business and societies - possibilities and linkages -----by sumit mukherjee,NIILM-CMS
Maximize firm’s profits to the exclusion of all else Balance profits and social objectives Do what it takes to make a profit; skirt the law; fly below social radar Fight social responsibility initiatives Comply; do what is legally required Integrate social objectives and business goals Lead the industry and other businesses with best practices Do more than required; e.g. engage in philanthropic giving Articulate social value objectives Corporate Social Responsibility
Companies can engage in CSR activities even while they are acting in unethical ways. For example, Enron was a champion of community involvement, but used off-balance-sheet partnerships to bilk investors and eventually ruin the company. Similarly Parmalat helped many Parma people and gave $2 million to restore the sixteenth- century Correggio frescoes at Parma Cathedral. But he diverted hundreds of millions from publicly held Parmalat to family owned companies like soccer team Parma AC and Parmatour . Companies can say one thing a nd do another .
Bullet 1 from Fleming, John E. (2004). Corporate citizenship revisited. AOM Newsletter , 35(1): 4. A 2002 U . S . poll conducted by the Wall Street Journal/NBC showed public esteem for business leaders dropped following reports that companies like Enron, Andersen, and others. Fifty seven percent of respondents said corporate standards and values dropped in the past 20 years compared with 38% who said they were the same. This compares to 1998 when respondents’ reports were 53 – 42%. They proportionately said government should regulate business, and that has occurred, for example Sarbanes-Oxley. From: Harwood, John. (2002, Apr il 11). Public’s esteem for business falls in wake of Enron scandal. WSJ , D5. Corporate scandals in Japan (former Mitsubishi Motors exec utive arrested on suspicion of professional negligence re: defective truck parts); Citibank turfed from Japan for irregularities. Corporate scandals also in Europe: ABB and Barnevik pay; hold kickbacks to suppliers; also make this a worldwide phenomenon .
On the left side of the continuum we see that the objective is to maximize firm’s (or individual) gains to the exclusion of all else (an example is Tyco whose CEO and CFO faced trail for larceny—converting $600 m of company assets to their own use); on the right is objective to balance social (CSR) and profit objectives .
Th ese may be activities you’ll see in your firms . Integrative philanthropy— Avon Products Inc. “ T he company for women&quot; donates funds to breast cancer research. In Seattle, FareStart partners with Consolidated Restaurants; Pharma companies align with Operation Smile, AIDs donations .
Incorporate values in belief statements: McDonald's: “ We believe that being a good corporate citizen means treating people with fairness and integrity, sharing our success with the communities in which we do business, and being a leader on issues that affect customers ” (McDonald's Corporation, 1992). Act on values: Starbucks put resources into integrating values . Primary stakeholders are internal to the company such as owners, employees, labor unions, customers and suppliers (Clarkson, 1995). Secondary stakeholders operate external to the firm; they could be nongovernmental organizations, social activists, community groups, and governmental organizations . REI definition of social responsibility: “ Achieving commercial success in ways that honor ethical values and respect people, communities, and the natural environment ” includes ethics, community investments, corporate governance, environmental health and safety practices, sustainability, sourcing practices. Matt Hyde, Sr VP of Merchandizing and Logistics at REI said the only way we can be CSR is if we pursue commercial success — it ’ s a given that you have to make money (Nov ember 1, 2004) .
If national practice is bribery, then most companies in that nation will use bribery . If a top manager is unethical, then he/she sets a lead that others follow . When managers behave unethically, employees can be demoralized, lose faith in the organization, and even leave their jobs. Others might follow-the-leader themselves and engage in unethical behaviors. High demands for performance and profitability led Enron employees first to cut ethical corners and finally to break laws as well. According to one Enron controller, the logic was as follows: &quot;If your boss was [fudging] and you have never worked anywhere else, you just assume that everybody fudges earnings. Once you get there and you realized how it was, do you stand up and lose your job? It was scary. It was easy to get into 'Well, everybody else is doing it, so maybe it isn't so bad.'&quot;
C reate a cohesive ethical program that meets multiple and sometimes conflicting demands.
G lobal rules are likely to emerge from a negotiation process ; they are unlikely to reflect values and habits consistent for all cultures. To the extent that these rules are developed by firms from the Westernized countries, they may not incorporate concerns for much of the world. Second, global ethics may be viewed as an end point rather than a beginning point for developing global ethics. Organizations may hide behind global codes, claiming that the absence of rules means that all behaviors are acceptable as conditions change. Organizations may/will find loopholes then use the rules in defense . A global code of ethics also may serve to depress innovation, since some will hesitate to act in the absence of clear guidelines. However, a static set of guidelines is unlikely to keep pace with globalization.