Business ethics and CSR

In the past time, the majority of enterprises regarded business ethics as internal regulations to comply with the rules of legal standards(Trevino and Nelson, 2010). However, the condition changes in modern times. Business ethics is more and more important to identify what it is right or wrong during the process of working or trading and so on(Wheelen and Hunger, 2011), which is closely related to the interests of stakeholders.

Under the background, many companies recognize that they have to obtain more respect and trust of their consumers so as to be successful. As result, organizations pay increasing attention to their behaviors and corporate social responsibility (CSR) become a business principle for marketing behaviors with the increased public awareness about the role of enterprises in assisting to promote and practice business ethics in society and environment.

In order to have a better understanding of business ethics and CSR, this report is going to logically identify business ethics and critically assessing its effect on an organization, identifying CSR and analyzing the lessons of the News Corporation scandal and the importance of CSR and then discussing the leadership during the process of promoting business ethics and CSR. Question 1: identifying business ethics and critically evaluating its effect on an organization 1. 1Identifying business ethics

Case and Smith (2012) commented that free market system cannot guarantee the efficiency, and an efficient free market economic system need enterprises with honesty, integrity, fairness, justice and other ethics to operate the market in addition to a valid property right and the legal system. The comment perfectly demonstrates the necessity and importance of business ethics in market, although it does not make enough introductions about the features of ethics. In their opinion, business ethics refers to moral principles which are used to regulate the behaviors of a business.

In other words, Case and Smith admitted that the same rules or regulations that distinguish the right or wrong of individual behaviors can also be applied to enterprises. This point explains the guidance of business ethics, which promotes corporations to pay more attention to the use of copyright, environmental issues and bribery. However, Case and Smith just cared about the enterprise itself and did not make an explanation about the relationship between corporations and stakeholders in the concept of business ethics.

According to Lusch and Webster (2010), every company is not alone, and stakeholder analysis is important for the practices of business ethics during the process of operation and provides more useful information for perfecting business ethics in different markets. They considered that enterprises depend on employees, government, media, customers and business clients and so on (Lusch and Webster, 2010), so business ethics aims at working out a balance among all those factors and then making them serves corporate objectives.

It can be said that Lusch and Webster explained the affecting factors of business ethics and put forward a broader illustration, which is beneficial for corporations to regulate ethically in all aspects. But this report agrees that it is better to combine the views of Case and Lusch et al. as to the illustration of business ethics. From this point of view, this report considers business ethics is a moral principle to deal with the relationship among stakeholders. According to the above literature review, it is obvious that business ethics focuses on the moral standards of corporate policies and behaviors and the effect on stakeholders.

It can be said the most significant points of business ethics refer to identifying reasonable business actions, balancing stakeholder interests, increasing corporate values and building accountability

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within the organization. From this point of view, business ethics is a performance of applied ethics in essence. 1. 2 Critically evaluating the effect of business ethics on an organization Business ethics is regarded as an important factor that affecting corporate performance, so it is necessary to evaluate its influence on an organization.

But it needs to be pointed out that business ethics also has positive and negative effect(Carroll and Shabana, 2010). On the first place, business ethics is beneficial for organizations to build distinct competence(Pearce and Doh, 2012). For example, as the hotel industry giant, the Hilton has developed rapidly since its inception in 1928 and its branch offices are spread all over the world(Hill, 2011). On the issue of the development of the Hilton, it is inevitable to mention the hotel’s internal culture and requirements “Today are you smiling yet?”

Hilton Hotel strongly embodies the “customer is God” and “home away from home” principle in facilities and services, internal culture and good business ethics make customers experience the “home”, which won the majority of customers; meanwhile the hotel becomes more competitive and corporate profits grow year after year. On the second place, it can protect the interests of stakeholders(Orts and Strudler, 2009). Business ethics, as a corporate soft power, reflects in all aspects of business, especially in the quality of products and services quality.

According to the Haier Group’s success and Sanlu milk powder incident(Bouee, 2010), lack of business ethics hurts stakeholders and corporate brand value is also enormously impacted. On the third place, good application to business ethics increases corporate scores to explore foreign market(Kolk and Van Tulder, 2010). In modern times, business ethics has become one of the most important parts for international business. In other words, the international market needs ethical companies. From this point of view, unsaturated international market gives priority to enterprises that have a good record for business ethics.

Just as Haier, it tried its best to protect the interests of customers and then it was favored by the international market. In addition, business ethics is beneficial to influence the behaviors and words of leaders and then cultivate ethical leadership owing to the formation of a good working environment. However, there are also some negative influences for business ethics. For one thing, business ethics puts forward a high demand for corporate capability(Carroll and Shabana, 2010). On one hand, the application of business ethics needs the support of adequate capitals.

In the short-term, business ethics may increase the total cost of organizations. On the other hand, business ethics can be different in different countries, so the organization needs excellent adaptability. For another, business ethic may bring about capital risks for companies that have weak financial basis(Skouloudis et al. , 2010). The application to business ethic needs adequate financial support, so the ethics may threaten the operations of businesses when the corporate is lack of capitals.

Question 2: analyzing the lessons of the News Corporation scandal and the importance of CSR 2.1 analyzing the lessons of the News Corporation scandal The News Corporation is one of the world’s largest media groups, and one of the world’s largest and most international integrated media companies(Yoon, 2013). On July 15, 2011, the British “Daily Mirror” quoted the news of an anonymous New York police officer, and said News Corp. ’s “World News” reporter tried to bride their telephone information of 9. 11 victims and tap their voicemail(Lewis, 2012). Facing strong public pressure, the News Corp was forced to shut down “News of the World.”

In order to grab the exclusive news, the News Corp took a lot of “extraordinary measures” and then lost more. The News Corporation scandal brings about many lessons for corporate management. In the first place, it is necessary to strengthen media self-regulation and professional ethics to further strengthen the social responsibility and professionalism. Wiretapping scandal stems from interests and competition-driven within the Western media(Simons, 2013), in order to expand distribution and increase influence, they even broken professional ethics and social moral bottom line.

As a result, they would pay their actions. In the second place, corporates should behave within laws and ethical regulations. The eavesdropping behavior of “World News” not only violates the self-regulatory codes of British newspaper industry, but also apparently breaks down the law and human rights. It is crazy to pursuit irritating news regardless of the limitation of law and moral constraints, finally embarking on a dead end. Thus, the “great” is not self-appointed, and “press freedom” beyond legal and moral is shameful(Sharma, 2009).

In the third place, the News Corporation scandal motivates other organizations to pay more attention to CSR instead of just thinking of profit. In order to absorb in as many customers as possible, the News Corp ignored the original target of media corporations and took all actions to obtain explorative news regardless of the interest of its stakeholders. The organization is not alone in society, and it needs to undertake the theme of serving people. Only in this way, can it become popular and successful.

Just like IKEA, Novo Nordisk and other organizations, they prefer to work out a CSR policy after a media scandal(Jiraporn et al. , 2013). 2. 2 analyzing the importance of CSR Firstly, CSR is important for corporate financial performance according to the News Corp scandal(Inoue and Lee, 2011). Just as Inoue and Lee (2011) said, CSR is a tool to increase corporate long-term profits through a little increase of cost in short-term. They emphasized the long-term benefits of CSR and excessive attention to short-term profits may lead to a failure.

For example, the profits of the News Corp dropped sharply after eavesdropping behavior. In contrary, the event “smashing refrigerator” of Haier won the trust and support of customers, got a better reputation and more performance, although it increased the total cost in a period at some degree. Thus, CSR is meaningful to improve corporate core competitiveness, inspire staff to be more enthusiastic and creative and attract more financial institutions to provide funds, thus contributing to the long-term business performance of enterprises.

Secondly, the application of CSR is closely related to corporate sustainability(Choi et al. , 2010). Just as Gomez-Haro et al. (2011) once said, CSR is a standard for an organization to measure the influence of corporate decisions and activities on society and natural environment. They emphasized that strategic CSR is important for an organization to obtain the dominate power to occupy marketplace and develop a sustainable future. Their views stress the relationship between CSR and sustainability, and explain the value of CSR during the process of operation, except that it did not point out the focus of CSR.

In the economic system of high globalization, during the pursuit of business performance, environmental pollution, product quality, labor safety and other issues has been unable to be separated from enterprises(Tan-Mullins and Mohan, 2013). According to the News Corp scandal, it is obvious that stakeholder interests cannot be ignored and CSR has become the main trend of business continuity. Undertaking social responsibility for stakeholders, enterprises can set up a good corporate image except for enhancing cohesion and core competitiveness, thus ensuring the sustainable development of enterprises.

Major food safety accidents of Melamine, excessive odor emissions of Michelin tire factory(Cobert, 2009), Foxconn sweatshops event(Watch, 2010) and so on all prove the importance of CSR to corporate sustainability. Thirdly, CSR is valuable to balance the relationship between economic development and social harmony(Carroll and Shabana, 2010). Smith (2010) said all businesses should aim at giving back to those who make corporate objectives come true. In his opinion, CSR is a performance to return the community through volunteerism or sponsorships or other causes.

What corporations do should comply with the situation of community; only in this way can corporations be sustainable and successful. In other words, CSR pays much attention to common progress, and persists to keep the consistency between economic development and social harmony. The News Corp excessively emphasized economic profits and ignored the demands of social development, and then it paid. In contrast, as a company equipped with a strong sense of social responsibility, Motorola stressed the company’s positive interaction with their environment(Blocker et al., 2011), which gains high assessment of the international community.

Question 3: discussing the leadership during the process of promoting business ethics and CSR Following the News Corporate scandal and other business scandals, the society has upgraded the standards for corporates that expect to establish great power. Just as Qualman (2012) once said, businesses have to work with transparency in order to obtain long-term activities from consumers and attention to the consistency of corporate words and behaviors should be stressed.

Therefore, ethical leadership must be emphasized during the process of promoting business ethics and CSR(Becker, 2013). It is necessary to point out that ethical leadership is a “soft” leadership and it focuses on making use of reasonable amount of authority in every condition to solve issues(O’Toole and Mayer, 2013). Ethical leadership is beneficial to cultivate great corporate culture, and put the principles of business ethics and CSR into corporate environment(Sheldon and Park, 2011), which makes employees feel the value of ethics and CSR at anywhere.

From the point of ethical leadership, leaders need to regulate themselves according to ethics and then influence others to follow the regulations of ethics and CSR. Business ethics, ethical leadership and CSR should become inseparable concepts during leader’s management(Ardichvili and Jondle, 2012). Corporate leaders have both external effect and internal effect, so how they behave is closely related with the interests of consumers, employees, suppliers, government and other stakeholders.

Protection for stakeholders is an important standard to judge the attention of a company to business ethics and CSR, which also proves the value of ethical leadership when promoting ethics and CSR. What’s more, appropriate social responsibility orientation of leaders makes great contribution to fulfilling business ethics and CSR(Sharma et al. , 2011), so it is necessary to display the value of social responsibility orientation during the process of promoting business ethics and CSR.

In other words, leaders have to regulate their social responsibility orientation in leadership framework and make use of this orientation to promote business ethics and CSR(Crittenden et al. , 2011). Wheelen and Hunger (2010) considered that, as the firm’s major decision-makers, business leaders have more opportunities for businesses to determine the tone of business ethics, the degree of fulfillment of CSR has a great relationship with the value orientation of business leaders. From this point of view, leaders have to try their best to comply their social responsibility orientation with the regulations of business ethics and CSR.

In addition, leaders should provide guidance for important corporate actions and make all operations suitable to business ethics and CSR so as to gain more support and expand the influence of business ethics and CSR(Brunk, 2010). Conclusion According to the above analysis to business ethics, CSR and leadership, it is obvious that business ethics is quite valuable for expanding its fame, absorbing in more consumers and exploring foreign markets and so on, but it needs to be pointed that it may increases the total cost in short-term and bring about capital risks sometimes.

It is also apparent that CSR is meaningful for corporate financial performance, sustainability and the relationship between economic development and environmental protection. In addition, leadership plays an indispensable role in promoting business ethics and CSR, but it may also ruin corporate ethics and CSR owing to unreasonable utilization to ethical leadership. Therefore, it can be concluded that business ethics and leadership should be paid attention and appropriate ethical leadership should display its guidance role.

In our company, there are a lot of employees and factories that produce tires. It is known that rubber releases bad gas and factories discharge polluted water, which both damages the health of workers and environment. Under this background, if the health of workers is cared and strict regulations are worked out for pollution, our company will get more support from workers and the society. Recommendation After theoretic analysis, it is necessary to provide some realistic and feasible recommendations. On one hand, business ethics and CSR should be taken into strategic management.

When working out some economic policies or strategic plans, companies should consider whether the policy or plan hurts the interest of stakeholders, damage natural principles and excessively emphasizes economic target regardless of social development or not. On the other hand, establish a monitoring and evaluation mechanism is recommended in the leadership team. This system is mainly used to supervise leaders’ actions and regulars assess their behaviors according to corporate ethics and CSR so as to strengthen ethical leadership. (Word accounts: 2699 words)

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