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Business ethics and Corporate Social Responsibility (Stakeholders (The…
Business ethics and Corporate Social Responsibility
Goals and activities of business should concern with
conducting business honestly
treating people in business (supplier, employees, customer...) fairly and socially responsible
being accountable, be punished
look after the environment
Example
product development and operation: safe, non-polluting product and working environment
marketing: ban, restrict tabacco/ monitor advertisement and sale promo -> honest representation
HR: improve working condition, ehance involvement of employees, pay and bonuses
finance and accounting: standard of public accountability, MNC: contribution to local
CSR: relationship between firms with stakeholder and with environment
issues: pollution reduce, responsible raw material exploit, child labor, corporate fraud, bribery and corruption...
Ethics
Branch of philosophy -> debatable
transcendental ethics/ethical absolutism: absolute right and wrong, apply to all society, religion universal moral code
utilitarianism: pragmatic of transcendental, action is right if produce greater good (lay off work force avoid bankruptcy)
ethical relativism/social ethics: ethical standard varies across societies (death penalty/bribery) -> complex for MNCs
tactical ethics: people act ethically because it's benefit them
Business ethics: moral issues and individual choices of right and wrong
beliefs about how customer and employee should be treated
use ethical relativism: value of individuals working in organization
corporate culture by top management
code of conduct in individual organization
social norms of local prevailing law vary from countries
value vary across societies: dilemma of employee in one country must do what's acceptable in their place (eg: bribery)
standard change overtime on issues like equal opportunities, some is not enough
manager dilemma: lay off&close business -> redundancy, early retirement, retaining package and counselling for those lose their job
business ethics: set framework for CSR, allegedly contribute to success
CSR: apply business ethics, concern with firm and its relationship with stakeholders
core characteristic
voluntary, go beyond legal requirement
about managing external impacts of business, not just environment but also people and marketplace
work best with framework of ethical values
business is about stakeholders, not just shareholders
philanthrophy, regconize business activity have impact on society, structure policies and practice accordingly
basic requirement
philanthrophy responsibility: discretionary, involve contribute company resources to community to improve quality of live
ethical responsibility: beyond legal requirement is expected*
legal responsibility: adhere to laws of particular countries is required
economic responsibility:
shareholder get returns on investment, employee, suplier, customer
be profitable
3 types of managers
immoral manager: exploit opportunities for gain
amoral manager: insensitive to negative impact
moral manager: good organization citizenship, aware of stakeholder, community and environment needs
Stakeholders
Shareholder: prime responsibility of company
issues: - amount for dividend vs. amount for reinvestment -> focus on short-term gain detrimental of company and its responsibility to other stakeholders
in volatile stock: share is volatile -> difficult to identify shareholders motives
shareholders only invest in business with clear ethical standard
Financial institution: shareholder, lend money to company
expect their money to be paid back fast -> make decision about relative priority of stakeholders (eg: sell football player -> angry fans)
Customer: want good value at reasonable price, transport pricing and honest commercial
firm cut safety feature to keep down cost
lay off, switch to low cost economies -> unemployment at home & exploitation overseas
Employee: offer service for wage, expect to be given means of living, safe environment, job security, reward for extra work, fair treatment, equal opportunities
HR issue: working hour, how much to pay employees
role of HR and ethics change because globalisation: labor is sourced globally -> decline trade union membership -> employee rights are less protected
issues of privacy
Suppliers: must treat like member of corporate
cut-throat competition between suppliers -> suppliers enjoy close relationship, some benefit (extra-credit, give compensation) or not (change payment policies in hardship)
Competitor: firm also have responsibility to
issue: abuse of monopoly power, aggresive promotional or prcing tactics, dirty tricks
Society in general: conform to prevailing social norms
but vary with culture differences and overtime and remarkable tolerance
Community
provide jobs for people, support housing market, provide revenue for shops
sometimes single firm dominate community -> must have responsibility
but recently have diminished because geographically and labour mobility and community policies of economic diversity
Govenment and law: social norms sometimes codified in law
could the safety of product, permissible form of advertisement-> disclosure of financial information, condition of employment
The environment: not just local but also global
most obvious CSR, highest public profile, used as focus of pulic relations and carries highest risk in cost
meet the need of present without compromising the ability of future generation to meet their needs
eg: Kyoto summit 1997: conflict: restriction of emission gass: penalized poor countries into high-cost action when rich countries have done that long time ago
Problem of stakeholder approach to CSR
which one has legitimate right of stakeholder concern CSR
priority
some group are very broad and each have different needs
need information disclosure for satisfaction
glocal economy: multiple stakeholders and differences
Historical development of ethical concern in business
western Christian and Islamic baking -> value not confined to one religion
paternalism threaten by seperation of control and ownership
20th century: curb power of large corporation and anti-trust legislation in USA and depression in 1920-1930s: trade union move around -> improved term of condition of work
Bretton Wood Conference 1944: respond to 2 wars + global depression and need to control future global economy, market provide insufficient and protection -> laws and institutions needed -> development of UN,... for ethical concern
post-war: interest in ethical business -> 1960s reacts to materialism, activity of MN in Third world and pollution
1970: shock of oil price, rising unemployment, poor outcome of government intervention
1980+1990: business ethics entered political agenda through issues
recent: collapse and associated scandal
Mechanism for ethical business
Ethical audit: assess shortfall in practice and to establish plan
area: product and service, process, term of employement, condition for employees, firm relationship with supplier, local community and environment
Code of practice: outline firm's standard on ethical business on mission
contain policy and operational mutual
both for employees and suppliers
international code: deal with human rights and work practices, include statement about disclosure of finance information, level of pay, rights of employment to unionize, length of working hours
impact is unknown -> not widespread
Ethics department: some have institutionalized ethics in the structure
eg: World Bank: HR deparment
some have ethical officer
Company report (1980): based on audit, guide its future aim
may "glossy sham"
Employee induction and training: to transmit value and practice about ethical business and CSR
Whistleblowing: hotline to report, not popular with staff
Non-executive directors: not involve in management of interprise but provide experience from elsewhere and operate as important voice influencing strategic direction
because people interested in outside the organization -> important agent
role: +) widen diversity of board membership to prevent corruption
+) provide critical and independent thinking in board level of decision-making
independence of non-executive directors is questioned because if not involved enough to offer critical output
Implicits: corporate culture and management, leadership, performance appraisal and incentive scheme
eg: CSR can be part of job description and judging performance
League table: published rating of company measure CSR
Ethical investment measure: change behavior to be listed -> motivation
Lecture
Failure in volunteer
•Insufficient –Less efficient than government
•Particularism–Aimed at one specific group (favor not right)
•Paternalism–I know what is good for you...
•Amateurism–Based upon citizens who want to help out without the proper training
•Nonprofit / nongovernmental organizations
–Organized
–Not directed towards profit (non distribution constraint)
–Self-governed by independent citizens
–Relevant voluntary input (money and time)
Service delivery
•Customer oriented
•Acceptance of manager, management, selection
•‘Professionalism’ is selection criterion
•Anybody can work / volunteer
Mutual support
•Member oriented
•Acceptance of organization, not of manager
•Mutual feature is acceptance–only members or related to membership can volunteer
•Weak, strong, indestructible
Campaigning
•Cause oriented
•Leadership, but no management and organization
•Believing is belonging–can have very strong informal, cultural selection system
What is a union
•Mutual support–Members help each other against the employer and if you are not a member.....
•Service delivery–The union helps workers that have a work-related problem
•Campaigning–The union fights for the right of the working class (globally)
Elements of Resource Exchange (CCI)
–Money: Financial support
–Means: Physical goods
–Mass: Opening up the corporate network
–Media: the use of corporate media outlets for a nonprofitor cause.
–Manpower: corporate volunteering
Resource Exchange....(CCI)
Attract new customers (Salamon, 2010; a bank educate people about financial services)
Donate to environmental causes (BP and planting trees)
Employees volunteer for nonprofits (Microsoft’s Employee Engagement Program)