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Ethical behaviour is very important in the business world as it takes into account very important characteristics such as dignity, responsibility and honesty which a business may need to become successful. Ethical behaviour is also about respecting the diversity and rights of individuals.
There are four alternative views of ethical behaviour which are:
Moral - Rights
Ethical behaviour focuses on individual businesses and Corporate Social responsibility takes into account all the businesses together.
In this essay I intend to answer the question by using books, lecture handouts and websites to comment and analyse the four alternative views of ethical behaviour and to explain how this might link to definitions of Corporate Social Responsibility.
Corporate Social Responsibility (CSR) is how a company controls its business processes to generate a positive impact on society. CSR start from the quality of how a business is managed e.g. how staff is treated, minimum wage, the impact on the environment and communities around the company. All these factors will create an image of the company. If the company controls its business processes the right way for example pay the right wages, less pollution, supporting local communities and overall have a positive impact on the society, the company tend to attract stakeholders and customers.
Businesses main targets are making profit and growth, however now businesses have also got to take into account CSR. This is important for a business because the business has to reflect a positive image in order to attract stakeholders. CSR has many benefits such as a better image in the market, advantages over other competitors and the business could be a role model to other organisations.
People have different views on the meaning of Corporate Social Responsibility, and here are some different definitions which explain the meaning of CSR:
There is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engage in open and free competition, without deception or fraud.
(Friedman, M 1970, September 13, 'The Social Responsibility of Business is to Increase its Profits.' The New York Times Magazine, The New York Times Company.)
Friedman believed that all a business has to focus on is to use its resources and make profit. In the quote above Friedman doesn't mention anything about the environment, stakeholders or local communities, so basically Friedman is saying a business main target is to make profit and not think about the negative impact they might have on society. This might reflect a negative image of the business and the business could lose out on stakeholders and customers and this might, in the long-term, turn the profit the business is making into a loss.
However, Milton Friedman also suggests that the business has to 'stay within the rules of the game, without deception or fraud. Now this article was written in 1970, since then the 'rules of the game' have expanded and factors such as reduction in the amount of pollution and detailed product labelling have been introduced. Businesses nowadays make sure CSR practices are managed and reported very well to reflect a good image of the business which would then attract stakeholders and this could lead to the business making a larger profit.
Another definition of CSR is:
CSR means setting objectives to meet targets that benefit the society as a whole that are outside the sphere of profit maximisation and shareholder value. Examples would include taking measures to protect the environment, protect workers' rights and protect consumers' rights. 'Giving a damn about CSR', 2006, Accountancy Ireland, Vol38, No.3, pp. 48-49.
This definition states that CSR is about having a positive impact on society without thinking about increasing profit. It also gives some examples of how to be a good Corporate social responsibility such as taking measures to protect the environment this may mean business might have the change the way they produce their products which may have an impact on their profit in the short however, as the business becomes knows for taking care of the environment and doing the right things, the business will attract new customer, new markets and more investors which might increase the business profit in the long term. The definition also includes some ethical issues, 'to protect workers 'rights and protect consumers' rights. As you can see ethical behaviour and Corporate Social Responsibility some times over lap both are very similar to each other.
There are four elements of Corporate Social Responsibility which are,
Voluntary and philanthropic - encourage human welfare and goodwill.
Being a good corporate citizen contributing to the community and the quality of life.
Economic - duty to earn profit for owners
Legal - duty to obey the law (society's codification of right and wrong)
Ethical - not acting just for profit but doing what is right, just and fair
tutor2u (2009) corporate social responsibility - introduction [online] www.tutor2u.net/business/strategy/corporate-social-responsibility-introduction.html, [accessed 25/12/2010]
Ethical behaviour is as important as CSR in the business world. If a business has poor ethical behaviour it will probably lose out on stakeholders. Ethical behaviour is defined as the behaviour that is accepted as "good" and "right" as opposed to "bad" or "wrong" in the context of the governing moral code.
(Siddiqui, Kalim 2010, Lecture Handout, Week 8)
Businesses have a set of rules set by the government they have to follow, rules such as minimum wage act, human rights, and health and safety. Businesses with ethical behaviour bring a lot of good benefits to the business such as more stakeholders and investors, new customers and new market which is good for a business as it helps the business make more money and invest into new technology which could prevent bad ethical behaviour.
However, businesses with bad ethical behaviour always tend to be in poor countries such as china and India but nowadays bad ethical behaviour is also found in developed in developed countries.
There are four views alternative views of ethical behaviour which all look at the same thing but from different angles.
First of all there is the utilitarian view which looks at how a decision might have an impact on everyone. Does the decision do the furthermost good for the majority of the people?
Individualism view of ethics looks how a decision or behaviour encourages an individual's long term self interest.
Moral rights view of ethics focuses on if a decision or behaviour is still within the human rights act, it's all about a business treating its employee's right, and the business should respect employee's privacy and not pass anything private on to the third party.
Justice view of ethics focuses if a decision or behaviour shows any fairness. This is where legal rules come into play. People should not be treated any different because of their race, religion or gender. Everyone is treated equally.
The utilitarian view of ethics is usually used when a business's target is to increase their profit. This view of ethics encourages managers to produce more and workers to work harder as the end result is good for the majority of people. E.g. if a business works towards maximizing their profit and reaches that goal, some people may get promoted and some people may get a pay rise there is an overall satisfaction.
However, in the book 'introduction to Mill's Utilitarian Ethics' West (2003) suggest that to get to the utilitarian view of ethics, where everyone is satisfied and benefits from the final outcome, the utilitarian view of ethics sometimes conflicts with the justice view of ethics.
When this happens the utilitarian view of ethics no longer becomes ethical becomes people will do anything to get to happiness which might affect someone else and when this occurs not everyone is treated fairly and this is where the justice view of ethics comes into play.
Now the justice view of ethics is all about how fairly people involved in the business are treated. The business has got to obey all the legal regulations. This would include treating everyone the same as everyone is equal. The justice view of ethics is usually associated with discrimination, racism and sexism. A lot of the time people get treated unfairly because of their race, gender and colour which is very unethical. Usually unethical behaviour is found in Asian countries such as China. China might be the world's biggest production country; however, a lot of the time employees are treated in an unethical way. People get paid less than they should and they work more hours than they should. There are hardly any rules to stop this. Unethical behaviour use to be a big issue as people were dying from the way they get treated at work. Most of the factories are very dangerous to work in.
Another unethical issue is child labour. Child labour is occurs all over the world, especially in big production countries such as china and Russia.
According to The Sunday Telegraph Malcolm MOORE (2010) Apple admitted to have used child labour at its china assembly plants. At least 11 fifteen year olds where found working at the factory. The paper also states that 62 workers at a factory that manufactures products for Apple and Nokia had been poisoned by n-hexane, a toxic chemical that can cause muscular degeneration and blur eyesight. This shows that unethical behaviour could occur through any business even well known businesses such as Apple
Moral-rights view of ethics is the view of ethics that is linked to human rights and freedom of speech. Nowadays moral - rights are very important. However, a while back businesses did not consider moral rights and people got fired from their jobs because they spoke out and complained. This happened not long ago in Disney world in Hong Kong people were threatened by their bosses to lose their jobs if they complained. They put their employees under a lot of pressure and more than 700 employees got injured. Moral-rights are very important people should be able to speak out and say what think, people should also know their rights and businesses should stick to these rights. Moral rights leads to increased health and safety action to ensure the employees are protected well and this is only achieved if they work in a safe environment.
Individualism view of ethics focuses on one's self interest in the long - term. This view encourages chasing after what you want to achieve without thinking about others. This view is different than the other views which encourage honesty. However, the actions taken to reach goals have got to be legal.
CSR and business ethics are very similar both look at the decision and principles based on something other than making a profit. Also, both look at how businesses act ethically. However, the difference between the two is that business ethics look at individual activities which can be considered as right or wrong. CSR is about the business's responsibility to take care of its stakeholders and the impact it has on the society.
Business ethics focus on issues of right and wrong behaviour in the business world. Again this looks at the impact business activities have on the society, environment and local communities. Business ethics is very important in the business world because without it the business world would be a chaos. People would lie, damage, steal and even kill to get to where they want to get. Business ethics identifies what's right and wrong.
Here are a few examples which illustrate ethical and unethical behaviour.
Example 1. Around the year 1869, a white stone was discovered near the Orange River in South Africa. This stone turned out to be very valuable and people paid a lot to own it. As these diamonds became more and more valuable, ways to mine them became more violent. They soon were called Blood Diamonds. Blood diamonds were extracted and traded by rebel armies. They used the money to buy weapons because they were in war with the government. During the process a lot of horrible things happened such as child soldiers where used, murders and killing innocent people.
A lot of people suffered from the violence that occurred over blood diamond, people were getting their hand cut off so they couldn't vote and remove the rebel armies from power. Until the year 2000 people were buying these diamonds not knowing it cost someone's live. Land, J. (2002), Blood Diamonds (Ben Kamal And Danielle Barnea Novels), Saint Martin Press inc.
This example is very unethical as people lost their lives and lost their hands so they couldn't vote. They used people as slaves and slavery was banned a long time ago so it's unethical in every way you look at it. This behaviour would usually occur in poor countries where people would do anything to the way they're living and these diamonds were opportunity to gain money and power. Blood diamonds are bad corporate social responsibility. Big jewellery companies in Europe still bought these diamonds even though they knew people lost their lives which is very unethical. This issue could be pay making sure there's less smuggling or they should put a government in control which would control the extraction of these diamonds, law and regulations need to be introduced. To solve this problem, in May 2000 countries that produced the jewellery met together and decided to set up a scheme which is now known as the Kimberly Process Certification Scheme (KPCS).
Example 2. Unilever is one of the well known ethical companies around the world. Last year Unilever was named world most ethical companies. Unilever work to meet peoples demand, it doesn't matter where you are in the world, you would always see Unilever products in shops. In 2009 Unilever invested 89 million Euros in community programmes worldwide.
Recently Unilever partnered World Food Programme (WFP) to provide food and nutrition for poor children in poor countries. Unilever also raised fund and awareness about this issue. Unilever (2010)
This is a very good ethical behaviour example. Unilever spend fast amount of money to tackle big issues in the world such child hunger. They know tackling this issue on their own won't make a big difference so they partnered businesses and government and non - government organisation around the world to tackle this problem. Child hunger is a very big issue in Africa and Asia.
Unilever is a very good example of corporate social responsibility. They actually care about their workers and the environment they also help local communities and have a positive impact on the whole world which CSR is all about.
Example 3. Toyota is a well known cars producer who fabricates good performing fuel efficient cars. Toyotas manufacturing plants are based in Japan and as we all know countries such as Japan is where unethical behaviour is likely to occur. Toyota seemed very successful over the last few. However, a lot of unethical practices occurred that people didn't know about. People were alleging that they've been overworked till they couldn't anymore. Toyotas acts have also been expressed as slavery.
This example illustrates unethical behaviour as Toyota took advantage of their workers; they treated their workers as slaves by overworking them and paying them less and less. The more profit Toyota makes the less they pay their workers.
This is a very bad example of CSR as Toyota are not taking care of their workers, they're also treating the workers bad which is unethical. Toyota based their plants in poor countries just took take advantage of the low wages.
This issue could be tackled by setting a minimum wage act and an act which sets the limit of working hours.
The four alternative views of ethical behaviour are all there to protect the rights of the employees, environment and the society. Without these views ethical behaviour the business world would be a chaos and there would be a lot of unfair treatment, lying, stealing, lack of health and safety, poor wages and this would have an effect on the economy as a whole because people would get less than minimum wage and people would reduce spending levels which will lead to a fall in employment and the economy would just go downhill.
However, these laws, rules and regulations are there to prevent this thing from happening. A business with good ethical behaviour tends to be the business that is more successful. This is because it attracts stakeholders, new customers and it would enter new markets.
Some ethical views support each other but this is not the case for the Utilitarian and justice because people would do anything to get to happiness even if it means they have to break the rules.
Ethical behaviour and CSR are very similar however, CSR and business ethics are very similar both look at the decision and principles based on something other than making a profit. Also, both look at how businesses act ethically. However, the difference between the two is that business ethics look at individual activities which can be considered as right or wrong. CSR is about the business's responsibility to take care of its stakeholders and the impact it has on the society.