Business Ethics and CSR

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Three schools of thought about the extent to which ethical standards apply across countries and cultures exist.

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Business Ethics and CSR

  1. 1. 9-1What Is Business Ethics? Business ethics involves applyinggeneral ethical principles and standardsto business activities, behavior anddecisions Ethical principles in business are notdifferent from ethical principles in general Business actions are judged By general ethical standards of society Not by more permissive standards
  2. 2. 9-2Ensuring a Strong Commitment toBusiness Ethics in MultinationalCompanies Three schools of thought aboutthe extent to which ethicalstandards apply across countriesand cultures exist:Ethical UniversalismEthical RelativismIntegrative SocialContracts Theory
  3. 3. 9-3Concept of EthicalUniversalism According to the school of ethicaluniversalism . . .Same standards of what is right andwhat is wrong are universal andtranscend most cultures, societies,and religions Universal agreement on basic moralstandards allows a multinational company todevelop a code of ethics that is appliedevenly across its worldwide operations
  4. 4. 9-4Examples of UniversalEthical Principles or Norms Honesty Trustworthiness Respecting the rights ofothers Practicing the Golden Rule Avoiding unnecessaryharm to Workers Users of a company’sproduct or service
  5. 5. 9-5Concept of Ethical Relativism According to the school of ethicalrelativism . . . What is ethical or unethicalmust be judged in light of localmoral standards and can varyfrom one country to another Companies a code of conduct basedupon the principle of ethical relativismassume that local morality is anadequate guide for ethical behavior
  6. 6. 9-6Drawbacks of EthicalRelativism The ethical relativism rule of “when inRome, do as the Romans do” presentsproblems It is ethically dangerous for companypersonnel to assume that local ethicalstandards are an adequate guide to ethicalbehavior» What if local standards condonekickbacks and bribery?» What if local standards blink atenvironmental degradation?
  7. 7. 9-7Integrative Social Contracts Theory According to the integrative socialcontracts theory, the ethicalstandards a company should try touphold are governed by both1. A limited number of universal ethicalprinciples that put ethical boundaries onactions and behavior in all situationsand2. The circumstances of local cultures,traditions, and values that furtherprescribe what constitutes ethicallypermissible behavior and what does not
  8. 8. 9-8Prioritizing Ethical Standards Integrative social contracts theoryprovides that “first order” universalethical norms always takeprecedence over “second order”local ethical norms when localnorms are more permissive
  9. 9. 9-9Corporate Social Responsibility Social responsibility calls forcompanies to strike a balance between1. Its economic responsibility toshareholders2. The legal responsibility to comply with thelaws of the countries where it operates3. The ethical responsibility to abide bysociety’s norms, and4. The discretionary philanthropicresponsibility to meet the unmet needs ofsociety

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