CSR
Simpson & Taylor
Chapter 1
Corporate Governance is the system by which organisations are directed and controlled. Cadbury
defined corporate governance as the direction, management and control of an organization’ (1992).
By the beginning of the 20th century the legal position was clear. A company was a distinct legal
person, its investors could lose no more than they invested and the managers or directors of the
company were trusted to run the business for the benefits of its investors. Various Companies Acts
have been allowed since then. in turn each one made its mark by
- tightening the legal restrictions on directors and on the company itself.
- setting rules concerning the issues of shares and the payment of dividends.
- requiring financial statements to undergo an audit by an independent auditor.
- setting the rules for minimum capital requirements for public companies.
- regulating the content of accounts, increasing accounting disclosure, the requirements for
accounts preparation and the records to be kept.
Chapter 2
Corporate culture has 3 definitions
1. shared meanings, values, attitudes and beliefs that are created and communicated within an
organization. by Ashkensary, Wildersonand Peterson, 2000
2. The set of shared taken for granted implicit assumptions that members of an organization
hold and that determine how they perceive, think about and react to their various
environments. by Schein 1992
3. Culture is the best way we do things around here by Bowers and Seashore, 1966
Determinants of corporate culture
Not only rules and other enforced compliances but dependent on the collective will (the value of the
individual employee) and the view, customs and values of the society. The norms: the day to day
activities to live-out the values.
Culture incorporates
- unwritten rules
- assumptions about expected behaviour
- styles and attitudes formed from national culture
- prevailing orthodoxies or moralities in the society and environment that surrounds the
organization and from which the most of the employees come.
1
,Cultural components
Visible aspect
- artefacts (uniforms)
- espoused values = the values that they make public (mission statement).
Hidden
enacted values
- unwritten rules (e.g. never argue with the CEO)
- underlying values (e.g. what employees define as success)
Johari window for the visibility
known to organization
1. arena
- known by the organization and outsiders (financial statements)
2. facade
- known by the organization but not to outsiders (use of offshore banking)
unknown to organization
1. blind spot
- not known by the organization but known by the outsiders (weaknesses know by
competitors)
2. unknown
- not known by the organization and not known to outsiders (untapped
potentials/missed opportunities)
sociability versus solidarity for the manifestation
2
,Sociability (friendliness) = social relations to achieve goals (university department)
Solidarity (union, fellowship) = very task oriented to achieve goals (e.g. accountant/lawyer’s firms)
corporate morality depends on
- clear strong relationship
- guidance for ‘doing the right things’
- moral codes of behaviour (good governance)
- preventing dysfunctionalities (not recurring to own personal morality)
good governance key indicators
- policies and procedures
- manuals an internal control structures
- internal audit
- supervision and oversight function
The management’s attitudes and actions sets the tone or culture of the organization.
- it‘s consistent and visible ethics behaviour is mandatory
- managers must understand what prevailing culture is
- leaders must always ‘do as they say, not what they want to do’
- good behaviour must be rewarded and recognized
- must embed systems/processes to support tone at the top as ‘bussines as usual’
The why of corporate culture
- human beings feel the need to fit in with group norms, to avoid unpleasant personal
consequences (e.g. families)
- individual employers identify most closely with colleagues in the immediate working
environment. the larger the organization the more distant.
Examples of corporate culture
1. anarchic (like google or other design led organization)
- informal appearance
- charismatic leadership
- anti-bureaucratic
- high level of commitment to work
2. dictatorial (like the police, navy or family owned companies)
- values of dominant individual or group
- formalized structure
- limited amount of delegation
3. bureaucratic (government organizations)
- rules based
- rigid hierarchical structures
- risk averse
4. democratic (like universities or hospitals)
- culture consensual
- high level of transparency
- high level of loyalty to organization
Chapter 3
3
, business ethics = the study of business situations, activities and decisions where issues of right and
wrong are addressed. definition by Crane and Matten
Ethics and law: Law can be considered as something that is required
by society, whereas ethics is something that is expected.
You can apply your knowledge of business ethics to formulate arguments about
and ethical issue.
The importance of cases and theory enables us to learn and discuss ethical
issues.
generally offer a certain rule or principle which one can
apply to any given situation.
Generally offer a certain rule or
principle which one can apply to any
given situation.
Motivation and role of corporate culture
- the prevailing ethical climate of an organization, its mores and values have a great effect on
the employee
- an organization that couples a strong set of ethical values with successful HR policy towards
its employees, where people are valued and rewarded, can prevent dysfunctional behaviour
- where unethical practice is accepted in organization or rewarded the temptation to help
oneself is reinforced. Thus a corporate culture that values ‘winning’ at any price may well, for
example encourage deviant behavior. This can create a culture where, e.g. bribery and
corruption in order to obtain contracts is considered acceptable and normal.
Socialization
New individuals learn about the organization they have joined through a number of socialization
processes
In ethical organizations these socialization processes reinforce the messages of ethical activity and
the individual accepts the group norms of moral behavior
In dysfunctional organizations the socialization process can perpetuate unethical or corrupt behavior
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