Academic journal article SAM Advanced Management Journal

Corporate Social Responsibility in a Globalizing Market

Academic journal article SAM Advanced Management Journal

Corporate Social Responsibility in a Globalizing Market

Article excerpt


Corporate social responsibility can be defined as the duty of organizations to conduct their business in a manner that respects the rights of individuals and promotes human welfare. While the level of social responsibility exhibited by multinational corporations is said to be improving, perfection has hardly been attained. Governments and people around the world seem to have an increasing interest in scrutinizing the actions of global corporations, in effect forcing international companies to be "good corporate citizens." One reason for this could be the realization that multinational companies (MNCs) are not as invincible as they were once thought to be; therefore, their policies can be influenced to benefit society. A second reason may be a realization that effective legal governance of companies whose activities stretch beyond national borders is impossible, leaving self governance as the only practical alternative.

Social responsibility in business has been debated for a long time, and several sides of the issue have been presented by ethicists. This debate has been extended in recent years to include the operations of MNCs. This article will summarize some of the changes in the attitudes and behaviors of MNCs and their perceptions of corporate social responsibility in light of the evolving nature and composition of global competition. After a brief discussion of some of the popular theories in ethics, the article reviews past recommendations for enhancing corporate social responsibility.

Even today, the age-old question still echoes through the boardrooms of MNCs around the world: "If it is legal, does that make it ethical?" The focus of the term ethics falls primarily on judgments pertaining to what is right or moral and what is wrong or immoral. One definition of ethics could be the clarification of what constitutes human welfare and the conduct necessary to promote it. The term ethical standards is used to describe conformity to widely accepted modes of conduct. These modes of conduct, in turn, are governed to a large extent by customs, manners, and values that a particular society adopts as guidelines for interpersonal behavior (Schollhammer, p. 54). With these definitions, one question remains: Where does the concept of legality fit into the discussion on ethics? Legal behavior is a sub-category of ethical behavior - often the lowest level of ethical behavior possible.

Due to a range of societal values, be they religious, philosophical, or cultural, a universally accepted code of ethical standards is difficult, if not impossible, to create. Even though certain ethical norms such as honesty, integrity, and loyalty are integral parts of most societies, the intensity of adherence to these norms can vary substantially from person to person across cultural boundaries. The ultimate result of these difficulties is no less than a highly complicated maze of international ethical norms, none of which appear similar in thought or meaning. Thus, any questions concerning business ethics in general, much less international business ethics, are becoming increasingly more difficult to deal with by multinational corporations.

Fundamentals of Ethical Theories

If we are to fully understand the critical role that ethics play in the business arena, we must first develop at least an awareness of the ethical theories most prevalent in the Western world today: utilitarianism, rights and duties, and justice.

Utilitarian theory seeks to provide a quantitative method for making ethical decisions, using cost-benefit analysis as a basis for what to do and what not to do. According to Manuel E. Velasquez (1982), utilitarianism is "a general term for any view that holds that actions and practices should be evaluated on the basis of the aggregate social benefits and the aggregate social costs associated with the actions or practices. In any given situation, the proper, or 'right' action or practice is the one that will produce the greatest net benefits (or lowest net costs) for society as a whole. …

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