Social Responsibility & Business Ethics
Balázs Hámori
[email protected]
MULTIDISZCIPLINÁRIS KIHÍVÁSOK, SOKSZÍNŰ VÁLASZOK"
8. Szimpózium, 2016. október 28.
Budapesti Gazdasági Egyetem Kereskedelmi és vendéglátóipari Kar
Corporate Social Responsibility
Internal Aspects
External Aspects
Employee welfare
Environmental issues
Working conditions
Products
Job design
Markets and marketing
Intellectual property
Suppliers
Employment
Community activity
Human rights
Corporate social responsibility
Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business) is a form of corporate self-regulation integrated into a business model
CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms
The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders.
Business ethics –
the societal expectations of organisations
Macro level
Range from laissez faire to shapers of society
Ethical stance of organisation in society
Extent an organisation exceeds its minimum obligations to stakeholders and society
Corporate social responsibility
Specific ways to exceed minimum obligations imposed by legislation/corporate governance
Reconcile conflicting demands of stakeholders
Individual level
Behaviour and actions of individuals within organisations
The Corparate responsibility and the ICT revolution
In the recent era we are witnessing genuine institutional explosions
New institutions come into existence day by day, especially as a result of ICT revolution
"We theorize that these moments of transition, from one historical period to the next, are times when institutional stability and isomorphism may be somewhat weakened and institutional innovations may play a greater role." (Raffaely & Glynn, 2015, 411.)
The ITC Revolution has also a major role in developing of Corporate Social Responsibility.
In the industrial era the reputation of the firms has changed relatively slowly, the customers being isolated from each others, and they had not a real influence of the corporate behavior in the short run
But the Web brought fundamental changes in this regard.
The evalulation of customers is penetrating the net in some days or maybe some minutes, and the companies have to take into consideration of the public opppinion already in short run
So the innovation of corporate responsiblity was not by chanche in paralell with diffusion of ICT in all sphere of life
Four Possible Ethical Stances
100 years ago
60 years ago
40 years ago
20 years ago
Like the technological innovations, the institutional innovations can also be radical, and
their initiators, the so called institutional entrepreneurs"
targets entire fields, the overall networks, cultural-cognitive systems, organizational archetypes, and collective action repertoires…" Bockhaven et al, 2015, 175) "create a whole new system of meaning that ties the functioning of disparate sets of institutions together." – (Garud et al, 2002,196.)
See also DiMaggio &Powell (1983) and the book of Scott (2008).
The Corporate Social Responsibility is an excellent example for radical institutional innovations
Corporate Social Responsibility as an Institutional Innovation
Institutional economics had, for a long time, focused on the analysis of a stable institutional framework, and on the actors adaptation to this framework.
It presented economic actors as embedded in the institutional network, who consider this framework as given.
In the past few decades, however, started to shift the focus of institutional analysis and look at the other side of the coin.
They emphasize how actors influence institutions and that they may create new institutions.
Corporate Social Responsibility is a typical case of institutional innovation
Outline
CSR as creation of new institution
Corporate Social Responsibility: internal and external aspects
Ethical issues
Ecology and Environmental Quality
Pollution cleanup and prevention
Dispersion of industry
Land use and beautification
Consumerism
Truth in lending, advertising, and business
Product warranty and service
Control of harmful products
Community needs
Use of expertise for local problems
Aid with health-care facilities and education
Service on voluntary groups
Governmental relations
Restrictions on lobbying
Control of business political action
The most important areas of the corporate social responsibility (1)
Minorities and Disadvantages persons
Training of unemployed
Equal employment opportunity
Locating plants and offices in minority areas
Purchasing from minority businesses
Labor relations
Improved occupational health and safety
Provision of day-care centers
Options of flexible work hours
Stockholder relations
Public seats on the board of directors
Improved financial disclosure
Corporate philanthrophy
Financial support for arts and culture
Special scholarships and gifts to education
Financial support for assorted charities
The Most Important Areas of the Corporate Social Responsibility (2)
Social obligation - corporate behavior at this level conforms only to legal requirements and competitive market pressures
Social responsibility - Corporate behavior at this level is congruent with prevailing norms, values, and expectations of society.
Social responsiveness - Corporate behavior at this level takes preventive action to avoid adverse social impacts from company activities and even anticipates or takes the lead in future movement beyond current expectations.
Continuum of social responsibility
UN Global Impact Initiative (2)
Environment
Principle 7: Businesses should support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly technologies.
Anti-Corruption
Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.
For further information, guidance material, please visit the Global Compact website: www.unglobalcompact.org
UN Global Impact Initiative (1)
Human Rights
Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and
Principle 2: make sure that they are not complicit in human rights abuses.
Labour
Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the effective abolition of child labour; and
Principle 6: the elimination of discrimination in respect of employment and occupation.
Critical approach to organizational culture
Organization as a Site of Domination
Power, Hegemony, and Concertive Control
Power - the possibility of imposing one's will upon the behavior of other persons
Hegemony - the predominant influence over others
Concertive Control - based on adherence to socially constructed norms and values developed by organizational members as they attempt to structure the environment
Communication and Critical Theory
Habermas - goal to develop a theory of society that aims at the self-emancipation of people from domination (the ideal speech situation)
The utterances are truthful
There is a legitimate relationship established between the participants
The utterances are sincere
The utterances are comprehensible
Literature
Robert C. Ellickson (1991): Order Without Law: How Neighbors Settle Disputes, Cambridge: Harvard University Press,
Guiso, L., Sapienza, P.& Zingales. L.( 2013): The Value of Corporate Culture. NBER Working paper.
ttp://faculty.chicagobooth.edu/luigi.zingales/papers/research/The_Value_of_Corporate_Culture.pdf
Lewis, David (1969). Convention: A Philosophical Study. Cambridge,Mass.: Harvard University Press,
Four ways of rationalize ethical misconduct
involving moral hazard and opportunism
Convincing yourself that the behaviour is not really illegal
Convincing yourself that the behavoiur is really everyone's best interests
Convincing yourself that nobody will ever find out what you have done.
Convincing yourself that the organization will protect you.
Moral hazards can be present any time two parties come into agreement with one another. Each party in a contract may have the opportunity to gain from acting contrary to the principles laid out by the agreement.
Economic opportunism is a term related to the subversion of morality to profit.
Attitudes to Social Responsibility
Obstructionist Stance (Unconcerned)
Do as little as possible to solve social or environmental problems
Defensive Stance (Damage Control)
Do only what is legally required and nothing more
Accommodative Stance (Compliance)
Meet legal and ethical obligations and go beyond that in selected cases
Proactive Stance (Ethical Culture)
Organization views itself as a citizen and proactively seeks opportunities to contribute to society
Stakeholders
Their main interest
Local authorities
Tax, subsidy
Local communities
Help, support, sponsorship
Trade unions
Acceptance
Customer groups
Consumer-friendly behavior
Employment association
Acceptance
Government
Pay tax, follow the laws
Press, media
Provide infromation, and advertise
Pressure groups
Specific interest
Foreign countries
Follow the local custom
Stakeholders
Their main interest
Suppliers
Long term connections
Buyers
Quality, quick reaction, low price
Other business partners
Long term connection, liquidity
Potencial entrans
Stable and business-like market
Substitute product producers
Clear roles, and conditions
Workers, and their unions
Good working conditions, wages
Employer's association
Rule-following behavior
Government's regulators
Rule-following behavior
Enterprises in the industry
Acceptance some mutual rules
Major arguments againts social responsibility
Major arguments for social responsibility
Loss of business profits
Long-run profit for business
Increased business costs
Public image of business will improve
Dilution of business purpose
Better environment for everyone
Too mach social power for business
Public expectations support business social responsibility
Lack of business accountability to public
Business may avoid more regulation
Arguments for and againts of corporate social responsibilities
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