Abstract
Through an analysis of Alfred Krupp’s 19th-century social welfare program, this chapter employs an ordonomic perspective on how morality can be employed as a factor of production. The chapter’s main argument is that corporate social responsibility (CSR) can be conceptualized as a corporate strategy of moral commitments. Such strategic commitments help to manage the relationship-based risks that arise out of social dilemma situations between the company and its stakeholders. In focusing primarily on relationship-based social risks that emerge from antagonistic cooperation, this chapter also provides an ordonomic contribution to corporate risk management.
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Notes
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The ordo-theoretical approach to economic ethics argues that the incentive properties of social institutions play an important role in implementing moral concerns. This approach to economic ethics was originated by Karl Homann. Cf. Homann (1990, 2002, 2003). Meanwhile, there are numerous publications available that specifically refer to this intellectual tradition. Cf. Habisch et al. (2008), Hirsch and Meyer (2009), Lin-Hi (2009), Lütge (2005, 2007), Schönwälder-Kuntze (2008), Suchanek (2007), Suchanek and Lin-Hi (2007), Waldkirch (2001) as well as Waldkirch et al. (2009). The “ordonomic” approach builds upon the German tradition of an “economic theory of morality” (Homann and Pies 1994) that was originally restricted in a more narrow sense to discussing matters of business and economic ethics. Ordonomics advances this school of thought to a general social and organizational theory that takes a rational-choice perspective on the analysis of interdependencies between institutions and ideas or, more specifically, on the analysis of interdependencies between social structure and semantics. For the ordonomic approach cf. Pies (2009a, b) as well as Pies et al. (2009, 2010), Beckmann and Pies (2008), Pies and Hielscher (2008, 2011).
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The pivotal importance of social dilemmas for social theory explain Buttkereit and Pies (2008). For one-sided social dilemmas and the important role of individual commitments, cf. Kreps (1990). For many-sided social dilemmas and the important role of collective commitments, cf. Bowles (2004). For a dilemma-based plea for (ethical) voluntarism, cf. Freeman (2007).
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Obviously, Krupp’s social policy also had an impact on other stakeholders, such as politicians, regulators, the media, and other companies, and it also contains other forms of commitment. For a detailed analysis of the Krupp social welfare program, cf. Hielscher and Beckmann (2009) as well as Hielscher (2010), who develop a strategy matrix of four insurance-based commitments organized by Krupp. The matrix comprises four types of commitments: individual and collective self-commitments, as well as services for individual and collective self-commitments.
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The graphical representation refers to Sinn (1988, p. 13).
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This assumption may be very close to reality because Krupp promised a high gross wage and thus was able to substitute the monetary wage with payments in kind.
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The graphical representation refers to Sinn (1988, p. 16).
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The graphical representation refers to Sinn (1988, p. 18).
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One effect was neglected here: Low residual absolute risk induces the actor’s marginal risk aversion to decrease as well. As a consequence, also the inclination of the indifference curves decreases and Krupp can realize production plans which are located even further to the right.
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Cf. McCreary (1968, p. 42): “Mobility of trained manpower meant a constantly recurring loss of time and effort, which would be translated directly into higher production costs.”
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McCreary (1968, p. 25, emphasis original, and p. 49, emphasis added).
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Cf. Ulrich (2008, p. 105 et seq.).
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In a sense, Fig. 7.4a also helps to illustrate the idea of “socio-economic rationality” as proposed by Peter Ulrich’s “integrative” approach to economic ethics. Ulrich (2008, p. 106) argues that an “instrumentally rational treatment of the scarcity of resources and goods (efficiency) cannot be dissociated conceptually from the question of an ethically rational treatment of the social conflicts between those involved.” In his figure 3.2, Peter Ulrich (2008, p. 107) insinuates that the ethical aspect of economic transactions refers to the potential conflict between the private interests of economic actors, while the economic aspect refers to all decisions of value creation. Such division of labour between ethics and economics, however, would assign a rather uncomfortable position to ethics: If ethics is by definition determined to elaborate (only) on the legitimational aspects of conflict of interests, all questions of how to explain and how further the creation of (social) value would consequently be left to the analytical tools of economics. More fundamentally, the question of how to implement moral ideals in modern societies would then not be a primary task of ethics, not to mention the explanation of how (Western-type) market societies have achieved moral progress within the last 200 years.
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Rorty (1998, p. 176).
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Hielscher, S. (2011). Morality as a Factor of Production: Moral Commitments as Strategic Risk Management. In: Pies, I., Koslowski, P. (eds) Corporate Citizenship and New Governance. Studies in Economic Ethics and Philosophy, vol 40. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-1661-2_7
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