csr business ethics in ib

7/30/2019 CSR Business Ethics in IB

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Business Ethics and Corporate Social Responsibility

Business ethics is a system of moral principles applied in the commercial world. It is a wholenew scientific area because it combines law theory and politics as much as philosophical and

historical documents. Ethics become a term very flexible and have many different aspects.

Business ethics provide guidelines for acceptable behaviour by organizations in both theirstrategy formulation and day-to-day operations. An ethical approach is becoming necessary both

for corporate success and a positive corporate image. Especially nowadays ethics in business are

obligated because many businessmen are only interested in making money despite the ethicalcosts or the harm they would probably cause to people or even to nature (environmental

pollution). Corporate social responsibility defines all the cases of ethics that businessmen can

follow effectively. Many organizations are choosing to make a public commitment to ethicalbusiness by formulating codes of conduct and operating principles. In doing so, they must

translate into action the concepts of personal and corporate accountability, corporate giving and

corporate governance. Key Words: Business ethics, corporate social responsibility, ethics in

business, corporate governance, ethics of sales and marketing, ethics of production, ethics of

technology, general business ethics and international business ethics.

1 Business Ethics

Introduction

Business ethics is a form of applied ethics that examines ethical principles and moral or ethicalproblems that arise in a business environment . It applies to all aspects of business conduct and

is relevant to the conduct of individuals and business organizations as a whole . Business ethics

consists of a set of moral principles and values that govern the behavior of the organization with

respect to what is right and what is wrong . It spells out the basic philosophy and priorities of anorganization in concrete terms It also contains the prohibitory actions at the workplace . It

provides a framework on which the organization could be legally governed. With time, certain

moral philosophies have helped in the evolution of four basic concepts of ethics. They aredeontologism, relativism, egoism, and utilitarianism . The paper examines basic principles of

business ethics and sheds light on the aforesaid concepts.

Dimensions of Business Ethics

General Business Ethics

Ethics of finance

Ethics of Human Resource Management

Ethics of Sales and Marketing

Ethics of Production


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2.Corporate Social Responsibility

One of an organization's primary goals is its obligation to operate in a socially responsiblemanner . Therefore, the recognition that the vast power of the modern corporation carry with it

an equally large responsibility to use that power responsibly is an important message for

managers. The social responsibility of business encompasses the economic, legal, ethical, anddiscretionary expectations that society has of organizations at a given point in time. The

fundamental idea of corporate social responsibility that business corporations have an obligation

to work for social betterment. In earlier times managers had only to concern themselves with theeconomic results of their decisions .Today it is generally accepted that business firms have social

responsibilities Social responsibility is complex because must be made in a wide variety of

areas . Corporate social responsibility (CSR) can be defined as the economic, legal, ethical, anddiscretionary expectations that society has of organizations at a given point in time (Carroll,

1996). The concept of corporate social responsibility means that organizations have moral,

ethical, and philanthropic responsibilities in additionto their responsibilities to earn a fair return

for investors and comply with the law .

Conclusions

When business people speak about "business ethics" they usually mean one of three things:

(1) avoid breaking the criminal law in one's work-related activity;

(2) avoid action that may result in civil law suits against the company and(3) avoid actions that are bad for the company image.

Businesses are especially concerned with these three things since they involve loss of money andcompany reputation. In theory, a business could address these three concerns by assigning

corporate attorneys and public relations experts to escort employees on their daily activities.

Anytime an employee might stray from the straight and narrow path of acceptable conduct, theexperts would guide him back. Obviously this solution would be a financial disaster if carried out

in practice since it would cost a business more in attorney and public relations fees than they

would save from proper employee conduct. Perhaps reluctantly, businesses turn to philosophersto instruct employees on becoming "moral." For over 2,000 years philosophers have

systematically addressed the issue of right and wrong conduct. Presumably, then, philosophers

can teach employees a basic understanding of morality will keep them out of trouble. However,

it is not likely that philosophers can teach anyone to be ethical. The job of teaching morality restssquarely on the shoulders of parents and one's early social environment. By the time

philosophers enter the picture, it is too late to change the moral predispositions of an adult. Also,

even if philosophers could teach morality, their recommendations are not always the mostfinancially efficient. Although being moral may save a company from some legal and public

relations nightmares, morality in business is also costly. A morally responsible company must

pay special attention to product safety, environmental impact, truthfuladvertising, scrupulous marketing, and humane working conditions. This may be more than a

tight-budgeted business bargained for. We cannot easily resolve this tension between the ethical

interests of the money-minded businessperson and the ideal-minded philosopher. In most issues

of business ethics, ideal moral principles will be checked by economic viability. The more


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ambitious notion of Corporate Social Responsibility emphasizes the role played by firms in

shaping legal rules and the outcomes of legal disputes.

CSR and Ethics International Business

Corporate Social Responsibility is a form ofcorporateself-regulation integrated intoa business model. CSR policy functions as a built-in, self-regulating mechanismwhereby a business monitors and ensures its active compliance with the spirit of thelaw, ethical standards, and international norms. CSR is a process with the aim toembrace responsibility for the company's actions and encourage a positive impactthrough its activities on the environment, consumers, employees,communities, stakeholders and all other members of the public sphere who may also beconsidered as stakeholders.

The term "corporate social responsibility" came into common use in the late 1960s andearly 1970s after many multinational corporations formed the term stakeholder,meaning those on whom an organization's activities have an impact. It was used todescribe corporate owners beyond shareholders as a result of an influential book by R.Edward Freeman, Strategic management: a stakeholder approach in 1984 Proponentsargue that corporations make more long term profits by operating with a perspective,while critics argue that CSR distracts from the economic role of businesses. Othersargue CSR is merely window-dressing, or an attempt to pre-empt the role ofgovernments as a watchdog over powerful multinational corporations.

CSR is titled to aid an organization's mission as well as a guide to what the company

stands for and will uphold to its consumers. Development business ethics is one of theforms ofapplied ethics that examines ethical principles and moral or ethical problemsthat can arise in a business environment. ISO 26000 is the recognized internationalstandard for CSR. Public sector organizations (the United Nations for example) adhereto the triple bottom line (TBL). It is widely accepted that CSR adheres to similarprinciples but with no formal act of legislation. The UN has developed the Principles forResponsible Investment as guidelines for investing entities.

Approaches

Some commentators have identified a difference between the Canadian (Montrealschool of CSR), the Continental European and theAnglo-Saxon approaches to CSR.[3] And even within Europe the discussion about CSR is very heterogeneous. A morecommon approach of CSR is philanthropy (love of mankind) . This includes monetarydonations and aid given to local organizations and impoverished communities indeveloping countries. Some organizations do not like this approach as it does not helpbuild on the skills of the local people, whereas community-based development generally
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leads to more sustainable development.[ Another approach to CSR is to incorporate theCSR strategy directly into the business strategy of an organization. For instance,procurement ofFair Trade tea and coffee has been adopted by various businessesincluding KPMG. Its CSR manager commented, "Fairtrade fits very strongly into ourcommitment to our communities."

Another approach is garnering increasing corporate responsibility interest. This iscalled Creating Shared Value, or CSV. The shared value model is based on the ideathat corporate success and social welfare are interdependent. A business needs ahealthy, educated workforce, sustainable resources and adept government to competeeffectively. For society to thrive, profitable and competitive businesses must bedeveloped and supported to create income, wealth, tax revenues, and opportunities forphilanthropy. CSV received global attention in the Harvard Business Reviewarticle Strategy & Society: The Link between Competitive Advantage and CorporateSocial Responsibilityby Michael E. Porter, a leading authority on competitive strategyandhead of the Institute for Strategy and Competitiveness at Harvard Business School;and Mark R. Kramer, Senior Fellow at the Kennedy School at Harvard University andco-founder of FSG Social Impact Advisors. The article provides insights and relevantexamples of companies that have developed deep linkages between their businessstrategies and corporate social responsibility. Many approaches to CSR pit businessesagainst society, emphasizing the costs and limitations of compliance with externallyimposed social and environmental standards. CSV acknowledges trade-offs betweenshort-term profitability and social or environmental goals, but focuses more on theopportunities for competitive advantage from building a social value proposition intocorporate strategy. CSV has a limitation in that it gives the impression that only twostakeholders are important - shareholders and consumers - and belies the multi-stakeholder approach of most CSR advocates.

Many companies use the strategy of benchmarking to compete within their respectiveindustries in CSR policy, implementation, and effectiveness. Benchmarking involvesreviewing competitor CSR initiatives, as well as measuring and evaluating the impactthat those policies have on society and the environment, and how customers perceivecompetitor CSR strategy. After a comprehensive study of competitor strategy and aninternal policy review performed, a comparison can be drawn and a strategy developedfor competition with CSR initiatives.
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Social accounting, auditing, and reporting

For a business to take responsibility for its actions, that business must be fullyaccountable. Social accounting, a concept describing the communication of social andenvironmental effects of a company's economic actions to particular interest groupswithin society and to society at large, is thus an important element of CSR.[6]

Social accounting emphasizes the notion of corporate accountability. D. Crowtherdefines social accounting in this sense as "an approach to reporting a firms activitieswhich stresses the need for the identification of socially relevant behavior, thedetermination of those to whom the company is accountable for its social performanceand the development of appropriate measures and reporting techniques."

Potential business benefits

The scale and nature of the benefits of CSR for an organization can vary depending onthe nature of the enterprise, and are difficult to quantify, though there is a large body ofliterature exhorting business to adopt measures beyond financial ones There is acorrelation between social/environmental performance and financial performance.

However, businesses may not be looking at short-run financial returns when developingtheir CSR strategy. .

The business case for CSR within a company will likely rest on one or more of thesearguments:

Human resources

A CSR program can be an aid to recruitment and retention, particularly within the competitivegraduatestudent market. Potential

recruits often ask about a firm's CSR policy during an interview, and having a comprehensive policy can give an advantage. CSR
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can also help improve the perception of a company among its staff, particularly when staff can become involved throughpayroll

giving,fundraisingactivities or community volunteering. CSR has been found to encourage customer orientation among frontline

employees

Risk management

Managingrisk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours

through incidents such as corruption scandals or environmental accidents.[17]

These can also draw unwanted attention fromregulators, courts, governments and media. Building a genuine culture of 'doing the right thing' within a corporation can offset these

risks.[18]

Brand differentiation

In crowded marketplaces, companies strive for a unique selling propositionthat can separate them from the competition in the

minds of consumers. CSR can play a role in building customer loyalty based on distinctive ethical values.[19]Several majorbrands,

such as The Co-operative Group,The Body Shop andAmerican Apparel[20] are built on ethical values. Business service

organizations can benefit too from building a reputation for integrity and best practice.

License to operate

Corporations are keen to avoid interference in their business throughtaxationorregulations. By taking substantive voluntary steps,

they can persuade governments and the wider public that they are taking issues such as health and safety, diversity, or the

environment seriously as good corporate citizens with respect to labour standards and impacts on the environment.

Criticisms and concerns

Critics of CSR as well as proponents debate a number of concerns related to it. These include CSR's relationship to the

fundamental purpose and nature of business and questionable motives for engaging in CSR, including concerns about insincerity

and hypocrisy.

Nature of business

Milton Friedmanand others have argued that a corporation's purpose is to maximize returns to its shareholders, and that since only

people can have social responsibilities, corporations are only responsible to their shareholders and not to society as a whole.

Although they accept that corporations should obey the laws of the countries within which they work, they assert that corporations

have no other obligation to society. Some people perceive CSR as in-congruent with the very nature and purpose of business, and

indeed a hindrance to free trade. Those who assert that CSR is contrasting with capitalismand are in favor of the free marketarguethat improvements in health, longevityand/orinfant mortalityhave been created byeconomic growthattributed tofree enterprise.[21]

Critics of this argument perceive the free market as opposed to the well-being of society and a hindrance to human freedom. They

claim that the type of capitalism practiced in many developing countries is a form of economic andcultural imperialism, noting that

these countries usually have fewer labour protections, and thus their citizens are at a higher risk of exploitation by multinational

corporations.[2]

A wide variety of individuals and organizations operate in between these poles. For example, the REALeadership Alliance asserts

that the business of leadership (be it corporate or otherwise) is to change the world for the better.[23]Many religious and cultural

traditions hold that the economy exists to serve human beings, so all economic entities have an obligation to society (see for

exampleEconomic Justice for All). Moreover, as discussed above, many CSR proponents point out that CSR can significantly

improve long-term corporate profitability because it reduces risks and inefficiencies while offering a host of potential benefits such as

enhanced brand reputation andemployee engagement.

]Motives

Some critics believe that CSR programs are undertaken by companies such asBritish American Tobacco(BAT),[24]the petroleum

giantBP(well known for its high-profile advertising campaigns on environmental aspects of its operations), andMcDonald's (see

below) to distract the public from ethical questions posed by their core operations. They argue that some corporations start CSR

programs for the commercial benefit they enjoy through raising their reputation with the public or with government. They suggest

that corporations which exist solely to maximize profits are unable to advance the interests of society as a whole.[25]

Another concern is that sometimes companies claim to promote CSR and be committed to sustainable developmentbut

simultaneously engage in harmful business practices. For example, since the 1970s, theMcDonald's Corporation's association
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withRonald McDonald Househas been viewed as CSR and relationship marketing. More recently, as CSR has become

mainstream, the company has beefed up its CSR programs related to its labor, environmental and other practices[26] All the same,

inMcDonald's Restaurants v Morris & Steel, Lord Justices Pill, May and Keane ruled that it was fair comment to say that

McDonald's employees worldwide 'do badly in terms of pay and conditions'[27] and true that 'if one eats enough McDonald's food,

one's diet may well become high in fat etc., with the very real risk ofheart disease.'[28]

Royal Dutch Shellhas a much-publicized CSR policy and was a pioneer intriple bottom linereporting, but this did not prevent the

2004 scandal concerning its misreporting ofoil reserves, which seriously damaged its reputation and led to charges of hypocrisy.

Since then, the Shell Foundation has become involved in many projects across the world, including a partnership with Marks and

Spencer(UK) in three flower and fruit growing communities across Africa.

Critics concerned with corporate hypocrisy and insincerity generally suggest that better governmental and international regulation

and enforcement, rather than voluntary measures, are necessary to ensure that companies behave in a socially responsible

manner. A major area of necessary international regulation is the reduction of the capacity of corporations to sue states

underinvestor state dispute settlementprovisions in trade or investment treaties if otherwise necessary public health or environment

protection legislation has impeded corporate investments.[29] Others, such as Patricia Werhane, argue that CSR should be

considered more as a corporate moral responsibility, and limit the reach of CSR by focusing more on direct impacts of the

organization as viewed through a systems perspective to identify stakeholders. For a commonly overlooked motive for CSR, see

also Corporate Social Entrepreneurship, whereby CSR can also be driven by employees' personal values, in addition to the more

obvious economic and governmental drivers.

Ethical consumerism

The rise in popularity ofethical consumerismover the last two decades can be linked to the rise of CSR. As global population

increases, so does the pressure on limited natural resources required to meet rising consumer demand (Grace and Cohen 2005,

147). Industrialization, in many developing countries, is booming as a result of both technology and globalization. Consumers are

becoming more aware of the environmental and social implications of their day-to-day consumer decisions and are therefore

beginning to make purchasing decisions related to their environmental and ethical concerns.[30]However, this practice is far from

consistent or universal.

Globalization and market forces

As corporations pursue growth throughglobalization, they have encountered new challenges that impose l imits to their growth and

potential profits. Government regulations,tariffs, environmental restrictions and varying standards of what constitutes "labor

exploitation" are problems that can cost organizations millions of dollars. Some view ethical issues as simply a costly hindrance,

while some companies use CSR methodologies as a strategic tactic to gain public support for their presence in global markets,

helping them sustain a competitive advantage by using their social contributions to provide a subconscious level of advertising. (Fry,

Keim, Meiners 1986, 105) Global competition places a particular pressure on multinational corporations to examine not only their

own labor practices, but those of their entire supply chain, from a CSR perspective. that all government is controlling.

Social awareness and education

The role among corporate stakeholders is to work collectively to pressure corporations that are changing. Shareholders and

investors themselves, throughsocially responsible investingare exerting pressure on corporations to behave responsibly.Non-

governmental organizationsare also taking an increasing role, leveraging the power of the media and the Internet to increase their

scrutiny and collective activism around corporate behavior. Through education and dialogue, the development of community

awareness in holding businesses responsible for their actions is growing.[31]In recent years, the traditional conception of CSR is

being challenged by the more community-consciousCreating Shared Valueconcept (CSV), and several companies are refining

their collaboration with stakeholders accordingly.

Ethics training

The rise of ethics training inside corporations, some of it required by government regulation, is another driver credited with changing

the behavior and culture of corporations. The aim of such training is to help employees make ethical decisions when the answers

are unclear. Tullberg believes that humans are built with the capacity to cheat and manipulate, a view taken from Trivers (1971,

1985), hence the need for learning normative values and rules in human behavior.[32]The most direct benefit is reducing the

likelihood of "dirty hands" (Grace and Cohen 2005), fines and damaged reputations for breaching laws or moral norms.

Organizations also see secondary benefit in increasing employee loyalty and pride in the organization[citation needed].CaterpillarandBest

Buy are examples of organizations that have taken such steps.[33]
http://en.wikipedia.org/wiki/Ronald_McDonald_Househttp://en.wikipedia.org/wiki/Ronald_McDonald_Househttp://en.wikipedia.org/wiki/Ronald_McDonald_Househttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-26http://en.wikipedia.org/wiki/McDonald's_Restaurants_v_Morris_%26_Steelhttp://en.wikipedia.org/wiki/McDonald's_Restaurants_v_Morris_%26_Steelhttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-27http://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-27http://en.wikipedia.org/wiki/Heart_diseasehttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-28http://en.wikipedia.org/wiki/Royal_Dutch_Shellhttp://en.wikipedia.org/wiki/Royal_Dutch_Shellhttp://en.wikipedia.org/wiki/Triple_bottom_linehttp://en.wikipedia.org/wiki/Triple_bottom_linehttp://en.wikipedia.org/wiki/Triple_bottom_linehttp://en.wikipedia.org/wiki/Oil_reserveshttp://en.wikipedia.org/wiki/Oil_reserveshttp://en.wikipedia.org/wiki/Oil_reserveshttp://en.wikipedia.org/wiki/Marks_and_Spencerhttp://en.wikipedia.org/wiki/Marks_and_Spencerhttp://en.wikipedia.org/wiki/Investor_state_dispute_settlementhttp://en.wikipedia.org/wiki/Investor_state_dispute_settlementhttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-29http://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-29http://en.wikipedia.org/wiki/Corporate_Social_Entrepreneurshiphttp://en.wikipedia.org/wiki/Corporate_Social_Entrepreneurshiphttp://en.wikipedia.org/wiki/Ethical_consumerismhttp://en.wikipedia.org/wiki/Ethical_consumerismhttp://en.wikipedia.org/wiki/Ethical_consumerismhttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-30http://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-30http://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-30http://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Socially_responsible_investinghttp://en.wikipedia.org/wiki/Socially_responsible_investinghttp://en.wikipedia.org/wiki/Non-governmental_organizationhttp://en.wikipedia.org/wiki/Non-governmental_organizationhttp://en.wikipedia.org/wiki/Non-governmental_organizationhttp://en.wikipedia.org/wiki/Non-governmental_organizationhttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-31http://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-31http://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-31http://en.wikipedia.org/wiki/Creating_Shared_Valuehttp://en.wikipedia.org/wiki/Creating_Shared_Valuehttp://en.wikipedia.org/wiki/Creating_Shared_Valuehttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-32http://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-32http://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Caterpillar_Inc.http://en.wikipedia.org/wiki/Caterpillar_Inc.http://en.wikipedia.org/wiki/Caterpillar_Inc.http://en.wikipedia.org/wiki/Best_Buyhttp://en.wikipedia.org/wiki/Best_Buyhttp://en.wikipedia.org/wiki/Best_Buyhttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-33http://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-33http://en.wikipedia.org/wiki/Ronald_McDonald_Househttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-26http://en.wikipedia.org/wiki/McDonald's_Restaurants_v_Morris_%26_Steelhttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-27http://en.wikipedia.org/wiki/Heart_diseasehttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-28http://en.wikipedia.org/wiki/Royal_Dutch_Shellhttp://en.wikipedia.org/wiki/Triple_bottom_linehttp://en.wikipedia.org/wiki/Oil_reserveshttp://en.wikipedia.org/wiki/Marks_and_Spencerhttp://en.wikipedia.org/wiki/Marks_and_Spencerhttp://en.wikipedia.org/wiki/Investor_state_dispute_settlementhttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-29http://en.wikipedia.org/wiki/Corporate_Social_Entrepreneurshiphttp://en.wikipedia.org/wiki/Ethical_consumerismhttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-30http://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Socially_responsible_investinghttp://en.wikipedia.org/wiki/Non-governmental_organizationhttp://en.wikipedia.org/wiki/Non-governmental_organizationhttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-31http://en.wikipedia.org/wiki/Creating_Shared_Valuehttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-32http://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Caterpillar_Inc.http://en.wikipedia.org/wiki/Best_Buyhttp://en.wikipedia.org/wiki/Best_Buyhttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-33


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Increasingly, companies are becoming interested in processes that can add visibility to their CSR policies and activities. One

method that is gaining increasing popularity is the use of well-grounded training programs, where CSR is a major issue,

andbusiness simulationscan play a part in this.[citation needed]

One relevant documentary isThe Corporation, the history of organizations and their growth in power is discussed. Corporate social

responsibility, what a company does in trying to benefit society, versus corporate moral responsibility (CMR), what a company

should morally do, are both important topics to consider when looking at ethics in CSR. For example, Ray Anderson, in The

Corporation, takes a CMR perspective in order to do what is moral and he begins to shift his company's focus towards the biosphere

by utilizing carpets in sections so that they will sustain for longer periods. This is Anderson thinking in terms of Garret Hardin's "The

Tragedy of the Commons," where if people do not pay attention to the private ways in which we use public resources, people will

eventually lose those public resources.

Laws and regulation

Another driver of CSR is the role of independent mediators, particularly the government, in ensuring that corporations are prevented

from harming the broader social good, including people and the environment. CSR critics such asRobert Reichargue that

governments should set the agenda for social responsibility by the way of laws and regulation that will allow a business to conduct

themselves responsibly.

The issues surrounding government regulation pose several problems. Regulation in itself is unable to cover every aspect in detail

of a corporation's operations. This leads to burdensome legal processes bogged down in interpretations of the law and debatable

grey areas (Sacconi 2004). For example,General Electric failed to clean up theHudson Riverafter contaminating it with organic

pollutants. The company continues to argue via the legal process on assignment of liability, while the cleanup remains stagnant.

(Sullivan & Schiafo 2005).

The second issue is the financial burden that regulation can place on a nation's economy. This view shared by Bulkeley, who cites

the Australian federal government's actions to avoid compliance with theKyoto Protocolin 1997, on the concerns of economic loss

and national interest. The Australian government took the position that signing the Kyoto Pact would have caused more significant

economic losses for Australia than for any other OECD nation (Bulkeley 2001, pg 436). On the change of government following the

election in November 2007, Prime MinisterKevin Ruddsigned the ratification immediately after assuming office on 3 December

2007, just before the meeting of the UN Framework Convention on Climate Change. Critics of CSR also point out that organisations

pay taxes to government to ensure that society and the environment are not adversely affected by business activities.

Denmarkhas a law on CSR. On 16 December 2008, the Danish parliament adopted a bill making it mandatory for the 1100 largest

Danish companies, investors and state-owned companies to include information on corporate social responsibility (CSR) in their

annual financial reports. The reporting requirements became effective on 1 January 2009.[34] The required information includes:

information on the companies policies for CSR orsocially responsible investments(SRI)

information on how such policies are implemented in practice, and

information on what results have been obtained so far and managements expectations for the future with regard to

CSR/SRI.

CSR/SRI is still voluntary in Denmark, but if a company has no policy on this it must state its positioning on CSR in their annual

financial report. More on the Danish law can be found at CSRgov.dk

Crises and their consequences

Often it takes a crisis to precipitate attention to CSR. One of the most active stands against environmental mismanagement is

theCERES Principles that resulted after theExxon Valdez incident in Alaska in 1989 (Grace and Cohen 2006). Other examples

include the lead poisoningpaint used by toy giantMattel, which required a recall of millions of toys globally and caused the company

to initiate new risk management and quality control processes. In another example, Magellan Metals in the West Australian town of

Esperance was responsible for lead contamination killing thousands of birds in the area. The company had to cease business

immediately and work with independent regulatory bodies to execute a cleanup. Odwalla also experienced a crisis with sales

dropping 90%, and the company's stock price dropping 34% due to several cases ofE. colispread through Odwalla applejuice. The

company ordered a recall of all apple orcarrotjuice products and introduced a new process called "flash pasteurization" as well as

maintaining lines of communication constantly open with customers.
http://en.wikipedia.org/wiki/Business_simulationhttp://en.wikipedia.org/wiki/Business_simulationhttp://en.wikipedia.org/wiki/Business_simulationhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/The_Corporation_(film)http://en.wikipedia.org/wiki/The_Corporation_(film)http://en.wikipedia.org/wiki/The_Corporation_(film)http://en.wikipedia.org/wiki/Robert_Reichhttp://en.wikipedia.org/wiki/Robert_Reichhttp://en.wikipedia.org/wiki/Robert_Reichhttp://en.wikipedia.org/wiki/General_Electrichttp://en.wikipedia.org/wiki/General_Electrichttp://en.wikipedia.org/wiki/Hudson_Riverhttp://en.wikipedia.org/wiki/Hudson_Riverhttp://en.wikipedia.org/wiki/Hudson_Riverhttp://en.wikipedia.org/wiki/Kyoto_Protocolhttp://en.wikipedia.org/wiki/Kyoto_Protocolhttp://en.wikipedia.org/wiki/Kyoto_Protocolhttp://en.wikipedia.org/wiki/Kevin_Ruddhttp://en.wikipedia.org/wiki/Kevin_Ruddhttp://en.wikipedia.org/wiki/Kevin_Ruddhttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-34http://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-34http://en.wikipedia.org/wiki/Socially_responsible_investmentshttp://en.wikipedia.org/wiki/Socially_responsible_investmentshttp://www.csrgov.dk/sw51190.asphttp://en.wikipedia.org/wiki/Coalition_for_Environmentally_Responsible_Economieshttp://en.wikipedia.org/wiki/Coalition_for_Environmentally_Responsible_Economieshttp://en.wikipedia.org/wiki/Exxon_Valdezhttp://en.wikipedia.org/wiki/Exxon_Valdezhttp://en.wikipedia.org/wiki/Lead_poisoninghttp://en.wikipedia.org/wiki/Lead_poisoninghttp://en.wikipedia.org/wiki/Mattelhttp://en.wikipedia.org/wiki/Mattelhttp://en.wikipedia.org/wiki/Magellan_Metalshttp://en.wikipedia.org/wiki/Escherichia_colihttp://en.wikipedia.org/wiki/Escherichia_colihttp://en.wikipedia.org/wiki/Escherichia_colihttp://en.wikipedia.org/wiki/Applehttp://en.wikipedia.org/wiki/Applehttp://en.wikipedia.org/wiki/Carrothttp://en.wikipedia.org/wiki/Carrothttp://en.wikipedia.org/wiki/Business_simulationhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/The_Corporation_(film)http://en.wikipedia.org/wiki/Robert_Reichhttp://en.wikipedia.org/wiki/General_Electrichttp://en.wikipedia.org/wiki/Hudson_Riverhttp://en.wikipedia.org/wiki/Kyoto_Protocolhttp://en.wikipedia.org/wiki/Kevin_Ruddhttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Corporate_social_responsibility#cite_note-34http://en.wikipedia.org/wiki/Socially_responsible_investmentshttp://www.csrgov.dk/sw51190.asphttp://en.wikipedia.org/wiki/Coalition_for_Environmentally_Responsible_Economieshttp://en.wikipedia.org/wiki/Exxon_Valdezhttp://en.wikipedia.org/wiki/Lead_poisoninghttp://en.wikipedia.org/wiki/Mattelhttp://en.wikipedia.org/wiki/Magellan_Metalshttp://en.wikipedia.org/wiki/Escherichia_colihttp://en.wikipedia.org/wiki/Applehttp://en.wikipedia.org/wiki/Carrot


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Stakeholder priorities

Increasingly, corporations are motivated to become more socially responsible becausetheir most important stakeholders expect them to understand and address the socialand community issues that are relevant to them. Understanding what causes areimportant to employees is usually the first priority because of the many interrelated

business benefits that can be derived from increased employee engagement (i.e. moreloyalty, improved recruitment, increased retention, higher productivity, and so on). Keyexternal stakeholders include customers, consumers, investors (particularly institutionalinvestors), communities in the areas where the corporation operates its facilities,regulators, academics, and the media.

Branco and Rodrigues (2007) describe the stakeholder perspective of CSR as theinclusion of all groups or constituents (rather than just shareholders) in managerialdecision making related to the organizations portfolio of socially responsible activities.[35] This normative model implies that the CSR collaborations are positively acceptedwhen they are in the interests of stakeholders and may have no effect or be detrimentalto the organization if they are not directly related to stakeholder interests. The

stakeholder perspective suffers from a wheel and spoke network metaphor that doesnot acknowledge the complexity of network interactions that can occur in cross sectorpartnerships. It also relegates communication to a maintenance function, similar to theexchange perspective.

For the past few decades, many executives, administrators, social scientists, and the

public at large have seen unethical behavior as a cancer working on the tissue of

society. Many are concerned that a crisis of ethics in the West is undermining our

competitive strength. This crisis involves businesspeople, government officials,

customers, and employees. Especially worrisome is unethical behavior among

employees at all levels of the business organization. For example, consider the notion

that employees account for a higher percentage of retail thefts than do customers or the

suggestion that one in every fifteen employees steals from his or her employer.

Management of ethical issues require that organizations ensure that their managers and

employees do not commit unethical acts and are familiar with how to deal with ethical

issues in their everyday work lives.

Ethical failures are rooted in leadership failure, the lack of a corporate culture in which

ethical concerns have been integrated, and unresponsiveness to key organizational

stakeholders. This paper seeks to enhance our understanding of the causes of ethical

debacles in an era when ethical missteps can often lead to corporate bankruptcies or

worse. We assert that organizations wishing to behave ethically must do more than
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harbor good intentions. Such companies must implement policies that inculcate the

corporate culture with ethical values. They must also commit to ethical behavior in all

interactions with internal and external stakeholders, including investors, customers,

employees, and the community.

The Challenge of Business Ethics and Corporate Social Responsibility

As a society, we define ourselves by the values we choose to emphasize. Beginning in

the 1980s, a frenzied quest for efficiency led to the endorsement of individualism over

community. The resulting emphasis on short-term returns encouraged a speculative

frenzy in the stock markets and merger mania on..

csr business ethics in ib

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