Business Ethics
CSR and Toyota


There are two key trends that can be observed from the recent changes in the business environment. Firstly, it is about the increasing rate of globalization, whereby companies are forced or highly motivated to go global, for bigger market shares, to reach a different market segment, to tap into resources available in the other countries or for any other strategic reasons. Thus, such a trend is hastening the pace of globalization, whereby internationalization of firms is not something new in global business landscape. Today, there are many powerful multinational corporations working in across the globe, in different cultural environment at different regions of the world. From another perspective, there is also a trend calling for more socially responsibly business corporations, consistent with the more frequent observations whereby corporation frauds are becoming more widespread in the recent years. In fact, it is not hard to see arguments that the financial crises in 2008 due to subprime issues are primarily contributed by unethical and in many cases, outright illegal actions and behaviors by the financial services related corporations in United States as well as in Europe. As such, people are placing more importance and attention on the issue of Corporate Social Responsibilities. Today, corporations, particularly those powerful multinational companies are expected to exhibits Corporate Social Responsibilities behaviors in the conduct of their businesses around the world. This is important to instill trusts of people towards businesses, as the many fraudulent activities by certain corporations are causing people to lost trust and faith in the many corporations.

In this article, an international firm will be selected to analyze its Corporate Social Responsibilities (“CSR”) policies and actions in the international arena. Toyota is selected, because it is a famous international firm, which is noted and respected for various Corporate Social Responsibilities actions, value offerings as well as business practices. For this, this assignment will discuss the reasons why many CSR initiatives are being implemented and conducted by Toyota, and what benefits have Toyota reaped from these CSR initiatives. It will also be discussed if Toyota are exhibiting CSR behaviors for enhancing its reputation in the marketplace around the world, or the company is doing so because the firm sincerely believe in ethical behaviors without counting if these initiatives are truly beneficial towards the corporation branding, reputation or performance.

This assignment is arranged as follow. Firstly, literature reviews on the issues of Corporate Social Responsibilities will be discussed. Then, the CSR activities of Toyota will be outlined and discussed. Subsequently, extensive discussions on Toyota CSR initiatives as well as their benefits and the intentions of Toyota in performing these CSR initiatives will be discussed. Finally, the assignment will be concluded with several ideas on how firms should act in order to achieve success in the marketplace, under the new trends of globalization as well as CSR era in the future.

Literature Review on CSR

Corporate Social Responsibilities (“CSR”) is not something new in the corporate arena. Indeed, there are many terms used to describe the concepts of CSR. In certain article or literature, CSR is also called corporate citizenship, sustainable and responsible business, corporate conscience or even social or community performance, although the exact definition of these terms may differ slightly (Mittal et. al., 2008). In the recent decades, many researchers and observers are demanding corporations to include CSR into their business model or operation. Generally, CSR is about a corporation proactively employ self-regulating measures to ensure not only the activities carried out in the firm is consistent with the pertaining rules and regulation, but also exceed the law’s requirement to exhibit ethical and corporate responsible behaviors. No matter how it may be carried out, CSR main objective is to ensure that corporations aware and proactive striving to act in a responsible manner towards the environment as well as the other stakeholders. It is meant to promote public interests and ensure sustainable development of the corporation. It is not hard to found that people are increasingly demanding that the concepts of CSR should be incorporated into the decision making and management process of the many corporations in current business environment.

The arguments for CSR are becoming more intense ever since when people realize that corporations should not only cater for the needs of the shareholders, but instead, should also take care of the interests of the many stakeholders (Cartwright et. al., 2006). The stakeholders may include the employees, customers, suppliers, competitors, community, governmental bodies, the environment as well as the future generation. It is argued that ethically speaking, corporations should be taking good care of the stakeholder as the more powerful they become, the more impactful their actions against others.

Researchers are arguing that there are many benefits to be reaped by a corporation that proactively exercising CSR initiatives. Many of the benefits discussed in the literature are not direct financial gains or benefits, whereby it is found that adoption of CSR philosophy in the corporate decision making process can be beneficial to corporations indirectly in the long term. Nonetheless, there are also literatures to have found some evidences that social responsible or ethical behaviors of a particular firm are related to the financial performance of those corporations. Apart from that, other no direct financial gains to be reaped may include some of the following. Firstly, CSR initiative can assist a firm to become better and more effective in its human resources management. There are two dimensions whereby CSR initiatives may be beneficial towards human resources management. The first dimensions are that through CSR activities, the corporations may become more famous, and respected by people in the community. This will enhance the firm’s capability to more easily recruit and select the very best talents from the interested candidates applying for jobs in the corporations. Then, CSR initiatives may also enhance the existing employees’ perceptions on the company itself. Employees may be more willing to stay and work for ethical corporations, which proactively take care of the community. Apart from that, CSR initiatives may be able to enhance the corporate governance of a firm, whereby when ethical behaviors are being emphasized in the corporation, people will become more aware of unethical or fraudulent behaviors by certain people in the organization. This is beneficial for the risk management in a particular corporation. When people have the conscience to do the right things, an organizational culture emphasizing on ethical behaviors is possible. Not only that, perhaps the biggest benefit to be reaped is that CSR initiatives may enhance a corporation’s brand name and reputation among the community. It is crucial and powerful ways to build by customers’ loyalty, and to earn respect from the society through exhibiting ethical values (Polonsky et. al., 2009). The society will more easily trust the corporations exercising CSR initiatives. And believe the corporations are acting with integrity and serving the very best interests of the community. Such a branding or positioning will definitely have great long term positive effects towards a corporation in the long run.

There are many areas in which CSR initiatives should be exercised by the many powerful multinational corporations, for a better and more sustainable world for people to live in. Firstly, it is about the management and usage of scare resources. It is not hard to observe that resources, particularly those non-reusable resources are becoming scare in the recent years, as people standard of living is increasing. Besides, as the population of people is also increasing, a huge burden on the natural resources, particularly those scare resources are becoming more prevalent. This can be seen from increasing prices of natural resources, such a crude oil, commodities, gold prices and other natural resources, be it renewable or non-renewable in the past few years. Thus, care should be taken to use these resources effectively, whereby wastages should be prevented. This is very important for sustainable development and growth of the economy of the world. In fact, wastages may cause the steep increases of prices of several resources, thereby can cause instability of society due to rising price pressure, before alternative resources or replacement are found. Secondly, another areas should be paid attention by corporations in exercising CSR initiatives are to eliminate or mitigate poverty and inequality among people around the world. Although people may be seeing increasing prosperity and standard of living in the recent decades, many people in certain part of the world are still living below the poverty line. These people urgently need assistance to live at least a normal life, whereby many of the people do not even have the access to clean water and viable living environment. In fact, many of the younger generation of these people are depriving from education as well. As powerful corporations, the many multinational corporations should put certain efforts in assisting these people, whereby many of the governments in these nations are not able to help their citizen in a responsible manner. From another perspective, and perhaps the most pressing problem faced by the world today, is about the issues of global warming and increasingly deteriorating business environment due to unethical or short term oriented businesses’ behaviors in the past few decades. For example, the many industrialized nations are causing great pollution to the world, by contributing emission of CO2 to the environment that caused global warming. Besides, over exploitation of the natural resources has put the globe in great pressure as well. The much pollution caused by mistakes or unethical behaviors of the many corporations around the world is fast to destroy the world beyond imagination. All these are bringing up the questions if the world can still remain as a nice place to live in the future.

Overall, it can be seen that CSR initiatives are important, and should be proactively implemented by the many firms, as when the issues due to ethical and fraudulent corporations’ executives’ behaviors get too serious, the corporations will not escape from their own doings (Cornelius et. al., 2007). In fact, any irresponsible acts will also likely to affect adversely on the public. Thus, it is crucial for corporations to understand the big picture and act responsible for sustainable corporations and economy growth and development.

Case Study: Toyota and its CSR Initiatives

Toyota is a famous company involve in several CSR initiatives. It is a successful company, and the track records as well as the many reasons contributing to the success of Toyota can be easily obtained from literature. Toyota is a good case study to understand corporations and the CER initiatives, as it is one of the few companies those truly exhibiting CSR initiatives for both the benefits and performance of the corporation itself as well as for the community. It is also a viable company for research purposes because the information regarding the company is widely available and easily accessed. Thirdly, the brand name as well as the products are widely known or used, and thus, it is suitable to be used for discussion purposes, as many people will understand how the Toyota business and products have been affecting them. In the following paragraphs, several important CSR initiatives will be presented.

Efficient supply chain – efficient use of materials. The key success of Toyota is widely attributed to the Toyota Production System (Lander et. al., 2007), which if a cutting edge concepts in ensuring or producing an efficient supply chain. The efficient supply chain can contribute a lot for the attainment of competitive advantages of Toyota, in which it is witnessed that production system enable Toyota to cut costs while at the similar time, increase the quality of its products significantly. Besides, from the CSR perspectives, such a production system is benefiting the environment as well, as it ensure efficient supply chain, and thus, reduce wastages in the production process (Regassa et. al., 2007). The many scare resources are allocated properly to its best usages, and unnecessary wastages of these scare resources can be mitigated significantly through the lean manufacturing system. Thus, it can be seen that whether it is intention of Toyota management or not, the Toyota Production System in definitely a good examples on how a firm can achieve great benefits with a system that can deliver positive impacts to the environment through efficient allocation or usages of scare resources.

Innovative and green-oriented products – fuel efficient and least polluting automobile. The product design of Toyota is also strictly adhere to the green concepts, whereby it can be seen that Toyota has been continuously improving the CO2 emission of the products design since its incorporation (Shook, 2009). In fact, Toyota has been getting a lot of awards in the throughout the years on its capability of producing the very fuel efficient, high quality car at the best prices. In the recent years, Toyota again spearheaded the development of hybrid car, which again, reduce the petrol consumptions of vehicles as well as reducing the emission of CO2 to the environment (Bergmiller et. al., 2008). The continuous improvement of Toyota cars ensure that the pollution due to automobile vehicles is being reduced from time to time. Overall, it can be seen that such a competencies in delivering environmentally friendly products not only is consistent with the CSR concepts, it is also highly beneficial to the firms as well, when the hybrid cars that are designed for fuel efficiencies and costs savings purposes increase the revenue of Toyota significantly. In fact, it is still early to judge the success of Toyota hybrid car, as the management actually is expecting more sales to come from the hybrid car segment, as people are getting more environmentally friendly conscious as well as are being forced to use more fuel efficient cars for petrol savings purposes.

Poverty reduction and contribution to society. From time to time, Toyota has also contributed to the society through donations. Toyota has been donating to the poor communities in the poor country for better education for the younger generations as well as for the improving the living standards. All these are not hard to understand, a poverty reduction could be best tackled by provision of education and knowledge to a particular community.

Financial and non-financial performance of Toyota. Overall, it can be seen that Toyota is a society conscious and environmentally friendly corporations. The many decision making process, production process as well as the product designs of Toyota is consistent with the go-green movement as well as preserving the earth for sustainable development and growth. All these are beneficial to the world as well as the environment. Not only is that, the many efforts are also highly beneficial from the perspective of Toyota as well, as Toyota has been greatly enhance its reputation. For example, by consciously recalling the defected cars from the market (where it is definitely a financial losing act in the short term) (O’Rourke, 2010), Toyota able to utilize the opportunity to enhance its brand name and its reputation for perfection and sincerely serving the customers and market through such crises (Piotrowski et. al., 2010). There are many ways CSR initiatives can be achieved through creativity and innovation, whereby both the community as well as Toyota can be benefited in the long run.


Overall, it can be seen that by exercising CSR initiatives, through innovation, creativity and continuous improvement efforts, a corporation can achieve mutually beneficial results for the corporations itself as well as for the society (Scholtens, 2006). Toyota is a great company to investigate on how CSR initiatives can contribute to the firm’s performance, be it from financial or non financial perspectives. It is shown that it is not necessary resources wasting for a firm to involve or exercise CSR initiatives in the corporate decision making or management process, because when properly implemented, a particular set of management decisions as well as corporate practices can be beneficial for the society as well as benefiting the performance of a particular corporation. Indeed, for Toyota, having successfully implementing CSR initiatives as well as utilizing the concepts of innovation, creativity as well as continuous improvement, Toyota able to achieve competitive advantages and great reputation in the marketplace, such as thought its energy saving and least pollution hybrid cars. Besides, by having lean manufacturing system, Toyota also able to efficiently using the scare resources, while at the similar time cut down a lot of unnecessary costs or wastages in the production process. The success stories of Toyota should serve as good examples on how firms can incorporate CSR initiatives in the design of the products as well as business decision making or management process, which can benefit both the corporation as well as the large community simultaneously for win-win solutions or situation in the ever challenging business environment.


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