TOPIC 5 ETHICS, CSR AND SUSTAINABILITY

CHEW TZE CHENG @ NUR ALESHA CHEW

19 Apr 202116:21

Summary

TLDRThis video discusses the complexities of ethics, corporate social responsibility (CSR), and sustainability in international business. It outlines the ethical challenges due to varying political, legal, and cultural landscapes and the difficulty of establishing global ethical standards. The script addresses common ethical issues like employment practices, human rights, environmental regulations, and corruption. It also explores the reasons behind unethical behavior by managers and introduces three philosophical approaches to ethics: cultural relativism, righteous moralism, and normative ethics.

Takeaways

🌐 Ethics, corporate social responsibility (CSR), and sustainability are critical in international business due to varying political, legal, economic, and cultural landscapes.
📚 Ethical issues often arise when there are no clear legal guidelines, pushing individuals into a gray area of personal ethics and business responsibility.
🤔 Ethical dilemmas do not have a legal framework to guide decisions; they require personal judgment and can have multiple valid alternatives.
🏭 CSR involves going beyond legal obligations to support stakeholders, including communities and the environment, through activities like philanthropy and environmental protection.
👷‍♂️ Common ethical issues in international business include employment practices, human rights, and environmental regulations, with examples like poor working conditions and child labor.
🌳 Environmental regulations are a concern as companies may move production to countries with lax regulations to avoid penalties at home.
💸 Corruption varies by country and can influence business operations, with some companies engaging in bribery to gain market access or contracts.
📊 The Corruption Perception Index ranks countries by their perceived level of corruption, with Denmark, Singapore, and the Netherlands leading the list.
🔑 Determinants of unethical behavior include personal ethics, social culture, decision-making processes, leadership, unrealistic performance goals, and organizational culture.
🌍 Philosophical approaches to ethics include cultural relativism, where ethics vary by culture; moralism, where a company upholds its home country's ethics; and normative ethics, which advocate for universal ethical standards.

Q & A

What are the three learning objectives discussed in the script regarding ethics, corporate social responsibility, and sustainability?
-The three learning objectives are: 1) Understanding the ethical issues faced by international businesses, 2) Identifying the causes of unethical behaviors by managers, and 3) Describing different philosophical approaches to ethics.
Why is it difficult to establish global ethical standards?
-It is difficult to establish global ethical standards due to differences in political systems, laws, economic development, and culture. What might be considered normal in one country could be illegal in another.
How are ethical issues related to but different from legal issues?
-Ethical issues are related to but different from legal issues because ethical behavior is about personal conduct in accordance with guidelines for good conduct or morality, whereas legal issues are about actions that are mandated or prohibited by law. Ethical dilemmas often involve no legal guidance, leaving the decision to personal ethics.
What is corporate social responsibility (CSR) and why is it important?
-Corporate social responsibility (CSR) refers to a company's practice of going beyond legal obligations to actively balance commitments to stakeholders such as investors, customers, other companies, and communities. It is important because it helps companies build a positive brand image, fosters goodwill, and contributes to sustainable development.
What are some common ethical issues that arise in international business?
-Common ethical issues include employment practices and human rights, environmental regulations, and corruption. These issues can vary significantly across different countries and cultures.
Can you provide an example of a company addressing ethical issues in employment practices?
-Apple and Foxconn improved working conditions at Foxconn factories in China after charges about poor working conditions were made. This is an example of a company addressing ethical issues in employment practices.
How do companies sometimes evade environmental regulations?
-Companies sometimes evade environmental regulations by moving their production to countries with lax regulations, where they can freely pollute the environment without legal repercussions.
What is the Corruption Perceptions Index and what does it measure?
-The Corruption Perceptions Index is a ranking that measures the perceived level of public sector corruption in various countries. Countries with the highest scores are perceived as having the lowest levels of corruption.
Why do managers sometimes behave unethically?
-Managers may behave unethically due to personal ethics, social culture, decision-making processes, leadership, unrealistic performance goals, and organizational culture. These factors can influence their conduct and decision-making.
What are the three commonly cited philosophical approaches to ethics?
-The three commonly cited philosophical approaches to ethics are cultural relativism, which believes ethical truths vary among cultures; righteous moralism, which holds that a company should maintain its home country ethics wherever it operates; and normative view, which believes ethical behavior standards are universal.
How can cultural relativism impact a company's ethical decisions?
-Cultural relativism can impact a company's ethical decisions by leading managers to adopt local ethical standards, which might differ from their home country's standards. This could involve practices that are acceptable in the local culture but not in the company's home country.

Outlines

00:00

🌍 Ethics, CSR, and Sustainability in International Business

This paragraph introduces the topic of ethics, corporate social responsibility (CSR), and sustainability in the context of international business. It outlines three learning objectives: understanding ethical issues faced by international businesses, identifying causes of unethical behaviors by managers, and describing different philosophical approaches to ethics. The paragraph discusses how ethical issues often arise due to differences in political systems, laws, economic development, and culture. It highlights the distinction between ethics and legal issues, emphasizing that ethical behavior is about personal conduct in accordance with moral guidelines. The concept of ethical dilemmas is introduced, where there is no clear right or wrong decision, but rather alternatives that may be equally valid from an ethical standpoint. The paragraph also explains the expectation for businesses to exercise CSR, which involves going beyond legal obligations to balance commitments to various stakeholders, including investors, customers, other companies, and communities. Examples of CSR activities are provided, such as philanthropy, educational initiatives in developing countries, and environmental protection.

05:03

🌳 Environmental Regulations and Corruption in Global Business

The second paragraph delves into specific ethical issues that arise in international business, focusing on environmental regulations and corruption. It discusses how companies sometimes relocate to countries with lax regulations to avoid environmental controls, which can lead to pollution and harm to global commons. However, with many countries now enforcing stricter environmental regulations, companies are increasingly adopting green initiatives to reduce their environmental impact and improve profit margins. The paragraph also addresses the cultural and political aspects of corruption, noting that the prevalence and acceptance of bribery vary by country. It provides an example of the Corruption Perception Index, which ranks countries by their level of corruption, with Denmark, Singapore, and the Netherlands being the least corrupt. The paragraph also mentions a corruption scandal involving Siemens, highlighting the detrimental effects of corruption on society and business. It concludes with a discussion of the moral obligations of multinational corporations, emphasizing the challenges of navigating ethical dilemmas in areas such as employment, human rights, corruption, and environmental pollution.

10:03

🏆 Determinants of Unethical Behavior in Organizations

Paragraph three explores the determinants of unethical behavior among managers. It identifies six factors: personal ethics, social culture, decision-making processes, leadership, unrealistic performance goals, and organizational culture. Personal ethics are influenced by an individual's upbringing, education, religion, and media. Social culture can stress ethical behavior, with some cultures being more prone to it than others. The decision-making process is highlighted as a point where unethical actions may occur if ethical considerations are not integrated. Leadership is crucial, as employees often follow the example set by business leaders. Unrealistic performance goals can pressure employees to act unethically to meet targets. Lastly, organizational culture can either encourage ethical behavior or focus solely on achieving goals without regard for ethical implications.

15:04

📚 Philosophical Approaches to Ethics in a Global Context

The final paragraph discusses three philosophical approaches to ethics: cultural relativism, righteous moralism, and normative view. Cultural relativism posits that ethical truths vary among different groups and are determined by specific situations, as exemplified by the saying 'When in Rome, do as the Romans do.' Righteous moralism asserts that a company should uphold the ethics of its home country wherever it operates, considering its ethical standards superior. The normative view believes in universal ethical standards that should be consistently upheld worldwide. The paragraph provides examples of how ethical standards can vary across different countries, such as copyright laws in China, gift-giving practices in Africa, CEO compensation in the United States and Malaysia, and advertising regulations for children in Finland and Sweden. It concludes the topic by summarizing the key points and thanking the audience for their attention.

Mindmap

Keywords

💡Ethics

Ethics refers to the moral principles that govern a person's behavior or the conducting of an activity. In the context of the video, ethics is central to understanding how international businesses should operate. The script discusses how ethical dilemmas differ from legal questions, emphasizing that ethical behavior is not always dictated by law but by personal and societal guidelines for good conduct. For instance, the script mentions that ethical dilemmas arise when laws are silent, pushing individuals into a gray area of personal ethics and business responsibility.

💡Corporate Social Responsibility (CSR)

CSR is the idea that companies should not only focus on profit but also act ethically and contribute to the betterment of society. The video script explains that CSR involves going beyond legal obligations to consider stakeholders like investors, customers, other companies, and communities. CSR activities can include philanthropy, such as building schools in developing countries or environmental protection. The script uses CSR to illustrate how companies can take on a broader role in society beyond just making a profit.

💡Sustainability

Sustainability in the video script refers to the ability to maintain certain conditions or processes over time without causing harm to the environment or society. It is closely related to CSR and is often seen in the context of environmental protection. The script mentions how companies are now pursuing green initiatives to reduce their environmental impact, which not only benefits the planet but can also lead to cost savings and increased profits.

💡Unethical Behavior

Unethical behavior is any action that goes against accepted moral or ethical standards. The script identifies this behavior among managers and explores its causes. It gives examples such as child labor and poor working conditions in factories, which are unethical practices that some companies might engage in to cut costs. Unethical behavior is a significant issue in international business because it can lead to harm and a negative reputation.

💡Ethical Dilemmas

An ethical dilemma is a situation in which a person is faced with two or more conflicting options, all of which involve some degree of moral uncertainty. The script explains that unlike legal questions, where there is often a clear right or wrong action, ethical dilemmas do not have a clear-cut answer. They require individuals to weigh alternatives and make decisions based on their ethical perspective. The video uses the example of a company deciding between applying home country standards or host country standards for employment practices.

💡Philosophical Approaches to Ethics

The script outlines different philosophical approaches to understanding ethics, which include cultural relativism, moralism, and normative ethics. These approaches provide frameworks for how individuals and companies can make ethical decisions. For example, cultural relativism suggests that ethical standards vary by culture, while moralism posits that a company should uphold its home country's ethics regardless of location. Understanding these approaches helps in navigating the complex ethical landscape of international business.

💡Cultural Relativism

Cultural relativism is the view that ethical standards are not universal but are instead specific to a culture or society. The script uses this concept to discuss how a company might justify certain practices based on local customs, even if those practices would be considered unethical in another culture. This approach can lead to ethical dilemmas when a company's home country ethics conflict with the practices of the host country.

💡Moralism

Moralism, as discussed in the script, is the belief that a company should maintain its home country's ethical standards wherever it operates. This approach is based on the idea that the company's home country has superior ethical values. The script contrasts moralism with cultural relativism by suggesting that a company might refuse to engage in bribery even if it's common in the host country, adhering to its home country's ethical standards.

💡Normative Ethics

Normative ethics is the belief in universal ethical standards that should be upheld consistently around the world. The script contrasts this with cultural relativism and moralism, suggesting that there are certain ethical principles that should be followed regardless of cultural context. This approach can guide companies in making decisions that are ethically sound across different countries and cultures.

💡Environmental Regulations

Environmental regulations are laws and policies that aim to protect the environment from pollution and degradation. The script discusses how some companies might move production to countries with lax regulations to avoid these restrictions. However, it also notes a shift towards companies adopting green initiatives, indicating a growing recognition of the importance of environmental responsibility in business practices.

💡Corruption

Corruption is the abuse of power for personal gain, often involving bribery or embezzlement. The script addresses corruption as a significant ethical issue in international business, noting that it can vary greatly from one country to another. The script provides an example of the Corruption Perceptions Index, which ranks countries by their perceived levels of corruption, and discusses the negative impacts of corruption on society and business.

Highlights

Ethics, corporate social responsibility, and sustainability are frequent social issues in international business.

Ethical issues often arise due to differences in political systems, laws, economic development, and culture.

Ethical issues and social responsibility are related but distinct from legal issues.

Ethical dilemmas do not have a legal framework to guide decisions, leaving it to personal ethics.

Corporate social responsibility (CSR) involves going beyond legal obligations to balance commitments to stakeholders.

CSR includes activities like charity, building schools, and environmental protection.

International businesses face ethical issues in employment practices and human rights.

Examples of ethical issues include poor working conditions and child labor in host countries.

Environmental regulations are a common ethical issue, with some companies moving production to lax regulation areas.

Corruption varies by country and can be detrimental to society and business.

The Corruption Perception Index ranks countries by their level of corruption.

Siemens was involved in a large-scale corruption scandal, illustrating the impact of unethical behavior.

Ethical dilemmas in multinational corporations are complex and often have no universally accepted solution.

Determinants of unethical behavior include personal ethics, social culture, decision-making processes, leadership, performance goals, and organizational culture.

Cultural relativism suggests that ethical truths are not absolute but vary between groups.

Righteous moralist view holds that a company should maintain its home country's ethics wherever it operates.

Normative view believes in universal ethical behavior standards that should be upheld globally.

Ethical standards vary by country, leading to different perceptions of what is considered ethical.

Examples of ethical standard variation include counterfeiting, gift-giving, CEO compensation, and advertising to children.