What Makes a Business Virtuous

By Kelsey Sampson

Although it is highly important for businesses to have corporate social responsibility programs, it is inadequate if the core business does not cover their more basic responsibilities. 

Cotopaxi's "Do Good" mission is at the heart of their CSR

Corporate social responsibility (CSR) is any business action that addresses widespread social, community, environmental, or other issues by utilizing company resources (usually in the form of profits). Especially in the 21st century, the emergence of CSR programs in more businesses has led individuals to question what the role of business should be in approaching social issues. There has also been a push businesses to address more basic responsibilities, such as diversity in the workplace or minimizing their carbon footprint.

First, a case for corporate social responsibility:

Although I will argue that only having a CSR program is inadequate, first it should be understood that CSR programs are something that should be happening within businesses. This is for three main reasons:

      1. There is an undeniable need.

Inequality shown through 2 housing developments

When I was 10 or 11, I went to Mexico for the first time. One afternoon, my dad took my family from the tourist-populated area of Mexico to a city several miles away. What I saw there dazed me. The houses were falling apart, the streets were lined with garbage, but what shocked me the most was how desperate the people seemed to get us to buy the trinkets they offered us. As a Utah born-and-raised kid, I had no idea that such inequality could exist. This experience, along with several others throughout my life, has helped me see the need for those with the power to do so to help alleviate poverty.

During the Enlightenment, many thinkers began to perpetuate a theme of human rights including the right to equality. Jean-Jacques Rousseau pondered inequality much like that found in Mexico in his Discourse on Inequality. He argued that man began in a state of inequality, but they became unequal as they learned skills and had more frequent contact with other humans. This perpetual inequality, as discussed by Rousseau, creates a deep need for individuals to be helped to improve their own living conditions.
 
      2. Many individuals have the resources to help.

This idea of specialization and competition discussed by Rousseau is at the heart of capitalism. Capitalism was first introduced by Adam Smith in The Wealth of Nations. In this book, Smith argues that “man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only... It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love.”

Ironically, the system that touts that individuals only have to look after their own interest is what gives so many individuals the means to be more invested in the social welfare of others. Capitalism has created a lot of profitability for a lot of businesses, giving businesses the opportunity to take on that role as social welfare catalysts. As Capitalism: A Very Short History points out, “capitalist societies will certainly have to deal with growing problems in the future, but their diversity and capacity to change will provide opportunities to reform.” This source of this reform can be businesses stepping up to the plate and creating much-needed social innovation throughout the world.

      3. It builds the ethos of the company as they effectively communicate their impact.

Milton Friedman, a highly recognized economist, argued that give-back programs go beyond the scope of what businesses should be. He stated that “there is one and only one social responsibility of business to use its resources… [and that is] to increase its profits… without deception or fraud.” Anything beyond that, Friedman argues, is the wrong way to do a good thing.

What Friedman fails to acknowledge, however, is that despite the fact that CSR programs usually involve giving large amounts of money away, these programs often actually increase shareholder wealth. Consider this example. Cotopaxi, an outdoor clothing store, gives 1% of all its profits to alleviate poverty. As a Cotopaxi customer, I can go to their website and view their poverty-alleviating efforts through stories, pictures of the kids they help, and statistics on the impact they are having. This makes me view them as a compassionate, trustworthy, and ethical company because I know that they are using their profits to do good, and that perception held by many people like me creates a strong positive ethos of the company that attracts a lot of customers. Furthermore, Cotopaxi publishes online that they insure that the workers in their factories are treated fairly, which makes customers feel even better about buying Cotopaxi clothing. In short, because they have a socially responsibility program and because they effectively communicate that program's impact with multiple types of media online, Cotopaxi creates a company ethos that brings them more customers and greater profits than they would have had otherwise.

With that said, just having a CSR program is not enough. 

Vivint employees volunteer through a CSR program

It is not uncommon for companies to have a less-than-virtuous core business, but then “make up” for their practices by ingenuinely throwing money at a social cause. This insufficient response to poor businesses practices can be understood through an airplane metaphor. While flying, flight attendants giving safety instructions always remind the passengers, “before you assist others, always put your oxygen mask on first.” The difference between CSR and a core virtuous businesses can bet thought of in a similar way. It is good for companies to help people outside of their normal business scope, just as it is good for individuals to help others apply their oxygen mask. However, just as one as to apply their own mask first, companies need to focus on their core business before they take it a step further and help those beyond their normal businesses practices.

This past year I have worked with individuals at BYU who are creating classes, books, conferences, and a business supporting this idea of making business more virtuous. We have conducted a lot of research to support the notion that CSR programs are not enough; businesses need to be good by simply existing. This positive existence should include a product mix should have positive effects on the world; for example, a cigarette company cannot "compensate" for their products by having a give-back program. Moreover, virtuous basic business practices should include non-permanent environmental practices, paying men and women equally, honest financial interactions, and so on.

This idea of demanding better basic businesses practices is not one that is new to the 21st century. As industrialization became a more prevalent theme in the late 18th century, workers’ unions began to emerge. Capitalism and industrialized markets were largely raising the standard of living for individuals, but as business became more of a machine to pump out as many goods as possible, individuals in the workplace faced unfair conditions. Many individuals worked long hours, received unfair wages, and did not have a lot of safety on the job. Thus, workers’ unions were a natural reaction to those conditions. These unions demanded that their employers respect the rights, and that businesses improve their basic behavior. Similarly, today individuals are demanding more from their places of work. It is not enough for their company to simply have a CSR program; companies must first consider the more basic actions that will make businesses have a positive effect on the world.

Image credits:

• Designbloom: unequal scenes: drone photography documents stark social inequality across the world. Author: Nina Azzarello. 
• Questival: , permission requested.
• Careers at Vivint: Vivint.com, permission requested.

Video image credits: 

• Co-Impact Sourcing: doterra.com, permission requested. 
• How Vivint Gives Back Supports Autism Awareness:, permission requested.

Source credits:

• Rousseau, Jean-Jacques, 1754."Discourse of Inequality." AmericanUniversityofBeirut.org.
• Smith, Adam, March 6, 1776. "Wealth of Nations." Accessed in print. 
• Friedman, Milton, July 14, 2009. "Corporate Social Responsibility." Lucidmanager.com.
• Fulcher, James, 2004. "Capitalism: A Very Short Introduction." Accessed in print.