Annie Tran BIS13

Managing Sustainability: Ethics & CSR

Business ethics is the reflection on the ethical behaviour of business organisations.

The Challenge of ETHICS

Corporate Social Responsibility (CSR): occurs when organisations seek to meet or exceed legal and normatively
mandated standards, by considering the greater good of the widest possible community with regards to the
environment, social, economic, legal, ethical and philanthropic impact of the organisations way of conducting
business and the activities they undertake.

A business approach that creates long-term value for the organisation by incorporating
economic, environmental and social dimensions into its core business decisions

The key to a business successfully demonstrating its commitment to CSR is ultimately through its actions. A
business can do this by:

> Investing in community projects > Adopting environmentally friendly practices

> Supporting research initiatives > Drafting and applying a code of ethics to
> Introducing OH&S measures company operations

Stakeholders: are key individuals or groups of individuals with vested interest or stakes in a given decision or
project.

Direct Stakeholder is a customer, supplier, government body, or anyone else formally linked to the
organisation(s).
Indirect Stakeholder is a member of the community who is not directly involved in the organisation(s) but
is affected by its behaviour; such as a resident in its immediate community.

The growing interest in CSR demonstrates that stakeholders expect more from organisations than just financially
successful performance.

Sustainability: literally, ensuring that resources are renewed.

Ecological sustainability refers to the development and use of methods of production that allow resources to be
used by producers today without limiting the ability of future generations to satisfy their needs and wants.

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Organisational Sustainability is concerned with:

GREEN (environmental) issues

Social justice
o A socially just society is based on the principles of equality and solidarity, understands and values
human rights, and recognises the dignity of every human being
o not only between society and organisations, but within organisations as well
Long term rather than short term

Business Ethics
Ethics can be defined as what is good or right for human beings.
The basic concerns of ethics are:

1. Individual character incl. what it means to be a good person

2. The social rules that govern and limit our conduct, especially the ultimate rules concerning right and wrong
which we can call morality.

Ethical behaviour involves making decisions that are not only legally correct but also, in a sense, morally correct.

Business ethics are the rules and principles a business follow to be a good corporate citizen.

Business ethics is the application of moral standards to business behaviour such as:
o Fair and honest business practices
o Decent workplace relations
o Conflict of interest situations
o Accurate financial management
o Truthful communication.

Broadly speaking there are two different schools of thought in the business ethics community. For some business
ethics is conceived of as a normative ethics.

Normative Ethics seeks to establish means of judging whether business practices are right or wrong.
o Can assist managers in dealing with moral dilemmas or to enable past actions to be judged in terms
of their ethicality.
o Business ethics used normative models in order to investigate the ethical nature and consequences
of particular events or practices in the business.
o Managing ethics is done through formalised codes of conduct that should govern everyday actions
and decisions.

The study of business ethics has also been pursued through a descriptive approach because it uses scientific
analysis to describe the actual behaviour of organisations and their members.

Why be ethical?

Global business environment: business-society relationship

Public perceptions of business practices
Regulation reflecting societys concerns
Demonstrated ethical leadership, trust
Good ethics is good business
Costs of criminal/civil liability

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Ethics: many facets, levels of focus
Individual
o Individual choices, professional ethics; what kind of person/leader am I?
Organisation
o Organisational actions, decisions, strategies; culture, corporate social responsibility

Macro/systemic
o Economic, political, legal & social systems in which business operate; environmental, social, political
consequences of business activity.

Strong corporate culture can affect ethics

Organisational culture implement ethics = strong corporate culture

Consider this
Should a company be responsible for people who are exposed to their dangerous products, but who did not
actually buy the products from the company?
Examples:
o People injured in a car accident because of a fault in a car that they were passengers in?
o People who get lung cancer from cigarette smoking but who have never smoked (passing smoking)
o People who buy homes in 2010 but were built with asbestos products in the 1950s

Some commonly used frameworks

DUTIES / MORAL RIGHTS Does a decision or behaviour maintain the fundamental rights of human beings?

INDIVIDUALISM Does a decision or behaviour promote our own long-term interests?

JUSTICE Does a decision or behaviour show fairness and impartiality?

General principles and specific rules relating to fairness, resource distribution.

Types of justice:
- Procedural rules should be clearly stated and consistently and
impartially enforced
- Outcome/distributive different treatment of people should not be
based subjective characteristics
- Interactional

UTILITARIANISM Does a decision or behaviour do the greatest good for most people?

Seeks the greatest good (benefit) for the greatest number of people.
The best course of action has the best outcome for most.
Can apply to either individual acts or general rules.
Though, question is how to define good ?

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Consequence-based framework
Utilitarianism: the end goal can justify the means to get there.
Ethical Egoism: seeking self-interest only
Consequentialist frameworks are typical in business settings.

RIGHTS of Employees DUTIES of Employees

Right to freedom from discrimination Duty to obey lawful instructions and commands:
Right to due process the instructions must be lawful (not illegal) and
Right to healthy and safe working conditions should not put the employee in position of harm or
Right to fair wages risk.
Right to work Duty to work with skill.
Right to privacy Duty to disclose relevant information: medical
Right to collective bargaining & association
information etc.
Right to participation
Duty to respect the employers property
Right to freedom of conscience and speech

The Business of Business is Business that is, to make profit ethically!

Global Perspective
Geocentrism: world oriented view focusing on the best approaches and people from around the world.
E.g. McDonalds.

Parochialism: viewing the world solely through your own eyes and perspective.
Ethnocentrism: best work approaches and practices come from the home country.
Polycentrism: managers in the host country know the best work approaches and practices. (The best global perspective)

What is International Business (IB)?

International Business is any commercial transaction that crosses the borders of two or more nations.

Other perspectives of International Business:

Openness associated with globalisation and internet

o The rise of Multinational Corporations (MNCs)
o Jobs/wealth creation versus Race to the bottom of labour standards. E.g. Nike Sweatshops,
Foxconn workers suicides, etc.
o Increase movements across borders
Sustainability
o Global warming
o Emission trading schemes and carbon taxes
o Renewable energy technologies and energy efficiencies
o Safe practices when getting rid of commercial waste.
o Green washing

Is when an organization spends more time + money advertising that they are "green" or
environmentally-friendly than putting into place, practices that are environmentally-friendly.
Some organizations may do this simply as a matter of public relations.

ALSO, it can be the practice of misleading customers about the environmental benefits of a
specific product through misleading advertising and unsubstantiated claims.

E.g. a company changing the name of their harsh detergent product from Product X to
Product Green, yet the product is still the exact same harsh detergent.

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How different is it from doing business locally? Is it more complex?

Crossing Borders
o State Borders
o Cultural Borders
o Economic Borders (Types of Economic systems market vs command, EU, ASEAN, NAFTA)
o Borders of Mind and Habit

Political and Legal

o The politics of the situation?
o Whos Law?
o Is the law, Law?

Various Modes of Entry

o Foreign Direct Investment (FDI)
o Joint Ventures
o Licensing
o Exports
o Other options

Impact of cultural dimensions in International Business

Cultural dimensions are psychological dimensions, or value constructs, which can be used to describe a specific
culture.

Most famous cultural theorists:

o Geert Hofstede (5 Cultural Dimensions)
o Fons Trompenaars (7 Cultural Dimensions frameworks)
o Stuart Hall (Cultural Factors e.g. High Context vs low context)

Over 200 different cultural dimension Frameworks

Understanding national cultures:

o GLOBE (Global Leadership and organisational behaviour effectiveness)
o framework
o Strength of national culture over organisational culture
o Legal, political and economic influences on culture

Note:
The organisations environment (both internal and external) influences decision making in organisations

The external environment influences the boundaries of what an organisation can do, as well as providing
opportunities and threats to their current processes
The internal environment provides the unwritten rules about how things are done and what is acceptable
and unacceptable behaviour
Managing in a global environment adds a new dimension (and a level of complexity) for the modern
manager
International Business impacts both Multinational Corporations (MNCs) and local businesses