Business Ethics and CSR

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Unit-13 Business Ethics and CSR

Program : MBASemester : IVSubject Code : MB0052Subject Name : Strategic Management and Business PolicyUnit number : 13Unit Title : Business Ethics and CSRLecture number : 13Lecture Title : Business Ethics and CSR

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Unit-13 Business Ethics and CSR

Objectives

The objective of this lecture is to:•Define the ethical codes of conduct.•Compare between the ethical and unethical codes of conduct•Describe CSR.•Explain why profit making should not be the only concern of business organisations.•Describe social audit and Corporate Governance.

Business Ethics and CSR

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Unit-13 Business Ethics and CSR

• Introduction • Ethics and Values• Ethical and Unethical Conduct• Impact of Ethical Conduct• Corporate Social Responsibility (CSR)• Business Profits• Obligations of Business Profits• Social Audit • Corporate Governance• Summary• Check Your Learning• Activity

Lecture Outline

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Unit-13 Business Ethics and CSR

•Business ethics are referred as moral rules and regulations governing the business world to guide in making effective corporate decisions.•Corporate Social Responsibility (CSR) means operating a business that meets or exceeds the ethical, legal, commercial and public expectations.•CSR focuses in maintaining the effective business features in an organisation. •Ethics and CSR are essential factors which influences a business.

Introduction

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Unit-13 Business Ethics and CSR

Ethics is defined as the rules or standards which govern the conduct of an individual or an organisation.Following are the features of an organisation which are integrated with ethical standards:•A clear vision and image of integrity exists throughout the organisation.•The mission and vision of the organisation is possessed and represented by the top management.•Policies and practices of the organisation are aligned according to the vision of the organisation.•The organisation has different dimensions which are of proper ethical values.

Values are the image of what an organisation stands for and are the basis for the behaviour of its members.

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Ethics and Values

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Unit-13 Business Ethics and CSR

Code of ethics is the written guidelines issued by an organisation to its management which assists in conducting the actions according to the ethical standards.

The roles of business ethics and business values are as follows:•Maximises profit.•Efficient utilisation of business resources.•Creates goodwill in the market.

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Ethics and Values contd…

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Unit-13 Business Ethics and CSR

The difference between ethical and unethical conduct in a business environment arises due to the respective proper and improper execution of ethical codes and standards by the management.The various principles of ethical conduct are:•Observing high standards of honesty, integrity and fairness in dealing with the client.•Improving the professional competence.•Obeying all applicable laws, rules, regulations.

The outcomes of unethical conduct are:•Increased risk and decreased productivity.•Increased misconduct and decreased performance.•Increased dysfunctional behaviours and decreased organisational reputation.

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Ethical and Unethical Conduct

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Unit-13 Business Ethics and CSR

The features of ethical conduct are:•It has a positive impact on employee behaviour and employee perceptions.•It assists in building a strong ethical culture in the organisation.

Business policy is the guidelines developed by an organisation to govern its actions.The impact of ethical conduct in implementing business policies are:•Assists in fulfilling the applicable laws.•Protects the confidential information of the client.•Projects a positive image of the organisation.•Acts ethically in handling and reporting data.•Avoids conflicts of interest.

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Impact of Ethical Conduct

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Unit-13 Business Ethics and CSR

Corporate Social Responsibility (CSR) is the continuing obligation of a business to behave ethically and contribute to the economic development of the organisation.

The features of CSR are:•Improves the quality of an organisation in terms of economic, legal and ethical factors.•Builds an improved management system.•Creates awareness towards environmental issues.•Enhances information security systems and implementing effective security measures.•Creates a new value in transportation.

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Corporate Social Responsibility

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Unit-13 Business Ethics and CSR

Business Profits

Profit is defined as the income earned by a company in a certain period of time.There are two types of profit namely gross profit and net profit.The sources of business profits include the following:•A proper plan including proper market research, availability of raw materials, research of the competitor and so on.•Execution of the strategic plan with proper adherence to the ethical standards and business values.•Company’s income should be more than its expenses to earn profits.Obligations of business profits in terms of business are the duties of an organisation towards the upliftment of the people and the country.

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Unit-13 Business Ethics and CSR

The various obligations of business profits are:•Social business obligation: Social responsibility is demonstrated by the determination of the organisation to treat customers, employees and investors fairly and honestly.•Moral business obligation: Moral obligation is a responsibility of balancing various needs of an individual by accurate understanding of the right or wrong actions using the acquired knowledge by an organisation.•Ethical business obligation: A company owes an ethical obligation to the individuals and groups who are responsible for the success of the company. An organisation has certain responsibility towards reducing unethical issues.•Environmental business obligation: An organisation must develop ways to improve the surrounding environment performance by reducing costs and unnecessary wastes.

Obligations of Business Profits

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Unit-13 Business Ethics and CSR

Social audit is an auditing process whose purpose is to consider the impact of a business on the surrounding community, environment, economy and the people.

The importance of social audit in a business are:•Reputation and image building•Enhancing corporate social responsibility•Tendering the opportunities•Boosting morale of the employees•Making a difference•Measuring employee’s impact

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Social Audit

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Unit-13 Business Ethics and CSR

Corporate Governance is the reflection of the business culture, policies, relationship with the stakeholders and the organisation’s commitment to its values.

The features of a company which has good Corporate Governance are:•A culture based on the foundation of a sound business ethics and business values.•Satisfying the long-term strategic goal of the owners while considering the expectations of all key stakeholders.•Maintaining proper fulfillment in terms of legal and regulatory requirements under which the company is carrying out its activities.

Corporate Governance

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Unit-13 Business Ethics and CSR

•Business ethics are the rules or standards which govern the conduct of an organisation and the individuals employed in that organisation.•Organisations can manage ethics in their workplaces by establishing an ethics management programme. Business ethics and business values maximises profit, creates goodwill in the market.•The difference between the ethical and unethical conduct in a business environment arises due to respective proper and improper execution of the ethical codes and standards by the management.•Corporate Social Responsibility (CSR) is the continuing obligation by a business to behave ethically and contribute to the economic development which improves the quality of life in the organisation.•Social audit considers the impact of a business on the surrounding community, environment, economy and the people.

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Summary

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Unit-13 Business Ethics and CSR

1. Define code of ethics.ANS: The code of ethics is the written guidelines issued by an organisation to its management which assists in conducting its actions according to the ethical standards.2. What is CSR?ANS: Corporate Social Responsibility (CSR) is the continuing obligation of a business to behave ethically and contribute to the economic development of the organisation.3. Define Corporate Governance.ANS: Corporate Governance is the reflection of the business culture, policies, relationship with the stakeholders and the organisation’s commitment to its values.

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Check Your Learning

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Unit-13 Business Ethics and CSR

Refer to http://www.karmayog.org/csr2009/csrdetails.aspx?id=369 and identify the ideas for implementing CSR in an organisation. What are the significant areas you can highlight for implementing CSR in your organisation?

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Activity