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The University of Nottingham Business School is now offering an MBA in corporate social responsibility.
Here is more.
Posted by Tyler Cowen on May 15, 2007 at 01:06 PM in Education | Permalink
Comments
The McIntire School of Commerce (UVA's undergraduate business program) now requires everyone to take a class that is basically CSR. Next year they will be offering non-profit management as a major.
Posted by: Chris at May 15, 2007 2:07:01 PM
the epitome of doublespeak and doublethink.
Posted by: The Tsunami at May 15, 2007 3:56:29 PM
An MBA in CSR is peculiar. CSR is a misguided attempt to force business ethics where government has lost its teeth.
As an economist might say, people respond to incentives. If you want ethics and social responsibility in business, then make the penalties for unethical and socially irresponsible behavior high.
Our present CSR practice of trying to publicly shame people and companies last only the 15 minutes mass media can spare. Some people may repent and it makes for great press, but nothing changes.
Posted by: squik at May 15, 2007 4:02:33 PM
This is pure, ironic insanity.
Posted by: Varangy at May 15, 2007 4:45:24 PM
Interesting. Seems the costs associated with corporations not being other people's personal never ending piggy bank are exceeding the benefits of not.
Posted by: Jacob at May 15, 2007 5:40:37 PM
Posted by: MiltonFriedman at May 15, 2007 5:44:26 PM
CSR = the science of using "community relations" to justify spending company funds on charities and the arts when the company doesn't have Ben & Jerry governing documents.
Posted by: jp at May 15, 2007 6:04:19 PM
What Milton Friedman (1962; Captialism and Freedom; p. 133) actually advocated was that the responsibility of business is to increase profits with important caveats:
" . . . 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."
The use of truncated versions of Friedman's ethos has been the cause of much confusion and misunderstanding. It is common for textbooks in Marketing and Management to state that he advocated that business "engage in activities designed to increase its profits." (end quote) Advocates of the so called "stakeholder theory" of CSR are particularly prone to this error. The stakeholder approach is at best superfluous to Friedman's (when the only stakeholder group is stockholders), and at worst is a path to mangerial chaos and/or corruption.
Posted by: indiana jim at May 15, 2007 6:16:50 PM
indiana jim,
Thanks for pointing that out. However, if you follow the link in my previous post you'll see that 1) that is the title of "my" 1970 NY Times article. and 2) that your quote is included in the article, but it too doesn't do justice to the lengthy explanation "I" illustrated in the article.
My apologies for not pointing out that my entire previous post was a link to an article. Hopefully people will read it and not just the title.
Posted by: MiltonFriedman at May 15, 2007 6:23:30 PM
"MF",
You have a vivid imagination.
Posted by: indiana jim at May 15, 2007 8:05:58 PM
The market in deception is, as always, cyclic. Surprising to see it given such an academic gloss, but then it's only an MBA.
Posted by: Dave at May 15, 2007 10:54:16 PM
The survival of stakeholder theory in academia is because it is self-reinforcing: business execs are empowered to spend shareholder's money because "experts" in the ivory tower validate them; these experts in turn receive the financial support of business execs.
Just because an idea survives does not, however, mean that it is not like the peacock's tail, an evolutionary adaptation that narrow the niche and eventually dooms the species.
Posted by: indiana jim at May 16, 2007 9:08:35 AM
I think Friedman's principle is very poorly thought out.
First of all, why stay within the rules? Suppose the expected gain from breaking the rules is positive, that is, the expected extra profit exceeds the expected penalties. If you say that there is still an obligation to stay within the rules then you are conceding that business has obligations over and above profit maximization, and you should explain why those obligations exist, and others do not.
Second, suppose the rules are such as to permit behavior that most would agree is immoral or unethical. Let's say you have a plant operating in a country with lax or non-existent anti-pollution laws, for example. You can dump your waste in the river without breaking any laws, but this will seriously damage the health and economic wellbeing of people living downstream. Is that OK? I don't think so. I think there is an obligation to avoid doing such damage, even if it means spending money on waste treatment or the like. To claim otherwise is to claim that it is OK to kill people for money.
Posted by: Bernard Yomtov at May 16, 2007 5:39:00 PM
Yomtov,
Your argument that Milton Friedman's argument is "poorly thought out" is
poorly thought out. What you do not appreciate it that reputation,
what is called the "good will" of a corporation, matters. These issues
are so subtle, powerful and pervasive that the scenarios that you propose
are quite generally in the realm of counting the number of angels dancing
on the head of a pin.
Friedman's principle is a high standard and well thought out. It advocates
transparency about the consequences of business activities. It advocates
free and open competition (this means an active market for corporate
takeovers, which would enhance the value of corporate "goodwill".
What makes corporate misbehavior newsworthy when it happens is that it
happens so infrequently; it is a man bites dog story. Are there examples
of corporations behaving fraudulently and deceptively and in restraint
of free trade? Yes, but in any of these cases Friedman's ethos has
been violated. If his ethos had been followed the Martha Stewart scandal,
the Enron debacle, and the Tyco scandal would not have occurred.
Posted by: indiana jim at May 16, 2007 9:39:12 PM
Bernard Yomtov,
I hope after that post you don't own a combustion engine motor vehicle, nor get on a bus with one, nor use electricity that comes from sources that emit GHG's. Nor own any products made from, or transported by, such inputs. According to the "scientific consensus", if you did so you are in effect killing the planet.
Is that OK? I don't think so. I think there is an obligation to avoid doing such damage, even if it means spending money on waste treatment or the like. To claim otherwise is to claim that it is OK to kill people for money.
Or is it that corporations have responsibilities where we as real humans don't?
Alternatively, perhaps it is instead up to governments of the people to set up laws and institutions so that such killing (or other harm) doesn't occur. Certainly there is ample literature on the free rider effects of the commons that would make one think it essentially 100% impossible to not have such environmental degredation without some sort of explicit mechanism to abate such tragedies of the commons.
Posted by: happyjuggler0 at May 16, 2007 9:47:57 PM
I should point out that we don't necessarily need regulations to abate pollution, although in some cases it may come to that.
David Friedman does a good job explaining Coase's famous insight on why commons problems can often be handled with well thought out property rights instead of via MBA's in CSR.
Posted by: happyjuggler0 at May 16, 2007 10:00:48 PM
Indiana Jim,
I simply do not agree that reputation effects are strong enough to deter the kinds of behavior I discuss. On what do you base this? Do you honestly believe that a manufacturing company polluting a river in a third world country is going to suffer greatly from reputation loss? I don't. I'm sure you can cite a few examples of compnaies changing behavior, but that doesn't prove your "subtle, powerful and pervasive" description.
You should also look up "goodwill." It's an accounting term that really doesn't mean what you seem to think.
What makes corporate misbehavior newsworthy when it happens is that it
happens so infrequently;
Oh really? How do you know how often it happens? Do you think that just maybe all of it doesn't show up in the news, despite the reputation effect that you are so confident prevents it?
Happyjuggler0,
You do have a point about cars, etc. But there are questions of degree here. I think there are limits on the damage I am allowed to do, and that I need to take that damage into account in my decision-making. Friedman allows no such thinking. Just make a profit. That's it.
Certainly it is up to governments to prevent harm. But some governments are corrupt, others are ill-informed. My point dealt with the situation where the government had done a poor job of dealing with this responsibility. Do you believe that in such a case the business (or its managers if you prefer) has no obligations beyond money-making?
By the way, I'm familiar with Coase, and am by no means advocating for an MBA in CSR. I just think that Friedman's statement does not stand up well to examination.
Posted by: Bernard Yomtov at May 16, 2007 10:38:44 PM
Yomtov,
Of course you want to poo-poo reputation, but your assertion that it is not powerful and persuasive is insufficient to settle anything, unless of course you happen to be God himself.
Therefore, I recommend you do some reading and studying about the subject; you might want to start with John Lott's book, Freedomnomics. Lott makes the case time and time again (with evidence and clear reason) that REPUTATION MATTERS.
Posted by: indiana jim at May 17, 2007 8:00:24 AM
Indiana Jim,
My opinion is as good as yours. I'd say it's better, since there clearly are cases of corporate malfeasance that obviously not deterred by reputation, and I think it is safe to say there are some undiscovered ones as well. Besides, we're not necessarily talking just about massive Enron scale misconduct. There are lots of small things businesses can do that are harmful that will never be exposed.
John Lott's record does not inspire trust in the validity of his work. Sorry. But even if he has a few stories to tell, so what? Reputation matters? In some cases, yes. But why does that mean it's strong enough to overcome all else?
I don't much like the reputation argument, frankly, because it is a sort of standard libertarian fallback argument when someone worries about corporate misconduct. "Oh. They would never do THAT (shock). It would hurt their REPUTATION." A nice all-purpose magical defense. It solves everything.
Posted by: Bernard Yomtov at May 17, 2007 9:59:43 AM
Yomtov,
First you tell me that Friedman's ethos is not well thought out, because you say so.
Then I urge you to consider the power of reputation to constrain corporate misbehavior, citing John Lott's work as a starting point for you to try to educate yourself about reputation.
Then you tell me that Lott's work is flawed, because you say so. And you also resort to overgeneralizing with statements about the "standard libertarian fallback".
I am beginning to think that you are more interested in the blog-status seeking or self-congratulation (you assert that your opinion is "better" than mine), than in learning from reasoned exchange; say it ain't so, say it ain't so.
Posted by: indiana jim at May 17, 2007 11:14:53 AM
First off, companies should simply maximize their profits without breaking any laws. What about morality, you ask? Morality is ensured through (1) the setting of proper laws; (2) reputation effects.
Secondly, the government should not interfere with business. Laws should be set as loosely as possible. Regulation is bad and hampers growth (not to mention freedom). The market can be relied upon to achieve the desired optimal results (see Adam Smith and the invisible hand).
Thirdly, silly people who want to buy "fair trade" coffee, or make a big stink about the wages of the security guards who work at their university, or who want to boycott companies that use sweatshop labor -- they should be scorned and ridiculed, because obviously they do not understand any economics. What good can any of this "feel-good" activism do? They can't change the laws of supply and demand.
I hope this was helpful. Are there any questions?
Posted by: Barbar at May 17, 2007 11:21:48 PM
Reputation is very important, and John Lott's career is an excellent example to prove this point.
Posted by: Mary Rush at May 17, 2007 11:24:43 PM
I'm sorry, I misspelled my name.
Posted by: Mary Rosh at May 17, 2007 11:25:19 PM
Posted by: 鑽石 at Apr 2, 2008 8:20:55 PM
