Topic 3 Corporate So..

The Pyramid of Ethical
(Cavusgil et. al, 2013)
Dr Fariba Darabi
International Project Week
14th May 2014
Helsinki Metropolia University of Applied Science
Understand the concept of Corporate Social
Identifying and analysing the stakeholders
Understanding ethics and CRS in MNEs, SMEs,
and NGOs
Discuss a sustainable CSR framework
The idea that corporates should consider the
social consequences of economic actions when
making business decision (Hill and HernandezRequejo, 2013).
A proactive approach to ethical behavior aimed
at maximizing profits and benefiting society
and the environment (Cavusgil et al., 2012)
Typically focuses on social impacts of the
corporation on both its internal and external
stakeholders (Painter-Morland and Spence,
(Peng and Meyer, 2011)
Responsible behaviour in SMEs tends to focus
on internal stakeholders
It is more difficult for them to communicate
some of the ethical practice in which they are
They are not always aware of the appropriate
Pressure from consumers is the main reason
why SMEs in developed countries engage in
SMEs tend to have lower bargaining power, and
can't exert the same type of pressure on
suppliers as MNEs
The number of NGOs are increasing because
of the support from ethical consumers
Many of NGOs are global e.g. Green Peace,
and Oxfam
Their growing effectiveness has been
facilitated by globalisation particularly global
communication through technology
(Mellahi, Frynas, and Finlay, 2005)
Cut costs and liabilities
Improve investor standing
Increase customer loyalty &
market position
Promote innovation & new
business opportunities
Enhance reputation
Increase ability to attract &
retain employees
Increase employee
commitment & motivation
Strengthen stakeholder ties
Potential for new business
Protects right to operate
Some argue that investing in emerging economies greatly
increases the economic development and standard of
living of the base of the global economic pyramid. Others
contend that moving jobs to low-cost countries not only
abandons CSR for domestic employees and communities
in developed economies but also exploits the poor in
these countries and destroys the environment. How would
you participate in this debate if you were:
a) CEO of an MNE headquartered in a developed
economy moving production to a low-cost country,
b) The leader of a labour union in the home country of
the MNE that is losing lots of jobs or
c) The leader of an environmental NGO in the low-cost
country in which the MNE invests?
Global Corporate Sustainability Report 2013 reveals that:
"Businesses around the world are beginning to take sustainability more
seriously..... A look at the actions taken by nearly 8,000 companies from
140 countries participating in the United Nations Global Compact tells a
promising story"
Gain competitive advantage (Dunning, 1993; and
Zhu, et al., 2007)
Cost savings through more efficient design and
processes (Mefford, 2011)
Add value for stakeholders (Mefford, 2011)
Brand image (Faisal, 2010)
Comply with legislation (Vasileiou and Morris,
Providing efficient and effective goods and services
(Beamon, 2008)
Corporate selfresponsibility
Corporate social
Corporate social
Corporate societal
"Utilitarian" legal
"Negative Duty"
"Positive duty" or
virtue based
"Interactive duty"
Profit maximisation
Quarterly profits and
market capitalisation
Medium- profitability
and sustainability
"Doing things right"
"Don't do things
"Doing the right
"Doing the right
things right"
"Doing well"
"Doing well and
doing good"
"Doing good"
"Doing well by doing
(internal) CSR
Nature of responsibility
(external) CSR
Dicken (2011) adopted from Van Tulder and Van der Zwart, (2006); Table 8.1; Van Tulder et al., 2009; Table
Do Nike Customers really
care about labour
Do Starbuck’s customers
really care where the
coffee is coming from?
Do Apple customers really
care about
conditions in Chinese
Do Wal-Mart customers
really care where the
products they buy are
sourced from?
How can
become more
E.g. Samsung in mobile
sector pursuit the green
supply chain with
reducing GHG Emission
and was successful in
decreasing CO2 footprint
and achieved ISO at 3
factories in Korea
(Sustainability Report,
Key metrics for
- Energy consumption
- Water consumption
- Greenhouse gas
- Waste generation
(Chopra and Meindl,
E.g LG mobile
manufacturer offer:
- Education
programmes, charity
fund and scholarships
to contribute to
community benefits
- Creating good
working conditions,
training and support
activities for the staff
(Sustainable Report,
E.g. Mobile manufacturers
outsource in low labour costs
and abundant labour force and
materials to emerging market to
save production costs
(Sustainability Report, 2012)
- switching to more efficient light
bulbs at its stores
- Using Skylights for natural light,
and reducing energy costs
- Helping coffee growers to increase their production in a
sustainable manner
- Evaluated the sustainable production of coffee by
- Product quality, economic accountability,
- Social responsibility (e.g. working conditions)
- Environmental leadership (e.g. suppliers
action on waste management, protect water
quality, reduce agrochemical use
Helping emerging economies such as
Brazil and India to wrestle with poverty,
water scarcity, and climate changes
Module Design by IKEA allows the company to
simultaneously reduce emissions as well as
its transportation costs
Carter, CR, Rogers, DS (2008) A framework of sustainable supply
chain management, moving toward new theory, International Journal
of Physical Distribution and Logistics Management, 38(5), pp360387
Cavusgil,ST, Knight, G and Riesenberger, JR (2012) International
Business: The New Realities, 2nd edition. Pearson, New Jersey
Ciliberti, F, Pontrandolfo, P and Scozzi, B (2007) Investigating
corporate social responsibility in supply chains: a SME perspective,
Journal of Cleaner Production, 16(15) 1579-1588
Hill,CWL and Hernández-Requejo, W (2011) Global Business Today,
7th edition. McGraw-Hill, New York
Mellahi, K, Frynas, G. J., and Finlay, P. (2005). Global Strategic
Managment. Oxford
Painter-Morland, M., and Spence, L. (2010). Business ethics in small
and medium enterprises, Afr J Bus Ethics, Vol. 4,pp 1-6
Peng, M., and Meyer, K. (2011), International Business,
Sengage Learning
1- in your opinion, how should MNEs act when legal requirements on labour or
environmental issues vary between the different countries in which they operate?
 Should they remain politically neutral and adopt practices and laws of the host
country, or should they stick to the rules that would apply to the same question
back home?
2- You are the PR officer of a major MNE in the chemicals industry. A national
environmental committee in your home country alleges that your company is
covering up an environmental disaster caused by your subsidiary in India, in which
several people died. How would you react?
3- Topics for the Group presentations on Thursday
Group 1) Identify ethical and unethical behaviours in 'Apparel' industry, and design a
sustainable CSR framework for the industry
Group 2) Identify ethical and unethical behaviours in 'Mobile' industry, and design a
sustainable CSR framework for the industry
Group 3) Identify ethical and unethical behaviours in 'Food' industry, and design a
sustainable CSR framework for the industry