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Some Reflections on Business Ethics and Corporate Social Responsibility
Richa Sharma Research Scholar in Management Sciences
JECRC University, Jaipur
Malvika Sharma Assistant Professor of Political Science
Khandelwal Girls College, Jaipur
Abstract
This paper is based majorly on the works of Sorab Sadri in India between 1991 and 2013. He has
argued along with Jayashree Sadri (in various works spanning two decades) that social responsibility
and business ethics are often regarded by American scholars as the same concepts. However, the social
responsibility movement is but one aspect of the overall discipline of business ethics. The social
responsibility movement arose particularly during the 1960s with increased public consciousness about
the role of business in helping to cultivate and maintain highly ethical practices in society and
particularly in the natural environment.
Keywords: Business Ethics, CSR
Introduction
Business ethics under Goodpastor, Donaldson and Buccholz flourished simultaneously no doubt but
their approach was intrinsically based on moral philosophy and sociological constructs. They could be
seen has having fanned the fire of belief that the two terms are similar. However, working from a
rationalist-positivist angle, Jayashree et al (2008), Sadri and Jayashree (2011) and Sadri and Jayashree
(2012) vehemently disagree. To them business ethics forms the basis of good corporate governance.
Good corporate governance enables organizational excellence and this leads to business sustainability.
But for this strategic planning and strategic intervention are critical. Corporate social responsibility to
them is the link between business being an ethical entity and the corporation being a socially
responsible citizen. For them the two terms are dialectically related but do not mean the same thing.
Corporate social responsibility (CSR), also known as corporate responsibility, corporate citizenship,
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responsible business, sustainable responsible business (SRB), or corporate social performance is a form
of corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a
built-in, self-regulating mechanism whereby business would monitor and ensure its adherence to law,
ethical standards, and international norms. Business would embrace responsibility for the impact of its
activities on the environment, consumers, employees, communities, stakeholders and all other members
of the public sphere. Furthermore, business would proactively promote the public interest by
encouraging community growth and development, and voluntarily eliminating practices that harm the
public sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public interest into
corporate decision-making, and the honoring of a triple bottom line: People, Planet, Profit.
The practice of CSR is subject to much debate and criticism. Proponents argue that there is a strong
business case for CSR, in that corporations benefit in multiple ways by operating with a perspective
broader and longer than their own immediate, short-term profits. Critics argue that CSR distracts from
the fundamental economic role of businesses; others argue that it is nothing more than superficial
window-dressing; others yet argue that it is an attempt to pre-empt the role of governments as a
watchdog over powerful multinational corporations. Corporate Social Responsibility has been
redefined throughout the years. However, it essentially is titled to aid to an organization's mission as
well as a guide to what the company stands for and will uphold to its consumers.
Development Business ethics is one of the forms of applied ethics that examines ethical principles and
moral or ethical problems that can arise in a business environment. In the increasingly conscience-
focused marketplaces of the 21st century, the demand for more ethical business processes and actions
(known as ethicism) is increasing. Simultaneously, pressure is applied on industry to improve business
ethics through new public initiatives and laws (e.g. higher UK road tax for higher-emission vehicles).
Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a
career specialization, the field is primarily normative. In academia, descriptive approaches are also
taken. The range and quantity of business ethical issues reflects the degree to which business is
perceived to be at odds with non-economic social values. Historically, interest in business ethics
accelerated dramatically during the 1980s and 1990s, both within major corporations and within
academia. For example, today most major corporate websites lay emphasis on commitment to
promoting non-economic social values under a variety of headings (e.g. ethics codes, social
responsibility charters). In some cases, corporations have re-branded their core values in the light of
business ethical considerations (e.g. British Petroleum’s “beyond petroleum" environmental tilt).
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The term CSR came in to common use in the early 1970s, after many multinational corporations
formed, although it was seldom abbreviated. The term stakeholder, meaning those on whom an
organization's activities have an impact, was used to describe corporate owners beyond shareholders as
a result of an influential book by R Freeman in 1984. ISO 26000 is the recognized international
standard for CSR (currently a Draft International Standard). Public sector organizations (the United
Nations for example) adhere to the Triple Bottom Line (TBL). It is widely accepted that CSR adheres
to similar principles but with no formal act of legislation. The UN has developed the Principles for
Responsible Investment as guidelines for investing entities. Some commentators have identified a
difference between the Continental European and the Anglo-Saxon approaches to CSR. And even
within Europe the discussion about CSR is very heterogeneous. An approach for CSR that is becoming
more widely accepted is community-based development projects, such as the Shell Foundation's
involvement in the Flower Valley, South Africa. Here they have set up an Early Learning Centre to help
educate the community's children, as well as develop new skills for the adults. Marks and Spencer is
also active in this community through the building of a trade network with the community -
guaranteeing regular fair trade purchases. Often alternative approaches to this is the establishment of
education facilities for adults, as well as HIV/AIDS education programmes. The majority of these CSR
projects are established in Africa. JIDF For You, is an attempt to promote these activities in India. A
more common approach of CSR is through the giving of aid to local organizations and impoverished
communities in developing countries. Some organizations do not like this approach as it does not help
build on the skills of the local people, whereas community-based development generally leads to more
sustainable development.
Procurement of Fair Trade tea and coffee has been adopted by various businesses: KPMG CSR
manager commented, "Fair trade fits very strongly into our commitment to our communities." Another
approach that is garnering increasing corporate responsibility interest is called Creating Shared Value,
or CSV. The shared value model is based on the idea that corporate success and social welfare are
interdependent. A business needs a healthy, educated workforce, sustainable resources and adept
government to compete effectively. For society to thrive, profitable and competitive businesses must be
developed and supported to create income, wealth, tax revenues, and opportunities for philanthropy.
CSV received global attention in the Harvard Business Review article Strategy & Society: The Link
between Competitive Advantage and Corporate Social Responsibility by Michael E. Porter, a leading
authority on competitive strategy and head of the Institute for Strategy and Competitiveness at Harvard
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Business School; and Mark R. Kramer, Senior Fellow at the Kennedy School at Harvard University and
co-founder of FSG Social Impact Advisors. The article provides insights and relevant examples of
companies that have developed deep linkages between their business strategies and corporate social
responsibility. Many approaches to CSR pit businesses against society, emphasizing the costs and
limitations of compliance with externally imposed social and environmental standards. CSV
acknowledges trade-offs between short-term profitability and social or environmental goals, but
focuses more on the opportunities for competitive advantage from building a social value proposition
into corporate strategy.
A CSR programme can be an aid to and retention, particularly within the competitive graduate student
market. Potential recruits often ask about a firm's CSR policy during an interview, and having a
comprehensive policy can give an advantage. CSR can also help improve the perception of a company
among its staff, particularly when staff can become involved through payroll giving, fundraising
activities or community volunteering. See also Corporate Social Entrepreneurship, whereby CSR can
also be driven by employees' personal values, in addition to the more obvious economic and
governmental drivers. Managing risk is a central part of many corporate strategies. Reputations that
take decades to build up can be ruined in hours through incidents such as corruption scandals or
environmental accidents. These can also draw unwanted attention from regulators, courts, governments
and media. Building a genuine culture of 'doing the right thing' within a corporation can offset these
risks.
In crowded marketplaces, companies strive for a unique selling proposition that can separate them from
the competition in the minds of consumers. CSR can play a role in building customer loyalty based on
distinctive ethical values. Several major brands, such as The Co-operative Group, The Body Shop and
American Apparel [
are built on ethical values. Business service organizations can benefit too from
building a reputation for integrity and best practice. Corporations are keen to avoid interference in their
business through taxation or regulations. By taking substantive voluntary steps, they can persuade
governments and the wider public that they are taking issues such as health and safety, diversity, or the
environment seriously as good corporate citizens with respect to labour standards and impacts on the
environment. Many universities in Jaipur for instance, are actively involved in five areas of research in
CSR and Ethics. Research of the authors is geared towards the following issues:
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CSR: how to strengthen the business case for CSR? How to reach the bottom of the pyramid
through socially responsible distribution? How much is enough? How society views what
business should do to reach their objectives?
Business and marketing ethics from a normative perspective: what is the right thing to do?
How to make ethical marketing business decisions?
Ethical consumerism: how do consumers track CSR behaviours of firms? How do they act
through ethical consumerism (through boycotts or bycotts)?
Ethics of defaults: consumers are more likely to retain the default package they buy, until what
point should marketing exploit their vulnerability?
The opening of firm boundaries: how companies should manage this challenge? How should
they manage their internal and external workforce?
This brings us to Ethics Training. The rise of ethics training inside corporations, some of it required by
government regulation, is another driver credited with changing the behaviour and culture of
corporations. The aim of such training is to help employees make ethical decisions when the answers
are unclear. Tullberg believes that humans are built with the capacity to cheat and manipulate, a view
taken from (Trivers 1971, 1985), hence the need for learning normative values and rules in human
behaviour (Tullberg 1996). The most direct benefit is reducing the likelihood of "dirty hands" (Grace
and Cohen 2005), fines and damaged reputations for breaching laws or moral norms. Organizations
also see secondary benefit in increasing employee loyalty and pride in the organization. Caterpillar and
Best Buy are examples of organizations that have taken such steps (Thilmany 2007). Increasingly,
companies are becoming interested in processes that can add visibility to their CSR policies and
activities. One method that is gaining increasing popularity is the use of well-grounded training
programs, where CSR is a major issue, and business simulations can play a part in this. One relevant
documentary is The Corporation, the history of organizations and their growth in power is discussed.
Corporate social responsibility, what a company does to in trying to benefit society, versus corporate
moral responsibility (CMR), what a company should morally do, are both important topics to consider
when looking at ethics in CSR. For example, Ray Anderson, in The Corporation, takes a CMR
perspective in order to do what is moral and he begins to shift his company's focus towards the
biosphere by utilizing carpets in sections so that they will sustain for longer periods. This is Anderson
thinking in terms of Garret Hardin's "The Tragedy of the Commons," where if people do not pay
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attention to the private ways in which we use public resources, people will eventually lose those public
resources.
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Gratitude with the usual disclaimers is extended to Dr Sorab Sadri of JECRC for his
academic assistance in writing this paper.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.