Learning Objectives. Business Ethics Across Cultures. Global Social Issues. Ethical Theories. Global Social Responsibility and Ethics

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1 Business Ethics Across Cultures Global Social Responsibility and Ethics Learning Objectives Provide an understanding of the major social issues that companies need to address in the global marketplace in order to be considered socially responsible practitioners Consider the use of codes of ethics by global companies to address issues relating to social responsibility Demonstrate how corporate social responsibility and ethical practice can provide competitive advantage in the global marketplace Global Social Issues Key global social issues include Corruption Human rights Labour practices Environmental protection Consequence Based Utilitarianism produces the greatest good for the greatest number of people Ethical Theories Duty Based deontological [Greek for Duty] Universal moral standards[kant] Correct 1

2 Contract Based Designed to maintain Social Order and Harmony Ethical Theories Virtue-Based Adherence to laws MacIntyre stated acquire human qualities that enable the person to achieve the good in their chosen vocation Religious Models Judeo-Christian [Old Testament] Judaism Christian [New Testament] Islam Confucianism Hinduism Buddhism African Traditional CORRUPTION 'The abuse of public office for private gain' (Lasserre, 2003) Term covers a range of practices including bribery, fraud, money laundering, cronyism, extortion, embezzlement Perceived to be widespread around the world The Corruption Perceptions Index (CPI) 2

3 Bribery The Bribe Payers Index (BPI) The offering, giving, receiving, or soliciting of something of value for the purpose of influencing the action of an official in the discharge of his or her public or legal duties. [Accesses March 2012] The Impact of Corruption Corruption and development Reduces government tax revenues Limits government ability to invest in public health and education Weakens the public infrastructure on which growth depends Increases construction projects costs Increases susceptibility to financial crises Damages future business potential The Impact of Corruption Corruption and business Increases the costs of doing business Erodes competitive advantage Blocks access to international markets Damages market efficiency Loss of reputation Credit restrictions and blacklisting 3

4 Human Rights The standards of treatment to which all people are entitled Universal Declaration of Human Rights adopted by the United Nations in 1948 Companies normally become implicated in human rights issues through their involvement with governments using abusive methods to protect the interests of the company Company Responses to Human Rights Issues Abandonment of operations in certain markets e.g. Burma Partnership activities e.g. Kimberley Process Certification Scheme for conflict diamonds United Nations Global Compact The United Nations Global Compact Labour Practices Main focus sweatshops and use of child labour Relationships with subcontractors "When local producers in Vietnam, Pakistan or Honduras exploit their workforce, few in the West hear of it... but when those same producers become suppliers to Reebok, Levi Strauss or Walt Disney, their actions make headlines" (Spar, 1998) 4

5 Environmental Concerns Climate change and global warming Deforestation Waste management Food production and distribution Environmental management National regulation sets minimum standards Socially responsible companies exceed these standards Generate new approaches to environmental management Essential business tool in gaining and sustaining competitive advantage Benefits from environmental management New revenue streams Improved product design Greater asset retention Reduced material use Increased worker productivity Enhanced brand Expanded market share Sustainable development Meeting the needs of the present generation without compromising the ability of future generations to meet their own needs Holistic approach to the environment Changes to management systems, company philosophy, marketing approaches Aim to enhance the triple bottom line economic efficiency, environment, equity Protect and restore ecological systems and well being 5

6 The Corporate Response to Global Social Issues Adoption of codes, standards and principles to meet the challenge of global social issues Corporate social responsibility is concerned with the impact of business on the societies within which it operates Corporate ethics is concerned with issues of individual decision making and the development of ethical conduct Codes of Ethics Express the organisation s values and culture Create guidelines for employees to work by Two main forms Integrity based codes Compliance based codes Corporate codes and International Companies Codes of conduct Normally compliance based Sets out guidelines on key social issues Forms basis for relationships with suppliers, contractors and licensees Externally audited Statement of business principles Essential corporate values Company standards and practices Value statement Integrity based Emphasises individual responsibility for ethical conduct Making Codes Effective 6

7 Ethics Training Most companies conduct in-house ethics training Programmes centre on dissemination and communication of ethical codes Discussion of ethical dilemmas Participative training sessions Workshops Web based interactive training Ethical scenarios Training cascaded via reporting line Ongoing support Involvement of senior management Corporate Social Responsibility and Competitive Advantage Corporate social responsibility as a source of competitive advantage Reputation management Risk management Employee satisfaction Innovation and learning Access to capital Improved financial performance Reputation Management Build up of trust with stakeholders Attraction of capital Attraction of trading partners Key issue is credibility Greenwashing Bluewashing Sweatwashing Risk Management Socially responsible practice has a key role in risk management Signals that companies take ethical risk seriously Signals that companies are safe custodians for capital investment Alerts companies to emerging issues Encourages dialogue and partnership 7

8 Employee Satisfaction A reputation for social responsibility can attract/retain talented staff Increases loyalty Key issue for graduate recruitment Increased productivity Innovation and Learning Design of new products and processes New market opportunities Social needs and product design Unilever Ben & Jerry s Body Shop International NEC Access to Capital Increasing market for ethical investment Financial providers screen for ethical investment New stock market indices FTSE4Good Dow Jones Sustainability Index Ethical investment normally matches or outperforms traditional investment International institutions lending and credit policies Improved Financial Performance Reduction of operating costs through improved environmental management Increases in productivity Less materials wastage Lower power costs Lower waste disposal costs Lower packaging costs 8

9 Case Study Abuse of Copyrights regulations Read the hand out Identify who is wrong and why What could be the factors influencing any unethical behaviour 9