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Management of InternationalManagement of International

BusinessBusiness

Lecture 2Lecture 2

Corporate Social ResponsibilityCorporate Social Responsibility

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BusinessBusinessAim of presentationAim of presentation

Explore the concept of ethics and ethicalExplore the concept of ethics and ethical

behaviourbehaviour Examine the relationship between business andExamine the relationship between business and

ethicsethics

Define Corporate Social responsibility (CSR)Define Corporate Social responsibility (CSR)

Outline the theoretical debate that underpin theOutline the theoretical debate that underpin the

varying CSR strategies of international businessvarying CSR strategies of international business

Identify regulatory environment for CSRIdentify regulatory environment for CSR

compliancecompliance

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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 apparelordered for Christmas

Dan McDougall

Sunday 28 October 2007

The Observer

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


BusinessBusiness

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What constitutes Ethics andWhat constitutes Ethics and

Ethical Behaviour?Ethical Behaviour?

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BusinessBusinessDefining Ethics:Defining Ethics:

EthicsEthics are an individual'sare an individual's

beliefs about whetherbeliefs about whether

a decision, behavior, or actiona decision, behavior, or action

is right or wrongis right or wrong (Griffin and Pustay)(Griffin and Pustay)

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BusinessBusinessEthical Behaviour:Ethical Behaviour:

Behavior that conforms to generally acceptedBehavior that conforms to generally acceptedsocial norms, guidelines for good conduct orsocial norms, guidelines for good conduct or

morality.morality. Varies between people, therefore pose dilemmasVaries between people, therefore pose dilemmas

for international business and ideas offor international business and ideas ofglobalisationglobalisation

The idea of global ethics is normative (an idea ofThe idea of global ethics is normative (an idea ofwhat should be)what should be)

Ethical dilemmas are not automatically questionsEthical dilemmas are not automatically questionsof legalityof legality

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BusinessBusinessEthical Behaviour is shaped by:Ethical Behaviour is shaped by:

Individuals and group belief systemsIndividuals and group belief systems

Cultural context shapes individual and groupCultural context shapes individual and groupbeliefsbeliefs

National culture or global cultureNational culture or global culture

Ability to rationaliseAbility to rationalise behavioursbehaviours

Circumstances that affect adherence toCircumstances that affect adherence tobelief systemsbelief systems

Questions of homogeneity problematise theQuestions of homogeneity problematise the

concept of globalisationconcept of globalisation

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Whats the relationship betweenWhats the relationship between

International Business and Ethics?International Business and Ethics?

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BusinessBusinessEthics and BusinessEthics and Business

Organizations face ethical dilemmasOrganizations face ethical dilemmas Decisions by organizations create ethicalDecisions by organizations create ethical

dilemmasdilemmas

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BusinessBusinessThe relationship between business and ethicsThe relationship between business and ethics

is central tois central to ::

How Organizations Treat EmployeesHow Organizations Treat Employees

How Employees Treat the OrganizationHow Employees Treat the Organization

How Employees and Organizations TreatHow Employees and Organizations Treatother Stakeholders.other Stakeholders.

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BusinessBusiness

Ethics and

Culture

Behaviour of

Organization

Toward Employees

Behaviour of

Employees

Toward Organization

Behaviour of Employees

and Organization

Toward Other Stakeholders

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Management of International BusinessManagement of International Business

Stakeholders

General social

welfare

Natural

environment

Areas of Social ResponsibilityAreas of Social Responsibility

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BusinessBusinessStakeholder can be defined as :Stakeholder can be defined as :

Stakeholder is any individual or group whoStakeholder is any individual or group whocan affect or is affected by the actions,can affect or is affected by the actions,

decisions, policies, practices or goals of thedecisions, policies, practices or goals of the

organisation ( Carroll and Buchholtz, 2000)organisation ( Carroll and Buchholtz, 2000)

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BusinessBusinessCorporate Social ResponsibilityCorporate Social Responsibility isisthe set of obligations anthe set of obligations anorganization undertakes to protectorganization undertakes to protect

and enhance the society in which itand enhance the society in which itfunctionsfunctions (Griffin and Pustay)(Griffin and Pustay)

Beyond legal obligations to balanceBeyond legal obligations to balance

commitment to investors, customers,commitment to investors, customers,other companies and communitiesother companies and communities(Wild, Wild and Han)(Wild, Wild and Han)

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BusinessBusiness

Philanthropic

Responsibility

Ethical

Responsibility

Legal responsibility

Economic responsibility

Source: Carroll 1991

Carroll (1991) : CSR comprises of 4 layers

Desired by Society

Expected by Society

Required by Society:

Required by Society:

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BusinessBusinessIssuesIssues

Bribery and corruptionBribery and corruption

Labour conditions and human rightsLabour conditions and human rights Fair trade practicesFair trade practices

EnvironmentEnvironment

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BusinessBusiness

Guidelines or

codes of ethics

Organizational practices

Corporate culture

Ethics training

Managing Ethical Behaviour Across BordersManaging Ethical Behaviour Across Borders

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Which theoretical debatesWhich theoretical debates

underpin choice of approach tounderpin choice of approach toCSR?CSR?

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BusinessBusiness4 main philosophies of business ethics and4 main philosophies of business ethics and

social responsibilitysocial responsibility (Wild,Wild and Han)(Wild,Wild and Han)

The Friedman ViewThe Friedman View The cultural relativist viewThe cultural relativist view

The righteous moralist viewThe righteous moralist view

The utilitarian viewThe utilitarian view

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BusinessBusinessFriedman ViewFriedman View

Profit maximisation for the ownersProfit maximisation for the owners

(Shareholders) is the sole responsibility(Shareholders) is the sole responsibility Reliant on a very narrow definition ofReliant on a very narrow definition of

stakeholderstakeholder

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BusinessBusinessCultural Relativist ViewCultural Relativist View

A company should adopt the local ethicsA company should adopt the local ethics

wherever it operates ( as belief systems arewherever it operates ( as belief systems areshaped within the specific cultural context)shaped within the specific cultural context)

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BusinessBusinessThe righteous moralist viewThe righteous moralist view

A company should maintain its homeA company should maintain its home

country ethics wherever it operates ( as thatcountry ethics wherever it operates ( as thatbelief system is regarded as right/superior )belief system is regarded as right/superior )

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BusinessBusinessUtilitarian ViewUtilitarian View

The right behaviour produces greatest goodThe right behaviour produces greatest good

for the greatest number of peoplefor the greatest number of people A company should maximise goodA company should maximise good

outcomes and minimise bad outcomes.outcomes and minimise bad outcomes.

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BusinessBusiness

Obstructionist

Defensive

Accommodative

Proactive

These philosophies of business ethics and socialThese philosophies of business ethics and socialresponsibility shape approaches of firms to CSRresponsibility shape approaches of firms to CSR

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BusinessBusiness

Least

Responsible

Most

Responsible

Obstructionist Defensive Accommodative Proactive

Approaches to Social ResponsibilityApproaches to Social Responsibility

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BusinessBusinessObstructionist StanceObstructionist Stance

Do as little as possible to address social orDo as little as possible to address social orenvironmental problemsenvironmental problems

Deny or avoid responsibilityDeny or avoid responsibility

ExampleExample

NestleNestle

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BusinessBusinessDefensive StanceDefensive Stance

Do what is required legally, but nothingDo what is required legally, but nothing

moremore Corporate responsibility is to generateCorporate responsibility is to generate

profitsprofits

ExampleExample Philip MorrisPhilip Morris

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BusinessBusinessAccommodative StanceAccommodative Stance

Meet ethical and legal requirements and moreMeet ethical and legal requirements and more

Agree to participate in social programsAgree to participate in social programs

Respond to requests (NGOs)Respond to requests (NGOs)

No proactive behavior to seek such opportunitiesNo proactive behavior to seek such opportunities

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BusinessBusinessProactive StanceProactive Stance

Strong support of social responsibilityStrong support of social responsibility

Viewed as citizens of societyViewed as citizens of society

Seek opportunities to contributeSeek opportunities to contribute

ExamplesExamples The Body ShopThe Body Shop

Ben & JerrysBen & Jerrys Green and BlacksGreen and Blacks

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BusinessBusinessStance on CSR conditioned byStance on CSR conditioned by

Internal organisationInternal organisation -- leadership and cultureleadership and culture

External EnvironmentExternal Environment Political/Legal (national, regional, international)Political/Legal (national, regional, international)

EconomicEconomic

SocioSocio--culturalcultural

TechnologicalTechnological

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The Regulatory Environment forThe Regulatory Environment for


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BusinessBusiness

InternallyInternally

corporate social auditcorporate social audit--

a formal analysis ofa formal analysis ofthe effectiveness of the firms socialthe effectiveness of the firms social

performance.performance.

ExternallyExternally

Governments ( national and regional)Governments ( national and regional)

Whistle blowing (often NGO)Whistle blowing (often NGO)

Evaluating Social ResponsibilityEvaluating Social Responsibility

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BusinessBusiness

The state

Civil societyThe market

The tripartite relationship that shapes the

regulatory environment

This relationship differs in different countries and

regions of the world

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Regulation of Ethics and Social ResponsibilityRegulation of Ethics and Social Responsibility SelfSelf--regulationregulation

National regulationNational regulation

Eg US Alien Tort Claims ActEg US Alien Tort Claims Act International Agreements andInternational Agreements and

OrganisationsOrganisations

Eg. AntiEg. Anti--Bribery Convention of the OrganizationBribery Convention of the Organizationfor Economic Cooperation and Developmentfor Economic Cooperation and Development

United Nations Declaration of Human RightsUnited Nations Declaration of Human Rights

International Labor Organization (ILO)International Labor Organization (ILO)

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ConclusionsConclusions

CSR an increasingly salient issue forCSR an increasingly salient issue forinternational businessinternational business

What constitutes ethical behaviour and theWhat constitutes ethical behaviour and the

appropriate strategies of business isappropriate strategies of business iscontestedcontested

Corporate social responsibility strategiesCorporate social responsibility strategiesreflect both the internal and externalreflect both the internal and externalenvironment in which international businessenvironment in which international businessoperates.operates.

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CSR and Your AssignmentCSR and Your Assignment

Written assignment (60%)Written assignment (60%)

--CSR approach of companyCSR approach of company

--How CSR approach shapes expansionHow CSR approach shapes expansionstrategystrategy egeg Nestles in Africa,Nestles in Africa,

Philip Morris in ChinaPhilip Morris in China

Vodafone in AfricaVodafone in AfricaBen & Jerrys in EUBen & Jerrys in EU

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ThisWeekThisWeek

Tutorial 2 : preparation work on MTVTutorial 2 : preparation work on MTV

Tutorial 3 : preparation work on ShellTutorial 3 : preparation work on Shell

Group workGroup work -- first meeting with the groupfirst meeting with the groupmembers?members?

Documents

Lecture 2 CSR %28Bp%29-2