then they came for the Catholics, but I was not Catholic, so I said nothing. . . ." It goes on and ends ". . . Then they came for me, and by then there was no one left to speak up for me." Were you a schoolyard bully? Or did you just look the other way, like the person in this quote? You may say that the situations are different--but I say that if you don't have the courage to stand up for others when you know it's right in the schoolyard or in the workplace, then you would stay quiet if people were being taken away on trains.

5H. Does God Belong in the Workplace?
Gregory F. A. Pearce, author of the book Spirituality@Work:

Why would we want to look for God in our work.... The simple answer is most of us spend so much time working, it would be a shame if we couldn't find God there. A more complex answer is that there is a creative energy in work that is somehow tied to God's creative energy. If we can understand that connection, perhaps we can use it to transform the workplace into something remarkable.

As quoted in Marc Gunther, "God & Business," Fortune (July 9, 2001), 61.

Questions: Is it time to change the traditional practice of keeping spirituality out of the workplace? Explain. What implications does your answer have for business ethics?

Author Notes 5-H: Does God Belong in the Workplace? The Shakers were a group of people who made their religion a way of life. Living, working, and worshiping were conjoined. Most people remember the Shakers for their ban on sex. However, most people don't understand the reason for that was to create a situation where men and women could work together equally and serve God in their own ways. A visit to a Shaker village helps to understand the peace they found in their world. God was in that workplace, and it worked. But we are not Shakers, sharing the same faith. For myself, I am uncomfortable with the idea of combining spirituality and the workplace. This would not be my choice. Spirituality is too personal to share with others in a work situation. I am also very uncomfortable with the implication that those who say they believe in God have a corner on being good, ethical, kind, etc. Ethics aren't about God. Ethics are about the person you choose to be.

5I. An Uphill Battle?
After a study of the ethical principles and ethical behavior of 674 business students at a U.S. university, a pair of researchers drew this rather somber conclusion:

While ethical behavior can be taught to our business students in the classroom, their resolve will be challenged on the job. Faced with pressure from above, platitudinous ethical codes, spotty enforcement, and no discernible link to the reward system, many will revert to expedience.

News item:

When San Diego State University instructor Brian Cornforth received an anonymous tip in March that students were cheating in his undergraduate business-ethics course, he decided to make a case study of his own class. The tipster said students in one class had obtained answer keys for the multiple-choice quizzes from earlier test-takers, so Cornforth scrambled the questions for the later class. "I was horrified," Cornforth says: 25 of 75 students simply cribbed the pirated test key, even though many answers were clearly nonsense. Punishment came swiftly. He flunked all 25, and several management majors won't graduate until they retake the required course. "Students really want that piece of paper and apparently they are willing to do anything to get it," says Julie Logan, the school's judicial officer.

Larry R. Watts and Joseph G. Ormsby, "Ethical Frameworks and Ethical Behavior: A Survey of Business Students," International Journal of Value-Based Management, 73, no. 3 (1994): 233; and Jamie Reno, "Need Someone in Creative Accounting?" Newsweek (May 17, 1999): 51.

Questions: Is it a waste of time to teach business ethics to college students? Explain. How can colleges and universities do a better job of improving business ethics? What does the business community need to do to improve ethics in the workplace?

Author Notes 5-I: An Uphill Battle? The ethical decision is rarely the easiest decision. Challenges to a person's ethics can range from a cashier giving you too much change to a choice between perjury or going to jail for life. We would all like to think that when a tough decision faces us we will do the "right thing." However, consider the number of students who have cheated on an exam, the number of consumers who have shoplifted, even the number of drivers who have thrown away a parking ticket--it's not easy to behave ethically when the pressure is simply saving money or getting a better grade on a test. What if the pressure involved losing your job or possibly even destroying your career? Does teaching ethics in business school make a difference? Probably not to everyone, but it might to a few. Given that, it's probably worth doing. However, when faculty and administrators don't hold students to high standards of ethics in the classroom, and companies don't hold employees to high standards of ethics in the workplace, individual standards will slip. Teaching ethics isn't enough. Ethics has to be lived. The rules need to be spelled out, with consequences that are real, easily understood, and always enforced. If I were the decision maker for San Diego State University, I would expel all 25 students. I wouldn't want students graduating from my University that are proven cheaters. Too harsh? If they had experienced serious consequences for cheating in grade school, maybe they wouldn't be pulling that **** in college. It's wrong. End of story.