Business Ethics and CSR in International Business - Coursework Example

1 Business Ethics and CSR in International Business The general consensus is that Business Ethics and Corporate Social Responsibility are separate, but not exclusive fields: Coupled with the fact that both the extent and the nature of Business Ethics and Corporate Social Responsibility, have characteristic variances, which in an operational sense, prompts each organization to either react or act in the application of one or the other. The primary focus of Business Ethics programs is to “prevent harm”, while the guiding force of Corporate Social Responsibility programs is to “do good”. Albeit the two concepts vary, and the thrust may vary from company to company, the focus of the two concepts is invariably shared by most. Zadek argues that: …”Coporate citizenship [which, for present purposes, is a synonym for CSR] has emerged in its contemporary forms within the context of the emerging new economy…Characterized by the acceleration of every aspect of social life, the collapse of geographical distance as a basis for defining and sustaining difference, and the growing significance of knowledge and innovation as the primary source of business competition and economic value”(Zadek 2001). Due to the level of acceptance of this theory, CSR is rapidly becoming to be viewed, “as an economic resource”(McWilliams & Seigel 2001). Held 1977, Hirst 1994, suggest that, “globilisation is creating a cosmopolitan democracy, involving processes of association and participation at local, national and international levels, in all civil, state and private sectors”(Held, Hirst). On the other hand Strange 1996, Sassen 1998, have a variant view 2 and these social scientists suggest, “the diffusion of power from state to civil society and business represents an undermining of democracy”(Strange 1996). Accordingly, Ottaway 2001 takes the issue one step further: “this approach therefore suggests we question the increasing collaboration between sectors of society on various public policy issues as potentially un-democratic”(Ottaway 2001). The primary premise for drawing the distinction between Business Ethics and Corporate Social responsibility, “can be drawn from the strategies that each approach deploys”(Altham). An example would be, “ethics officers focus on responding to hotline calls: employee questions and concerns. Therefore, they become involved in resolving a problem only after it has been identified”(Altham). Clearly, this strategy is reactive and in the initial stages, it contributes little if anything at all to prevention. It does, however, provide a framework for the prevention of similar occurrences in the future. Moreover, in an international setting, this reactive approach to business ethics could result in dire or expensive consequences. Few companies develop ethics programs with elements that take responsibility for doing good on behalf of their employees, like reviewing family benefits or addressing unfair pay scales. Whenever an international company takes on independent sub contractors to produce a product, ethically the corporate entity automatically assumes the responsibility of assuming that the bad practices of the sub contractor will not in any way,infringe upon the workers. Niles arrangement with its international vendors is a prime example of corporate action regarding levels of responsibility that Business Ethics and Corporate Social 3 Responsibility provide: “When problems surfaced regarding the abuse of employees and unfair wages in the factories producing Nike athletic shoes, human rights activists pressured Nike to assume responsibility for the employees of its independent contractors”(Altham) “At the time, Nike’s contractors agreed upon a code of conduct and the monitoring of health and safety standards. Auditing firms were then brought on board to monitor such issues as unfair wages, work schedules and child labor. Hence, Nike essentially accepted responsibility for “preventing harm”, to any worker associated with manufacturing its product”(Altham). Additionally, Corporate Scial Responsibility has its foundation in the use of proactive strategies. This may often result in the creation of new business practices in fostering change. “…Ironically by sticking its neck out in the support of certain causes or values, a CSR company may actually increase rather than minimize risk;, depending upon which causes or values it elects to support”(Altham). “…as pressure and publicity increased through the mid 1990’s, Nike extended its activities. For example, the code, itself, was tightened to surpass local laws to promote better working conditions with restricted working hours. As part of its monitoring and improvement program, the company under took cultural sensitivity training for its contractors expatriate supervisors”(Altham) As one views the program issues which are inherent of the policy adopted by Nike, it is evident that the program’s scope is broad and far reaching. It is centered in the 4 concerns expressed by a group of stakeholders from the community-at-large, and it will indirectly affect the government, as it is tasked with the responsibility of safe-guarding the human rights of its citizens. The company’s stance on initiating cultural sensitivity training will invariably position it to reposition its Business Ethics paradigm from a reactive position, to that of a proactive posture. “…As international markets and businesses expand, so does the influx of ethical difficulties within the workplace and the communities in which businesses operate. It is in each company’s best interest to develop and incorporate elements of both Business Ethics and Corporate Social Responsibility into its agends, because the challenges of the new millennium will, no doubt, require an integrated approach to the issue of corporate ethics”(Altham). Some of the other major issues which are to be considered and met by companies are: Environmental issues: pollution control, transport, suppliers, health, energy, water, waste management, hazardous substances and safety. Socio-economic and community-at-large issues: facilitation payments, bribery, pricing, indigenous people, corruption, financial transparency, political contributions, land rights, displacement and resettlement. Human rights and labor laws: wages, labor and management relations, freedom of association, forced child labor, hours of work, harassment and abuse, security practices, diversity, gender, race/ethnicity, non-discrimination, and terms of employment. 5 Over the past twenty years, through experience networking among companies and consultants, a number of trends have been manifested and this has produced a convergence around certain issues. Adversely, it has also resulted in a non- convergence in some areas. The most prominent convergence of all issues can be found in the labor area as it affects discrimination, forced child labor, along with safety and health. All of the other issues in this category are also important; wages, benefits, and terms of employment. These are all critical ethical issues which are appropriately safe-guarded by parochial laws or standards of the various industries. According to Smith and Feldman, security practices are,”perhaps the single most important human rights issue to extractive companies”(Smith et al). facilitation payments have been put in place to circumvent all types of bribery and its accompanying corruption. According to Anita Baker, in International Business ethics Review, Volume B Issue 1,; “some companies want to eliminate all forms of facilitation payments”(Baker) “In 2002, for example, BP rejected all facilitation payments through its group, and is attempting to eliminate these payments by its agents as well. BP’s policy actually exceeds the standards as defined by the US Foreign Corrupt practices Act. BP regards “small facilitating payments as bribes and will not make them”(Baker) “There appears to be a lack of convergence on the issues of environment and human rights”(Smith & Feldman). Accordingly, a study by Jorgensen & Pruzan indicates, “most companies do not express an interest in human rights (except for 6 labor rights), and environmental concerns. Concluding that these two areas are not promising for “code enforcement”(Jorgensen et al). The thorniest issues as expressed by Smith and Feldman, are the issues, “surrounding freedom of association, collective bargaining, and security of employment”(Smith et al). These issues suffer from the absence of a blanket unified policy on most national levels, coupled with the fact, that company codes rarely specifically address these topics, and it is difficult to formulate across the board with specificity. The international standard or the tolerance for socio-economic bribery, corruption, community-based issues, financial transparency, the applicability of standards to agents and suppliers, and political contributions, does not exist across the board. Albeit, most companies espouse financial transparency, the variance of actual fact and the actual adherence reveals a large gap.Political contributions are left up to the discretion of individual companies, who will make contributions in accordance with perimeters established by local law. However, there are companies like “BP, Oderbrechts, Occidental, Shell, Statoil, and Total, who preclude their affiliates from making any type of political contributions in countries where their operations are housed”(Feldman) While there is evidence of convergence in some areas by some companies, there is also an emphasis and de-emphasis, placed on some ethical and CSR areas, depending on the company’s product or service; “…The Ethical Trading Initiative, SA8000, and fair Trade Label, are important to 7 agribusiness, but less so to gas, oil and mining companies”(Baker) “…Labor issues receive the most detailed attention in the codes of apparel, footwear, and light industry, but are not addressed to nearly the same extent among extractive companies”(Baker) Bibliography Altham, J.(2001) Business Ethics and Corporate Social Responsibility: Competing or Complimentary Approaches Baker, A., (2003), Are Sutandards becoming Standard Operating Procedures? An International Update, International Business Ethics Review Held, D. (1997), Democracy and Globalization, Global Governance, Vol 3 No.3 Hirst, P. (1994), Associated Democracy: New Forms of Economic and Social governance, U. Mass Press Jorgensen, H.B. & Pruzan, P.M. (2003), strengthening Implementation of Corporate Social Responsibility in Global Supply Chains, PWC/World Bank, Copenhagen McWilliams A., & Siegel D. (2001) Corporate Social Responsibility: A Theory of the Firm Perspective. Academy of Management Review, 26 (1) Ottaway, M. (2001) Corpotism goes Global: International organization, NGO Networks and Transistional Business, Global Governance Sassen, S. (1998) Globalization and its Discontents, New Press NY Smith & Feldman (2003) Company Codes of Conduct and International Standards an Analytical comparison, World Bank/IFC, Wash. D. C. Strange, S., (1996), The retreat of the State: The Difusion of Power in the World Economy, Cambridge Univ. Press Zadek, S. (2001), The Civil Corporation: The New Economy of Corporate Citizenship, London Read More