Ethics in Business in Corporate Responsibility

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Introduction

Ethics in Business in corporate responsibility is crucial and to the business world it has become of increasing concern over the last two decades. Anderson (1989) agrees that in today’s generation, businesses must also reflect on ethical, legal, social and moral; significances of their verdicts. For listed companies it is now mandatory that they include a section on corporate social responsibilities in their annual reports. However, CIMA (2010) argues that many firms routinely ignore ethical considerations despite codes of practice, regulatory oversight, and ever-increasing public pressure. Consumers expect a business to demonstrate ethical responsibilities such as the treatment of employees, the community, the environment, working conditions etc. Where these expectations are not met this can have a severe negative impact on the business and now with social media this process is heightened. This causes business to start on the back foot and play catch up. To safeguard against such risks it is important that businesses consider the ethical implications of their activities in order to mitigate the chances of a public relations disaster which tend to be expensive and embarrassing. This report will investigate the ethical implication local and global for the expansion of our company.

Ethical approach

Various authors approach issues by questioning what their favoured moral or political theories say about them in business ethics (Moriarity, 2008). Utilitarian approach suggests that “an act is morally acceptable if it produces the greatest net benefit to society as a whole, where the net social benefit equals social benefits minus social costs” (Bentham, 1789; Mill, 1957; Brandt, 1979; Rachels, 1999; Velasquez, 1998; Schumann, 2001; Cavanagh, 1981). Utilitarianism suggests that well-being of every distinct individual is no more or less important than well-being of other individual. However, treating the entire individual in same way is not assumed. Therefore, the proposal of the project can be agreed as the greatest net benefits to society once the consequences been taken into account. On the other hand, Kantian ethics which states “highest good was the good will. To act from a good will is to act from duty. Thus, it is the intention behind an action rather than its consequences that make that action good” (Bowie, 1999). Therefore, it can be argued that the advantage of Kantian ethics in business is that by assembling verdicts based upon a good intention would always lead to virtuous business practice. However, Moriarity (2008) argues that ‘Organisation need an ethics of their own’ because of the distinctiveness of the organisational background. Yet, in business ethics an organisation can deprived moral and political theories but cannot function without consequences, guidelines, moralities, duties, virtues etc and the prominence of pre-theoretical perceptions.

Therefore, our business decisions should be guided by sequences of CSR values in order to demonstrate good business citizenship. Dobson (2007) argues that virtue ethics which focuses on character and motivation rather than material goals of the agent can be co-related with our project permission. In addition, business activity must be viewed as a ‘practice’ for the features to be effectively applied in business.

However, the question could arise here ‘could our project expansion be ethically accepted and demonstrated? Are the gifts offered by our project is ethical?

Wulfson, (2001) states that corporate philanthropy is one of the most observable techniques a business can help a community. The projected gifts to the local mayor to help the community and to the local school can be suggested as philanthropy ethics. These gifts could be offered as charitable bases which will show our project has a responsibility towards society that will operate in equivalent with the determinations to make profits as suggested by (Wulfson, 2001). By doing this, it will ensure the offered financial gift is taken as for advantage of the community and not as bribery or corruption which will give our project an advantage from public for its expansion.

3.2 Globalisation, CSR and global ethics

Bardy, et al., (2011) argues that globalisation is most important chances for eliminating complete poverty worldwide. In addition, the increased sharing knowledge, cultural values and technologies are some of the benefits of globalisation (Kibert, et al.,). However, business ethics in a global context can be described in two different frameworks: relativism -“when in Rome, do as Romans do” which refers that an action depends on the moral norms of the society. Whereas, absolutism argues “home country cultural values must be applied everywhere as they are home” (Buller and McEvoy, p327). In addition, right or wrong may vary conferring to different values. For example, McDonald’s strategy of glocal ‘mixing the elements of globalisation and internationalisation has lead them to ability of higher market growth and hence profitability (Vignali, n.d.). Therefore, it is essential for our project expansion to understand and implement the business strategy according to the culture and values of the country. Thus, our business should follow the cultural norms of country according to their necessity.

On the other hand, Husted and Allen () questions “what is the relationship of global and local (country-specific) CSR to international organizational strategy?” Davis and Blomstrom () defines “Corporate Social Responsibility CSR as the obligation of the internal corporate decision-makers to take action which protects and improves the welfare of society as a whole along with their own interest”. In other words CSR is a set of rules how firms manages their strategies and business for an overall positive and long-term within the environment where they operate. Furthermore, Husted and Allen() finding suggests that organisation strategy in the management of CSR multinational organisations will merely imitate the existing product-market. Hence, to fit in with the frim market strategy CSR remains an activity which when achieved without taking into account all firms including CSR is fortuitous. Our project expansion in lesser developed country indicates the beneficial for the development of the country. Thus, a firm can be multi-domestic in its CSR and world-wide in its market approach if the welfares of different strategies prevail over the costs implied by McWilliams and Siegel (2001).

Furthermore, Corporate Social Responsibility CSR is used by companies as a political tool to protect their interest to make sustainable business to ensure not to raise barrier that could be harmful to environment and consumer (Detomaso, 2008). CSR concept encompasses an aggregation of activities to demonstrate the human rights, environmental and labour issues which are brought by activist group (Slack, 2006). Many multinational companies have been indicted of societal disrespect and environmental degradation for chasing profit. For example, in 2013, a garment factory which supplied clothing giants such as Primark and Marks and Spencer’s in Bangladesh collapsed killing hundreds of people (BBC, 2013). The initial reaction was huge public outcry of condemnation of the lessee’s fair attitude of the corporation in response to their responsibilities to everyone involved in the process of making their garments.

4.0 Consequence

“Third World babies are dying because their mother’s bottle feed them with Western style infant milk” (Muller 1974). After the scandal of Nestle baby milk and Sanlu milk incident will it be acceptable to expand the baby powder milk factory in least developed country? There are various ethical implications drawn upon expanding the factory. However, one of the major concerns for the proposal is the free supply of baby milk for 3 months to newborn babies. The proposal refers to it as a gift, which from certain angles could be considered as exploitation. Consequently, babies may become dependent on powdered milk after 3 months not liking breast-feeding and poor families may be forced to buy powdered milk. In addition, the lack of income required to feed a baby might cause babies suffering from severe malnutrition and even death (CFB, 2004). This may lead to anger and resentment from the local community. Media will transfer from Local to National to International very quickly heightened by social media. Sales could drop and market share loss to competitors. Share price will fall and there could be the need for heads to roll at the decision makers. Therefore before any actions are taken more research needs to be performed to ensure that newly born babies won’t be so called ‘addicted’ to the milk.

Another ethical implication of offering ‘gifts’ to the mayor can be misunderstood as Bribery. The question that can arise is “is it morally right action to referred “gifts” as a good action to precede the business”. The UK Bribery Act 2010 which was introduce for companies of deteriorating to prevent bribery (TIUK, 2012) can cause our parent company to become liable which can block the expansion of our company globally. Hence, our company should only offer ‘gifts’ to school and community and not individual (mayor).

“Doing well by doing good” was highlighted in 1989 by World watch Institute which suggests that business that care about preserving environment can also make profit (Hoffman, 1991). Being environmentally conscious can build a brand in tune with the mood of the country. Our company should concern for the protection of environment as a part of our project.

Furthermore, ACAS () states that for employee/employer relationships to be successful there has to be a balance of interests. Companies in the UK have whistleblowing requirements. It should be ensured that these standards are maintained throughout the global operations. Whistle-blowers should be protected so that the organisations are accountable.

Conclusion and recommendation

Ethics is about considering the wider effect of business in all aspects and not just the profit and loss account. It is very important to follow ethical implication locally and globally for the survival of the company in long term. The following recommendation should be taken for our expansion policy:

  • Our business should embrace ethical practice.
  • Should work with local suppliers so that more of the economic benefits stay within the country and help develop a poor country into a modern economy.
  • Re-consider the proposed gifts.

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