For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

ETHICS AND CORPORATE SOCIAL RESPONSIBILITY IN

A GLOBAL CONTEXTChapter 6

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Learning objectives

• Explain how conflict affects business and give examples of how business can contribute to conflict prevention and management.

• Identify and assess the challenges faced by companies in selling their products and services to the poor.

• Outline and evaluate the ways in which corruption affects the economy and business.

Ethics and corporate social responsibility in a global context

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

TOPICS

• The global context of business activity

• Operating in conflict zones

• Role of business in poverty alleviation

• Corruption: From business as usual to economic malaise

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

THE GLOBAL CONTEXT OF BUSINESS ACTIVITY

Ethical issues:• Corruption, • Labour standards• Product safety

• Imposing foreign values• Workspace practices• Management across national borders

• Human rights issues• Global ethical standards• WTO, UN

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

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Ethics and corporate social responsibility in a global context

OPERATING IN CONFLICT ZONES

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

OPERATING IN CONFLICT ZONES

Business risk and costs:

Security costs

Material losses

Impact on share prices

Litigation costs

What can businesses do?

Mediation (venue, funding)

Upholding of sanctions

Peacekeeping (facilitate

relationships and information)

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

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Ethics and corporate social responsibility in a global context

ROLE OF BUSINESS IN POVERTY ALLEVATION

The nature of poverty:

1. Poverty has physical, material and psychological

dimensions.

2. The state has been ineffective in helping the poor.

3. The poor depend on friends and informal networks.

4. Families suffer under the tension of poverty.

5. Social network and support are unravelling.

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

ROLE OF BUSINESS IN POVERTY ALLEVATION

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

ROLE OF BUSINESS IN POVERTY ALLEVATION

Helping the poor through business

The poor represent a large pool of potential customers

and offer a good market to test and develop products.

It benefits companies but also helps the poor access to

services and reduce their cost of living.

Distribution and adaptation of product and service is

key. E.g. Shampoo, tea and medicine can be sold in s ingle-

servings rather than in mega-packs

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE

Factors that influence corruption across countries:

Regulatory power of

state

Economic development

Education and human

capital

The less power the

public sector has, the fewer opportunities for corruption

Low income countries tend

to have greater levels of corruption

Low human capital (poor education)

tend to lead to corruption with

countries

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE

Factors that influence corruption across countries:

Public sector wages

Culture and social norms

Expectations on

corruption

Low wages is associated

with corruption as

bureaucrats seek to top-up

their wages

Exchanging gifts are in

many countries seen

as a part of the business relationship

The fewer the people that

are believed to be corrupt the less corruption

tend to take place

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE

But is corruption really so bad?

Corrupt governments may be more efficient that non-

corrupt once

Corruption may improve allocation efficiency.

Corruption may speed up the slow process of government

bureaucracy.

Corruption has less adverse effects when it is centralized

as opposed to decentralized.

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE

Fighting corruption

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE

Fighting corruption

US foreign Corrupt Practices Act (FCPA), enacted in 1977, which prohibits US companies from providing anything of value to foreign officials for obtaining or retaining business.

EU Convention on Corruption, adopted in 1997, which consdiers bribes to be paid inside and outside the European Union Criminal and in this way provides for the prosecution of civil servants from the EU and its members states.

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE

Fighting corruption

OECD Convention on Combating Bribery of Foreign Public Officials in International Transactions from 1999 requires participating countries to introduce and enforce laws that make it a crime for domestic companies to ‘offer, promise, or give any undue pecuniary advantage, whether directly or through intermediaries, to any foreign public official’ to gain advantage or business relations

The Global Compact, a voluntary initiative set fourth by the United Nations,. Invites companies to ‘work against corruption in all its form, including extortion and bribery’ through the development of policies and concrete programmes.

For use with Business Ethics and Corporate Social Responsibilityby Paul Griseri and Nina Seppala

1408007436 © 2010 Cengage Learning

Ethics and corporate social responsibility in a global context

SUMMARY

• The poor are increasingly seen as a promising

market segment.

• Corruption distort competition and functioning of the

free markets by giving and invisible advantage to

companies that are ready to pay a bribe.

• Few industries gain from violent conflict. Zones of

conflict are normally a source of risk and additional

expenses for companies.