Corporate Social Responsibility and Ethics in Global Business
Ethics, Corporate Social Responsibility, and Sustainability
Ethics
Ethics is the study of morality and standards of conduct. It is important in international marketing because ethical behavior often varies from one country to another. Ethics manifests in the ways societies and companies address issues such as employment conditions, human rights, and corruption.
Action Being Taken by Selected Industrialized Countries and Companies to Be More Socially and Environmentally Responsive to World Problems
During the years ahead, multinationals will likely become more concerned about being socially responsible. NGOs are forcing the issue. Countries are passing laws to regulate ethical practices and governance rules for MNCs. MNCs are being more proactive (often because they realize it makes good business sense) in making social contributions in the regions in which they operate and in developing codes of conduct to govern ethics and social responsibility. One area in which companies have been especially active is pursuing strategies that blend environmental sustainability with business objectives.
Initiatives to Bring Greater Accountability to Corporate Conduct and Limit the Impacts of Corruption Around the World
MNCs—in conjunction with governments and NGOs—are also contributing to international development assistance and working to ensure that corporate governance practices are sound and efficient.
Corporate Social Responsibility and Sustainability
- Socially Responsible Business Practices: Corporations are under increasing pressure to contribute to the societies and communities in which they operate and to adopt more socially responsible business practices throughout their entire range of operations.
a) Corporate social responsibility (CSR) can be defined as the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm.
b) Nongovernmental organizations (NGOs) are private, not-for-profit organizations that seek to serve society’s interests by focusing on social, political, and economic issues such as poverty, social justice, education, health, and the environment.
- Civil Society, NGOs, MNCs, and Ethical Balance: The emergence of organizational civil society and NGOs has dramatically altered the business environment globally and the role of MNCs within it.
- Response to Social and Organizational Obligations: Agreements and codes of conduct are established for MNCs to maintain certain standards in their domestic and global operations. Examples include the UN Global Compact, the Global Reporting Initiative, the social accountability “SA8000” standards, and the ISO14000 environmental quality standards. These approaches may also contribute to rising standards in the developing world by “exporting” higher standards to local firms.
- Fair trade is an organized social movement and market-based approach that aims to help producers in developing countries obtain better trading conditions and promote sustainability.
- Sustainability: In the boardroom, the term sustainability may first be associated with financial investments or the hope of steadily increasing profits, but for a growing number of companies, this term means the same to them as it does to an environmental conservationist.
CSR in the Globalization Era
Organizations can demonstrate their commitment to CSR in a variety of ways, including cause-marketing efforts or a commitment to sustainability. One of the forces restraining the growth of global business and global marketing is resistance to globalization. In a wired world, a company’s reputation can quickly be tarnished if activists target its policies and practices. In a socially responsible firm, employees conduct business in an ethical manner. In other words, they are guided by moral principles that enable them to distinguish between right and wrong.
At many companies, a formal statement or code of ethics summarizes core ideologies, corporate values, and expectations. For the global company with operations in multiple markets, the issue of corporate social responsibility becomes complicated.
When the chief executive of a global firm in a developed country or government policymakers attempt to act in “society’s best interests,” the question arises: Which society? That of the home-country market? Other developed countries? Developing countries?
Thus, a multinational firm may rely on individual country managers to address CSR issues on an ad hoc basis, while a global or transnational may create a policy at headquarters.