ETHIC AND SOCIAL RESPONSIBILTY
ETHIC AND SOCIAL RESPONSIBILTY
• Ethical behavior is personal behavior in
accordance with guidelines for good conduct
or morality.
• Corporate social responsibility (CSR) : is the
practice of companies going beyond legal
obligation to actively balance commitments to
investors, customers, other companies, and
communities.
Philosophies of Ethics and
Social Responsibility
• Four commonly cited philosophies of business
ethics and social responsibility
1. The Friedman view
2. Cultural relativism view
3. The righteous moralist view
4. The utilitarian view
1. The Friedman
• The Friedman view of CSR says that a company’s sole
responsibility is to maximize profits for its owners while
operating within the law
• He rejects the idea that businesses should undertake social
expenditures beyond those mandated by the law and required
for the efficient running of a business
“There is one and only one social responsibility of business—to use its
resources and engage in activities designed to increase its profits so long as it
stays within the rules of the game, which is to say that it engages in open
and free competition without deception or fraud”
-> But, is it social responsibility a synonym for business ethics?
2. Cultural Relativism
• All ethics are culturally determined - ethics are nothing
more than the reflection of a culture
• Accordingly, A company should adopt local ethics wherever
it operates.
• Cultural relativism sees truth, itself, as relative and argues
that right and wrong are determined within a specific
situation
• If you look around the global, many different cultural have
a different approach to what is deemed appropriate or
“Good”
If a culture supports slavery, is it OK to use slave labor
in a country?
When in Rome,
do as the Romans do
3. The Righteous Moralist
The righteous moralist view : A company should maintain its
home-country ethics wherever it operates because the home-
country's view of ethics and responsibility is superior to other
views
Examples: American bank manager in Viet Nam
U.S. laws set down strict guidelines regarding minimum
wage and working Conditions. Should US apply the
same in a foreign country?
It will nullify the reason for investing in that
country
4. The utilitarian
• The utilitarian view: A company should behave in a way that
maximizes “ good” outcomes and minimizes “ bad” outcomes
wherever it operates.
Ask the question : “ What outcome should I aim for?”
And answers : “ That which produces the best outcome for all
affects parties”
Minimizes
Maximizes “GOOD”
“BAD”
Corporate Social Responsibility Issues
1. Bribery and Corruption
“Bribery and corruption has been a problem in almost every society in history,
and it continues to be one today”
• Bribes- back handers and nepotism: they hamper economic development,
undermine justice and prevent democracy.
• Beside corruption also send resources toward inefficient uses, hurt economic
development, distort public policy, and damage national integrity
Corruption is most likely to be seen in countries where:
• Wages are lower (officials are more likely to take a bribe)
• Job opportunities are scarce
• There's a lack of transparency and accountability
How to reduce bribery and corruption????
Example: In Russia - NON-CASH PAYMENT
SOLUTIONS TO AVOID CORRUPTION
Elena Panfilova, head of our chapter in Russia,
puts it in the article:
“Our polls clearly state
that most Moscow
drivers didn’t like paying
fines hand-to-hand, in
cash and on the roads.
But they still do it
because nobody has time
to wait in bank lines (to
pay the fines).”
2. Labor Condition and Human Right
• Labor condition and Human rights are a group of legal rights
and claimed human rights having to do with labor relations
between workers and their employers, usually obtained under
labor and employment law.
• Rights that we take for granted in developed nations, such as
freedom of association, freedom of speech, freedom of
assembly, freedom of movement, freedom from political
repression, and so on, are by no means universally accepted
• Examples: South Africa until 1994; China’s human rights
record; Myanmar (formally known as Burma); Royal Dutch
Shell in Nigeria
Video Honda Employees in China Strike
https://www.youtube.com/watch?
v=MtEmwZU9UpY
3. Fair Trade Practices
What are fair trade practices?
Fair trade boils down to promoting sustainable, fair
price trading at all levels of business. Most efforts focus
on individual or small group producers in third world
countries. The practices of fair trade involve promoting
living wages for workers in their local communities.
Example: Transfair USA certifies that product meets the following :
Fair Prices
Fair Labor Condition
Producer group receive
a guaranteed minimum Farms do not employ children, and
floor price workers are given freedom of
association, safe working
conditions, and a living wage
Direct Trade
Whenever possible, importers
purchase from producer group to Democratic Community
eliminate intermediaries Development
Farmer and worker decided how to
Environmental Sustainability spend their Fair Trade premiums in
social and business development
projects.
Farming methods protect the
health of farmers and preserve
ecosystems
Environment
• Ethical issues arise when environmental regulations in
host nations are inferior to those in the home nation.
• Should a multinational feel free to pollute in a
developing nation?
• ‘tragedy of the commons’ occurs when individuals
overuse a resource held in common by all (Garrett
Hardin)
• Examples: Coca Cola plant in Viet Nam
BUSINESS AND INTERNATIONAL RELATION
Explain how international relations affect
international business activities.
• Political relations between a company’s home
country and those with which it does business
strongly affect its international activities.
• In general, favorable political relations lead to
increased opportunity and stable business
environments.
• The mission of the United Nation (UN) is to provide
leadership in fostering peace and stability around the
world
• Although its global peacekeeping efforts have had
mixed result, the UN helps poor nations by providing
food and medical supplies, educational supplies and
training, and financial resource.
