Management of International Business

Lecture 2 Corporate Social Responsibility

Management of International Business

Aim of presentation
 Explore the concept of ethics and ethical behaviour  Examine the relationship between business and ethics  Define Corporate Social responsibility (CSR)  Outline the theoretical debate that underpin the varying CSR strategies of international business  Identify regulatory environment for CSR compliance

Management of International Business

Questions of Ethics are increasingly salient for International Business
For example: Child sweatshop shame threatens Gap's ethical image
An Observer investigation into children making clothes has shocked the retail giant and may cause it to withdraw apparel ordered for Christmas
Dan McDougall Sunday 28 October 2007 The Observer

A Gap worker straightens up clothing. Photograph: Paul Sakuma/AP

What constitutes Ethics and Ethical Behaviour?

Management of International Business

Defining Ethics: Ethics are an individual's beliefs about whether a decision, behavior, or action is right or wrong (Griffin and Pustay)

Management of International Business

Ethical Behaviour:

 Behavior that conforms to generally accepted social norms, guidelines for good conduct or morality.  Varies between people, therefore pose dilemmas for international business and ideas of globalisation  The idea of global ethics is normative (an idea of what should be)  Ethical dilemmas are not automatically questions of legality

Management of International Business

      Ethical Behaviour is shaped by: Individuals and group belief systems Cultural context shapes individual and group beliefs National culture or global culture Ability to rationalise behaviours Circumstances that affect adherence to belief systems Questions of homogeneity problematise the concept of globalisation

Whats the relationship between International Business and Ethics?

Management of International Business

Ethics and Business  Organizations face ethical dilemmas  Decisions by organizations create ethical dilemmas

Management of International Business

The relationship between business and ethics is central to :  How Organizations Treat Employees  How Employees Treat the Organization  How Employees and Organizations Treat other Stakeholders.

Management of International Business

Behaviour of Organization Toward Employees Behaviour of Employees Toward Organization

Ethics and Culture

Behaviour of Employees and Organization Toward Other Stakeholders

Corporate Social Responsibility

Management of International Business Areas of Social Responsibility

Stakeholders

Natural environment

General social welfare

Management of International Business

Stakeholder can be defined as : Stakeholder is any individual or group who can affect or is affected by the actions, decisions, policies, practices or goals of the organisation ( Carroll and Buchholtz, 2000)

Management of International Business

Corporate Social Responsibility is the set of obligations an organization undertakes to protect and enhance the society in which it functions (Griffin and Pustay) Beyond legal obligations to balance commitment to investors, customers, other companies and communities
(Wild, Wild and Han)

Management of International Business

Carroll (1991) : CSR comprises of 4 layers
Philanthropic Responsibility Ethical Responsibility Legal responsibility Desired by Society

Expected by Society

Required by Society:

Economic responsibility Source: Carroll 1991

Required by Society:

Management of International Business

Issues  Bribery and corruption  Labour conditions and human rights  Fair trade practices  Environment

Management of International Business

Managing Ethical Behaviour Across Borders Guidelines or codes of ethics Ethics training Organizational practices Corporate culture

Which theoretical debates underpin choice of approach to CSR?

Management of International Business

4 main philosophies of business ethics and social responsibility (Wild, Wild and Han) The Friedman View The cultural relativist view The righteous moralist view The utilitarian view

   

Management of International Business

Friedman View  Profit maximisation for the owners (Shareholders) is the sole responsibility  Reliant on a very narrow definition of stakeholder

Management of International Business

Cultural Relativist View  A company should adopt the local ethics wherever it operates ( as belief systems are shaped within the specific cultural context)

Management of International Business

The righteous moralist view  A company should maintain its home country ethics wherever it operates ( as that belief system is regarded as right/superior )

Management of International Business

Utilitarian View  The right behaviour produces greatest good for the greatest number of people  A company should maximise good outcomes and minimise bad outcomes.

Management of International Business

These philosophies of business ethics and social responsibility shape approaches of firms to CSR
Obstructionist Defensive Accommodative Proactive

Management of International Business

Approaches to Social Responsibility
Least Responsible Most Responsible

Obstructionist

Defensive

Accommodative

Proactive

Management of International Business

Obstructionist Stance  Do as little as possible to address social or environmental problems  Deny or avoid responsibility  Example
Nestle

Management of International Business

Defensive Stance  Do what is required legally, but nothing more  Corporate responsibility is to generate profits  Example
Philip Morris

Management of International Business

Accommodative Stance
    Meet ethical and legal requirements and more Agree to participate in social programs Respond to requests (NGOs) No proactive behavior to seek such opportunities

Management of International Business

Proactive Stance
    Strong support of social responsibility Viewed as citizens of society Seek opportunities to contribute Examples
The Body Shop Ben & Jerrys Green and Blacks

Management of International Business

Stance on CSR conditioned by  Internal organisation - leadership and culture  External Environment
Political/Legal (national, regional, international) Economic Socio-cultural SocioTechnological

The Regulatory Environment for Corporate Social Responsibility

Management of International Business

Evaluating Social Responsibility

Internally  corporate social audit - a formal analysis of the effectiveness of the firms social performance. Externally Governments ( national and regional) Whistle blowing (often NGO)

Management of International Business

The tripartite relationship that shapes the regulatory environment

The state

The market

Civil society

This relationship differs in different countries and regions of the world

Management of International Business

Regulation of Ethics and Social Responsibility  Self-regulation Self National regulation
Eg US Alien Tort Claims Act

 International Agreements and Organisations

Eg. Anti-Bribery Convention of the Organization Antifor Economic Cooperation and Development United Nations Declaration of Human Rights International Labor Organization (ILO)

Management of International Business

Conclusions
 CSR an increasingly salient issue for international business  What constitutes ethical behaviour and the appropriate strategies of business is contested  Corporate social responsibility strategies reflect both the internal and external environment in which international business operates.

CSR and Your Assignment

 Written assignment (60%) -CSR approach of company -How CSR approach shapes expansion strategy eg Nestles in Africa, Philip Morris in China Vodafone in Africa Ben & Jerrys in EU

This Week
 Tutorial 2 : preparation work on MTV  Tutorial 3 : preparation work on Shell  Group work - first meeting with the group members?