Chapter 10: Global Business Ethics and Social Responsibility
10-1 Understanding Business Ethics and Social Responsibility
Pg 304-311
Ethics deals with what is good or bad and moral obligation. Ethics can help
determine the conduct and behavior acceptable between individuals and groups.
Especially in larger organizations, business ethics determine policies for
environmental issues, social responsibility, and human rights.
Ethics, Business and Law
Everywhere you go, you can find values. Business set up guidelines or rules that
show what is appropriate or not while in business. A related topic is morality,
which refers to more personal principals of behavior.
A society’s history and values determine its ethics. Ethics also govern
relationships and interactions in a society as a whole, or within the larger context
of international business.
Many Western countries embrace the rule of law. These written laws establish
standards or rules that citizens are expected to follow.
There is a difference however, between what is legal and what is ethical. Even
though rules may permit companies to act in certain ways, those acts permitted
may not be ethical. Many times this leads to conflicting interests between the two
values.
Some companies choose to write a clear list of their values so to defeat any
chance of these conflicts arising. This code helps to create a guideline for
businesses to make an acceptable choice.
When involved in international business, many Canadian business people find
that the ethics that we hold here in Canada may not necessarily hold the same in
other countries. This problem can lead to ethical dilemmas.
Cultural Relativism and Ethical Imperialism
Anyone who dose business in, or travels to, a different country is expected to
behave according to the laws and codes of the country. Ethical behavior is
determined by the host country’s value system.
An individual, company, or country acting according to this framework may, try to
impose its ethical standers on another company or country.
Attitudes towards smoking is different jurisdictions can illustrate the difference
between cultural relativism and ethical imperialism. In many countries,
government regulations and company policies allow smoking in public spaces
and workplaces. A foreign company practicing cultural relativism accepts such a
policy and follows local guidelines.
In international business there is the question of the employment of children. In
some country’s it is customary for children to work long hours at a young age and
it is considered acceptable.
Ethical imperialism and cultural relativism present two extremes. As the process
of globalization gather momentum, a consensus is arising that there are many
common values that are shared like respect, fairness, honesty, compassion, and
responsibility. Such core values of caring can override differences between
individual countries. It is also possible to put these values into action without
jeopardizing long-standing traditions of a country’s culture.
Corporate Social Responsibility
Canadian companies are learning to be good corporate citizens in vastly different
cultures. Every company has an obligation to a variety of stakeholders.
Stakeholders consist of the community, employees, customers, suppliers,
investors, and society in general. Stakeholders are the persons or groups
affected by the performance of the organization. As a result of a renewed focus
on stakeholders, many businesses today are promoting social responsibility.
Socially responsible companies serve not only the financial expectations of their
stakeholders but also the ethical interests and demands of all of their
stakeholders.
One measure of corporate success is the social and environmental impact of a
company, its corporate social responsibility (CSR). CSR broadly covers
corporate standards and practices regarding human rights, the environment,
human resources, and community relations. A company’s CSR is a mark of its
willingness to be accountable to its many stakeholders.
Voluntary Codes and Legislated Codes
A voluntary code of conduct is demonstrated in voluntary initiatives, guidelines,
or non-regulatory agreements. Voluntary codes are commitments made by
companies, associations, and other organizations to influence their behavior for
their own benefit and for the sake of their communities. Voluntary or discretionary
codes address the needs of consumers, workers, and citizens while at the same
time allowing companies to be more competitive.
One Canadian organization that has a strict, though voluntary, code of conduct is
Mountain Equipment Co-op(MEC), which was established in 1971 to sell goodquality outdoor equipment that was not readily available in the Canadian
marketplace. The Mountain Equipment Co-op voluntary code focuses on four key
areas:
Business operations sustainability: reduction of waste and energy
consumption.
Product sustainability: monitoring of labor practices and respect for local
communities.
Service and use of MEC products: product re-use, alternatives to buying, and
rental and repair programs.
MEC as a citizen: community and environmental programs.
When producing offshore, MEC ha a firm policy and code in place
covering employee health and safety, working hours, working conditions, and
environmental issues to avoid dealing with factories that abuse their workers’
rights.
Unlike a voluntary code, a legislated code is, in fact, law. Compliance is
mandatory. A number of Canadian government agencies ensure that the
legislated codes are followed, for example, at Canada’s borders, in the
environment, in food production, in health and safety, and in air travel. A
business that fails to follow a legislated code is considered non-compliant and
may face legal sanctions.