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"Ethics and Corporate Social Responsibility"

Yergaliyev Maksat

M. Narikbayev KAZGUU University

Business Communications

Limarenko Kristina

20.05.2022
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Content

Content 2
Introduction 3
What is Corporate Social Responsibility? 3
What is Ethics? 4
The relationship between Corporate Social Responsibility and Ethics 4
Main body 5
About companies 5
Problem of the case 6
Proposed solution of the case 7
Analysis of the case 8
Alternative ways of the case 10
Conclusion 10
References 12
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Introduction

How business ethics and social responsibility might help attract, retain, and boost

employee morale is one of the most important topics in organizational behavior and

management. The behavioral idea of "nudging" is commonly used in today's enterprises to

encourage more ethical behavior, fair treatment of a diverse workforce, or ecologically friendly

activities.

Corporate social responsibility and ethics are critical principles in society because

without them, everyone would do whatever they want. This paper will discuss "what is corporate

social responsibility" and "what is ethics," with a case study as an example.

What is Corporate Social Responsibility?

There are many definitions of Corporate Social Responsibility, but the main idea is that

socially responsible businesses consider all of their activities, reconcile their interests with those

of shareholders, employees, consumers, the environment, their community, and other

stakeholders, and accept responsibility for their environmental impact¹ (Barauskaite and

Streimikiene, 2021).

In other words, Corporate Social Responsibility is a self-regulatory business model that

allows a firm to be socially accountable to itself, its stakeholders, and the general public.

Companies can be aware of their impact on all parts of society, including economic, social, and

environmental, by exercising corporate social responsibility, also known as corporate citizenship.

Corporate social responsibility (CSR) refers to business actions and policies that have a

positive impact on society. CSR is based on the premise that businesses should seek additional

pro-social goals in addition to achieving profits. Minimizing environmental externalities,

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promoting volunteerism among firm employees, and donating to charity are examples of popular

CSR aims.

What is Ethics?

Ethics is the study of behavior in terms of whether it is judged right or wrong, good or

bad. "Moral conduct," or the "moral life," is a singular phrase for such behavior. Another way of

putting it is that Ethics seeks to provide a systematic account of our judgments about behavior,

insofar as they evaluate it in terms of right or wrong, good or bad² (Dewey, 2016).

Telling the truth, keeping our promises, and helping someone in need are all examples of

ethics. On a daily basis, we are guided by an ethical framework that helps us make decisions that

have positive consequences and steers us away from unjust outcomes.

The relationship between Corporate Social Responsibility and Ethics

Davidson and Griffin define ethics as an individual's personal beliefs regarding what is

right and wrong or good or bad³ (as cited in Fischer, 2004). The crucial argument, according to

Davidson and Griffin, is that individuals within organizations have ethics, but organizations have

not. This is most likely due to the fact that organizations cannot have "personal ideas" about

anything. Organizations do react to their surroundings in ways that often involve ethical

dilemmas and decisions. However, the way they respond must be based on social responsibility

rather than ethics³ (as cited in Fischer, 2004).

Connection between these two concepts is that they have the same purpose, which means

that individuals as well as organizations care about the environment and try to make it better.
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Main body

As an example, there will be a “Apple and Foxconn'' case study. Case is about a young

Chinese worker from Guandong province jumped to his death from the 12th storey of his

apartment building early on the morning of July 16, 2009. His name was Sun Danyong, 25, had

been charged three days earlier with the theft of an iPhone prototype from the Foxconn

Technology Group office where he worked. Thirteen more Foxconn workers committed suicide

in various manners over the next 13 months⁵ (Guo, Lei & Hsu, Shih-Hsien & Holton, Avery &

Jeong, Sun, 2012).

About companies

Apple Inc. (hereafter referred to as Apple) was founded in 1977 and is listed on the

NASDAQ Global Select Market. 'Apple designs, manufactures, and markets mobile

communications, media devices, personal computers, and portable digital music players, as well

as sells a variety of related software, services, peripherals, networking solutions, and third-party

digital content and applications,' according to the company's Form 10-K. Apple sells its products

through retail locations, online sites, and third-party vendors. Apple is a global leader in

electronic goods and technology innovation. Apple's net sales were predicted to be $108.2

million in 2011. When compared to 2010, its net sales climbed by 60% in 2011. Apple employs

60,400 full-time employees and 2,900 temporary and contract workers worldwide. The

corporation uses outsourcing to manufacture its items in other countries.⁴

Foxconn is a Taiwanese-owned transnational company that manufactures electronic

components for Hewlett-Packard, Dell, Sony, Nokia, and Nintendo, as well as assembling

iPhones, iPods, and iPads for Apple.⁵ Foxconn is the world's largest maker of iPhones and iPads,
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with over 900,000 people, including 420,000 in the Foxconn Shenzhen facility. This plant has 15

factories, as well as dorms, a hospital, and a restaurant. There's a bank, a grocery shop, and

eateries nearby. Inside the compound, the personnel live and work.⁴

Problem of the case

A total of 13 workers committed suicide between 2009 and 2010. Sun Danyong, the first

employee, committed suicide after being probed about the loss of an iPhone 4 prototype he had

in his hands.⁴

This issue has more than one cause of occurrence. Firstly, the reason for the repeated

suicides was uncovered during an undercover investigation to be tied to internal management.

The Foxconn facilities are good, but the management is terrible,' stated Zhu Guangbing, the

investigation's organizer. Foxconn has a military-style management technique, according to

Audrey Tsui, a lecturer at the National University of Singapore Business School. The employees

were not permitted to interact with one another. Workers who broke the rule were fined or held

in contempt by the manager. The workers worked up to 70 hours a week, even though it was ten

hours more than the maximum working time set by the Apple Supplier Code. The Foxconn

factory is well equipped. Swimming pools and tennis courts are at the disposal of the staff.

Foxconn organizes activities such as chess groups, mountaineering and fishing. However, the

employees did not have time to use these facilities due to their 70-hour workweek.⁵ Secondly,

one of Foxconn's workers stated that the media had overstated the suicides related to their

employment at Foxconn, and that some suicides may have been motivated by sentiment or

romance and later, it was uncovered that child labor issues have worsened at computer, iPad, and
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iPhone vendors. According to Apple's 2011 Supplier Liability Report, there were 91 underage

employees at suppliers.⁴

Proposed solution of the case

Foxconn also took a number of steps to address the spike in suicides, including providing

numerous salary rises, psychological support, no-suicide contracts, worker rallies, and installing

safety nets around buildings where Foxconn employees live and work. ⁵

But, in terms of other issue, Apple offered different efforts. Apple conducts audits to

ensure that suppliers follow the Supplier Code. The audits look at working and residential

circumstances, as well as health and safety and environmental practices. Each year, after

conducting audits and prepare the reports, they found allowing the use of child labor and to fix it,

company took action such as suppliers must pay educational expenditures, living stipends, and

lost wages for six months or until the worker reaches the age of sixteen if underage labor is

revealed or Suppliers are required to return underage workers to school and fund their education

through Apple's Child Labour Remediation Program. Also, the CEO of Apple, Tim Cook

commented: ‘We would like to totally eliminate every case of underage employment. We have

done that in all of our final assembly. As we go deeper into the supply chain, we found that the

age verification system isn’t sophisticated enough. This is something we feel very strongly about

and we want to eliminate totally’.⁵

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Analysis of the case

SWOT analysis:

Strengths: Weaknesses:
- psychological healthy employees - the fact that minors are allowed to
- future ready workers work
- the admission of improper treatment of
the company's

Opportunities: Threats:
- implementation of an updated - risk of spoiling the reputation of the
monitoring and management system company
- show its actions regarding corporate - abuse of the company's services by
social responsibility and ethics people

Strengths:

Having made various efforts to solve the first problem, the company can provide itself

with a guarantee of good working capacity of workers, and as for problems with child labor,

Apple will already train future employees of its company and, accordingly, will have a

guaranteed workforce in the future thanks to the program they provide.

In addition, the company fulfills all responsibilities regarding corporate social

responsibility, that is, it has a positive impact for society by helping underage illegal employees

of its company, which shows full responsibility to the community and adheres to the rules of

ethics as the head of the company and to the corporate social responsibility of the company itself.

Weaknesses:

The fact that minors are allowed to work is considered a weakness, since the main goal

was to find the cheapest job, which contradicts the rules of corporate social responsibility, which

means the company has set ahead maximizing profits rather than care about society. Therefore,

the company should take this into account and prevent this.
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Also, the admission of improper treatment of the company's employees is considered as

a weakness, because the company's employees are also members of society and the reasons for

driving employees to suicide is the reason and clearly shows a violation of corporate social

responsibility.

Opportunities:

Implementation of an updated monitoring and management system, that is, when hiring,

to conduct special control of candidates in order not to have such problems in the future. It is

worth paying greater attention to the training of good managers who will assign appropriate

tasks, inspire people, and not put them in a psychological state where they may commit suicide.

Another opportunity for the company to show its actions regarding corporate social

responsibility and ethics. The fact that accidents have occurred cannot be denied; thus, the

corporation should focus on the future and behave in accordance with corporate social

responsibility guidelines, because if the company does not respond, society may lose trust in

them.

Threats:

Such problems and cases arising in the company can spoil the reputation of the company

and cause significant damage. The company may suffer as a result of ongoing similar situations

and challenges, because it is difficult to create a brand due to a bad reputation.

In addition, it is difficult to call it a danger, but it has cause for alarm. Because of the

opportunities that the company provides, people can abuse this, that is, people in search of easily

achievable money can specifically arrange their children to work illegally and profit from it,

receiving compensation from the company.

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Alternative ways of the case

This is an analysis to see what would have happened if the company hadn't paid notice

and initiated an investigation. If the corporation had been unconcerned about employee suicides

at start, the number of suicides would have risen since the company would not have discovered

the core cause and provided no assistance. Consequently, all this could have an impact on the

average life expectancy of the area where the company is located. Second, if an investigation had

not been done, the company would not have known anything regarding working minors, i.e., we

would have been completely unaware of the ongoing and clandestine situation. Hence, child

labor would continue to be used, and underage workers who should be in school and receiving

education would not receive one, affecting the education of the general population in the area

where the company hires workers.

It is difficult to say that the company started taking measures in time, because 13 suicides

in 13 months is not the best indicator, but based on the previous analysis, we can say that the

company understood its responsibilities and followed the corporate social responsibility policy

and tried to find a solution and fix everything as much as possible.

Conclusion

Just as "ethics" concerns an individual, so "corporate social responsibility" concerns one

organization, a company, and that other. That is, if an individual is responsible for his actions,

then some organization is responsible for its impact, which it makes its act.

Every organization should keep a corporate social responsibility report, to keep order and

monitor how they affect the environment, what is happening inside the company, how things are

with employees, because if every organization thought only about its own personal benefit, there
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would be no order. Using the example of the Apple and Foxconn case, if the companies had not

taken up the case and had not paid attention, there could have been such consequences. It is

possible that the number of suicides would increase and the use of underage labor would

continue, which would lead to global problems such as lack of education, low average life

expectancy, etc.

Based on all the analyses carried out, it can be concluded that every organization,

company and other enterprises should take their responsibility to society, comply with the rules

and try to make their environment better, and as for individuals, everyone should know the rules

of ethics and comply with them.

References

1. Barauskaite, G., & Streimikiene, D. (2021). Corporate social responsibility and financial

performance of companies: The puzzle of concepts, definitions and assessment methods.

Corporate Social Responsibility and Environmental Management, 28(1), 278-287.

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2. Dewey, J. (2016). Ethics. Read Books Ltd.

3. Fischer, J. (2004). Social responsibility and ethics: clarifying the concepts.

Journal of Business ethics, 52(4), 381-390.

4. Four Case Studies on Corporate Social Responsibility

https://www.utrechtlawreview.org/articles/10.18352/ulr.205/galley/203/download/

5. Guo, Lei & Hsu, Shih-Hsien & Holton, Avery & Jeong, Sun. (2012). A case study of the

Foxconn suicides: An international perspective to framing the sweatshop issue.

International Communication Gazette. 74. 484-503. 10.1177/1748048512445155.