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9 - Ethics and Corporate Social Responsibility (Stakeholders that a…
9 - Ethics and Corporate Social Responsibility
Goals and activities of business
Conducting business honestly
Treating people who come into contact with the business (suppliers, customers, employers, etc.) fairly and in a socially responsible manner
Being accountable
to the public
sometimes board members can be held responsible and prosecuted as individuals
Looking after the environment
Treating stakeholders fairly involves paying employees and suppliers as agreed and on time and only making promises that can be met
Rules and restrictions across many departments to control ethics
e.g. advertising constraints in marketing
e.g. working conditions in HR
Interest in ethical issues and responsible business stems from a number of disasters and scandals
e.g. Chernobyl
e.g. oil spills
Types of Ethical Approaches
Utilitarianism - an action is morally right if it produces the greatest good for the greatest number of people
Ethical relativism / social ethics - ethical standards will vary between societies reflecting their histories and influences
e.g. the death penalty is acceptable in some societies but not in others
Transcendental ethics / ethical absolutism - there are absolute concepts of right and wrong, which apply across all societies
Tactical ethics - people pursue ethical standards because it suits them so to do
e.g. managers producing codes of practice and corporate statements that identify ethical intentions but it is just a public relations exercise to gain a good reputation
Standards in business change due to...
the values of individuals working in organizations
the corporate culture created by top management
codes of conduct operating in individual organisations
the social norms of the society within which the organisation is located
the local laws
Complications in global business
wanting to bribe in a country where its deemed unacceptable
often they pretend its a gift
Moral relativism - when businesses acknowledge that things are done differently elsewhere and it is acceptable to operate to unusual standards in that setting
To save the business and hence jobs in one location, it may be necessary to close operations and shed jobs elsewhere
to soften the blow they would offer redundancy, early retirement, retraining packages and counselling for those losing their jobs
Stakeholder theory - views business in terms of its relationship to a number of groups
Carroll's (1991) Pyramid of CSR
Philanthropic responsibility - desirable; involves donations to charity, education and improving the quality of life of employees
Ethical responsibility - expected; goes beyond legal requirements
Legal responsibility - basic requirement; through adherence to the laws of a particular country
Economic responsibility - basic requirement; for suppliers, customers and employees, e.g. a return on shareholders' investments,
Stakeholders that a business is responsible for
Shareholders
Dividends vs reinvestment
Financial Institutions
Lend money
Can cause conflict when an asset has to be sold against shareholders wishes
Customers
quality at good prices
could cause cuts to safety checks, redundancies, and sweat shops
Suppliers
loyalty
Competitors
The community
Society
Government
e.g. product safety and advertising laws
The environment
Employees
a safe environment, fair treatment, etc
Moral Argument (Crane and Matten 2004)