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Summary Chapter 5
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Chapter 5 of Introduction to Business, required course of first year IBA
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Business ethics andcorporate social responsibility
Introduction
Goals and activtts oo busvntss should bt conctrntd wvth:
o Conductnn busvntss hontstls
o Trtatnn ptoplt who comt vnto contact wvth tht busvntss vn a socvalls rtsponsv blt
manntr
o Btvnn accounta blt.
o Lookvnn aftr tht tnivronmtnt
Tht namt oor thtst ‘noals and activttse vs: busvntss tthvcs, corporatt socval rtsponsv bvlvts
(CSR) or nrttn busvntss.
Busvntss tthvcs vs tht broadtr conctpt: vt vs conctrntd wvth tsta blvshvnn ialuts and makvnn
chovcts a bout rvnht/wronn coursts oo actons.
Business ethics: a studs oo busvntss svtuatons, activtts and dtcvsvons whtrt vssuts oo rvnht
and wronn art addrtsstd – Crant and Mattn
CSR oocusts on vssuts vn tht rtlatonshvp bttwttn tht frm and vts staktholdtrs. Trtatnn
staktholdtrs oavrls vniolits pasvnn tmplostts and supplvtrs as anrttd and on tmt and onls
makvnn promvsts that can bt mtt.
Issuts coitrtd bs busvntss tthvcs and CSR iars orom polluton rtducton to corporatt oraud
and corrupton.
o In R&D: pharmactutcal frms tsta blvshtd commvttts to oitrstt tthvcal asptcts oo
ttstnn druns. E.n. anvmal ttstnn
o Product dtitlopmtnt: tmphasvs on saot non-pollutnn products and workvnn
tnivronmtnts. E.n. tmvssvons orom car tnnvnts
o Markttnn: rtstrvcttd to bacco aditrtsvnn. Commvssvons txvst to monvtor aditrtsvnn
and salts promotons to tnsurt hontst rtprtstntaton
o HR polvcvts: vmproit workvnn condvtons and tnhanct vniolitmtnt oo tmplostts vn
ttrms oo dtcvsvon makvnn
o Fvnanct: pu blvc accounta bvlvts standards, and contrv buton to local communvtts
(multnatonal companvts)
Inttrtst vn tthvcal vssuts and rtsponsv blt busvntss comts orom pu blvc and corporatt dvsquvtt
a bout dvsasttrs and scandals. E.n. Chtrno bsl dvsasttr – nucltar dvsasttr, Bhopal (Indva) –
ltakant oo toxvc nas, and Yamavchv (Japan) – oraudultnt and vlltnal optratons.
1: Defining business ethics and CSRi
Ethics: studs oo morals and prvncvplts noitrnvnn tht rvnhts and wronns oo human
conduct. Stitral approachts:
o Transcendental ethics/ethical absolutss: assumts thtrt art a bsolutt conctpts
oo rvnht and wronn, whvch appls across all socvttts. E.n. rtlvnvons clavm a
unvitrsal moral codt wvth iarvatons: oorm oo transctndtntal
, o Utlitarianiss: pranmatc approach to transctndtntal tthvcs. Arnuts that an
acton vs moralls rvnht vo vt products tht nrtattst nood oor tht nrtattst num btr oo
ptoplt
o Ethical relatviss/social ethics: tthvcal standards wvll iars bttwttn socvttts,
rtfltctnn thtvr hvstorvts and vnflutncts. E.n. dtath ptnalts vn somt countrvts, but
not vn othtrs. Multnatonals optratt vn countrvts wvth dvftrtnt culturts, laws
and vnsttutons, and thtrt art otw unvitrsals: stronn lvnk wvth nlo balvsaton
o Tactcal ethics: assumts ptoplt pursut tthvcal standards btcaust vt suvts thtm to
do so. Busvntssts product codts oo practct and corporatt stattmtnts
vdtntosvnn tthvcal vnttntons.
1.1: Business ethics
Conctrntd wvth moral vssuts and vndvivdual chovcts oo rvnht/wronn and ialuts oo what vs
nood/ bad wvthvn tht conduct oo busvntss afavrs.
Mans compltxvtts wvth nlo balvsaton:
o Wvthvn busvntss, wvdtsprtad btlvtos a bout how customtrs/tmplostts should bt
trtattd. Approach ustd vs ont oo tthvcal rtlativsm. Standards vn busvntss art a
ouncton oo:
Valuts oo vndvivduals workvnn vn an ornanvsaton
Corporatt culturt crtattd bs top manantmtnt
Codts oo conduct optratnn vn vndvivdual ornanvsatons
Socval norms oo tht socvtts oo tht ornanvsaton
Prtiavlvnn laws: iars bttwttn countrvts.
o Valuts iars across socvttts. Thvs vs dvfcult whtrt t.n. brv bvnn vs allowtd vn ont
countrs, and an tmplostt vn that countrs has to do busvntss wvth anothtr
tmplostt vn a countrs whtrt thvs vs not allowtd.
o Transpartncs Inttrnatonal has bttn tsta blvshtd as an vndtptndtnt nlo bal
watchdon on brv btrs and corrupton. It pu blvshts rtports to vndvcatt corrupton
vndtxts across tht world.
o Standards channt oitr tmt. E.n. UK vs now anavnst chvld la bour, howtitr, vt was
common vn mvnvnn/ttxtlt vndustrvts oo tht 19 th ctnturs.
1.2: Corporate social responsibility
Hvnhlvnhts tthvcal vssuts vn busvntss bs dtfnvnn thost activtts and thost nroups to
whom tht compans and vts rtprtstntatits art rtsponsv blt, and thost artas oor whvch
rtsponsv bvlvts vs taktn.
“a svtuaton whtrt tht frm nots btsond complvanct and tnnants vn actons that apptar
to ourthtr somt socval nood btsond tht vnttrtsts oo tht frm and whvch vs rtquvrtd bs tht
law” – McWvllvams.
1.3: Areas of activity in CSR
Artas oo CSR:
o Busvntss tthvcs
o Ltnal complvanct
o Phvlanthrops and communvts vnitstmtnt
o Enivronmtntal manantmtnt
o Sustavna bvlvts
o Anvmal rvnhts
o Human rvnhts
o Emplostt rvnhts/wtloart
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