SOCIETY AND EDUCATION 14 (2) 2014

Wydawca / Publisher: ISSN: 1898-0171

Instytut Studiów
Międzynarodowych
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i Edukacji HUMANUM
Society and Education
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Daniela Hrehová
Mária Antošová
Technical University, in Košice

Business ethics and corporate

social responsibility
Abstract
Business and commerce, and their connections to ethical thinking, are as old as civilization. This paper
raises questions about the overlap and reciprocally supportive interface between business ethics and
corporate social responsibility, as well as about their mutual exclusivity. Business ethics imply a system
of moral principles and rules of conduct applied to business so that the business should be conducted
according to certain self-recognised moral standards. Corporate social responsibility is a form of
corporate selfregulation integrated into a business model. It is also called as corporate conscience,
corporate citizenship, social performance, or sustainable responsible business.
Key words: business ethics, corporate social responsibility, firms

INTRODUCTION

B
usiness ethics can be defined as written and unwritten codes of principles
and values that govern decisions and actions within a company. In the bu-
siness world, the organization’s culture sets standards for determining the
difference between good and bad decision making and behavior. In the most ba-
sic terms, a definition for business ethics boils down to knowing the difference
between right and wrong and choosing to do what is right. The phrase ‚business
ethics’ can be used to describe the actions of individuals within an organization,
as well as the organization as a whole. CSR-focused businesses would proactively
promote the public interest (PI) by encouraging community growth and develop-
ment, and voluntarily eliminating practices that harm the public sphere, regardless
of legality. CSR is the deliberate inclusion of PI into corporate decision-making,
that is the core business of the company or firm, and the honouring of a triple bot-
tom line: People, Planet, Profit [12]. The goal of CSR is to embrace responsibility
for the company’s actions and encourage a positive impact through its activities on
the environment, consumers, employees, communities, stakeholders and all other
members of the public sphere. Understanding the landscape of business ethics can

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 Hrehová D., Antošová M.: Business ethics and corporate social responsibility

be problematic [11]. The field is vast, often encompassing such concerns as corpo-
rate governance, reputation management, accurate accounting, fair labor practi-
ces and environmental stewardship to name but a few. In fact, the field addresses
the entire scope of responsibilities that a company has to each of its stakeholders:
those who have a vested interest in the decisions and actions of a company, like
clients, employees, shareholders, suppliers and the community. Depending upon
the company in question, one may even be able to identify additional stakeholders.

BUSINESS ETHICS
Busisness ethics is focused on the corporations and society, consider social re-
sponsibility, moral standards across borders, issues of human rights such as non-
discrimination, safety and privacy. Understanding ethical principles and expla-
ining their relevance to business [6]. Business ethics is a form of applied ethics.
It aims at inculcating a sense within a company’s employee population of how to
conduct business responsibly [20]. Because the term „ethics” can pose problems in
an international context, i.e., the term does not translate well and it can be difficult
to find a common understanding of the term, some organizations choose to recast
the concept of business ethics through such other terms as integrity, business prac-
tices or responsible business conduct [22]. Why are problems in business ethics?
In other words, what accounts for the unethical actions of people in organiza-
tions, more specifically, why do people commit those unethical actions in which
individuals knew or should have known that the organization was committing an
unethical act [21]? An example recently provided by Baucus and Near [2] help to
illustrate this distinction. According to the model developed from Baucus and Ne-
ar’s research, illegal behavior occurs under certain conditions. For example, results
from their research showed that

1. large firms are more likely to commit illegal acts than small firms;
2. although the probability of such wrongdoing increases when resources are
scarce, it is greatest when resources are plentiful;
3. illegal behavior is prevalent in fairly stable environments but is more probable
in dynamic environments;
4. membership in certain industries and a history of repeated wrongdoing are
also associated with illegal acts; and,
5. the type of illegal activity chosen may vary according to the particular combina-
tion of environmental and internal conditions under which a firm is operating.

Corporate responsibility refers to fulfilling the responsibilities or obligations that

a company has toward its stakeholders. When examining a particular corporate
practice, like profit versus environmental protection, corporate responsibility can
help distinguish between a stakeholder expectation and a corporate obligation,
i.e., is the company obligated to provide absolute environmental protection at all
costs or is it obligated to maximize profits for its investors at the cost of damaging

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the environment? CSR can be understood in terms of corporate responsibility,

but with greater stress upon the obligations a company has to the community,
particularly with respect to charitable activities and environmental stewardship
[14]. Corporate and social responsibility is sometimes described as being a tacit
contract between business and a community, whereby the community permits the
business to operate within its jurisdiction to obtain jobs for residents and revenue
through taxation [8]. Additionally, the community expects the business to pre-
serve the environment and to make the community a better place to live and to
work through charitable activities.

Corporate Social Responsibility (CSR) - its translation as social responsibility is

understood as primarily a course on the ethical principles that should be respected
companies in business [23]. Until now there is no united definition of the concept.
Reasons are different aspects the definitions come from. Basically it contains long-
-time commitment of the company to behave ethically, to contribute to economic
growth and life quality improvement of their employees, community and whole
society [10]. Under social responsibility belong anticorruption measures, corpora-
te governance, intellectual property protection, transparency, also ecology, quality
management and various HR policies [13]. Socially responsible is also a company
which is engaged in charity and community investment, counselling or volunte-
ering [1]. It is harder to find consensus if it can be involved in social responsibility
also combining of philanthropy with brand promotion such as so called cause re-
lated marketing. Current definitions of CSR are based on principles of objectivity,
involvement, active cooperation with the involved subjects and transparency. It is
also distinguished by common characteristics such as: universality, focusing on
active cooperation with involved subjects (stakeholders), expression of commit-
ment to contribute to life quality development.

ETHICS AND SOCIAL RESPONSIBILITY

Corporate social responsibility is quite often wrongly identical replacement term
business ethics, in some cases, the concept of business ethics. As social (social)
responsibility is a synthesis of economic, ethical, legal and philanthropic respon-
sibilities, and based on the idea of business as good citizens, businesses, respec-
tively [9]. Business ethics focuses primarily on the moral aspects of the behaviour
of individuals and groups within the enterprise [4]. Both concepts use different
methods and forms of its implementation. Current definitions of corporate social
responsibility are clearly based on universal ethical principles, namely indepen-
dence, commitment, active collaboration with stakeholders and transparency [3].
Also, having common characteristics such as: universality, voluntary, focusing on
the active cooperation of stakeholders (stakeholders), expressed commitment to
contribute to the development of quality of life. They have a universal character
and apply to all types of business, not just for some [5]. It is clearly impossible to
do a one-on-one comparison between ethical standards and social responsibility
principles if, for no other reason, than there are twelve ethical standards and seven
principles for social responsibility [19]. Nevertheless, a side-by-side look at the
standards and principles provides the opportunity to make some initial compari-

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sons and begin to question their compatibility or mutual exclusivity [23]:

Buying organizations have the ability to influence and/or demand both ethical be-
havior and social responsibility from their suppliers, but should they? When it co-
mes to ethics, an implicit agreement of long-standing exists that ethical behavior is
not only desirable but required in domestic business transactions. Any debate [7],
[9] stems from doing business globally wherein the ethics standard recommends
being „especially sensitive to customs and cultural differences with respect to so-
cial and business behavior and issues of influence.” Influencing or demanding so-
cial responsibility from suppliers has no such caveat and poses such questions as:
Is it ethical to influence the social responsibility of suppliers?Is it ethical to demand,
by way of contract language, socially responsible behavior from suppliers?

Ethics Perhaps, the first thing that becomes apparent in comparing the ethics stan-
dards and the social responsibility principles is that „ethics” are embedded in the
social responsibility principles [16]. The ethical standard for small, disadvantaged
and minority-owned businesses seems to relate to the social responsibility prin-
ciple of diversity. The commentary for the ethical standard, „encourage support
for small, disadvantaged and minority-owned businesses”.

The social responsibility principle includes: proactively promote purchasing from,

and the development of, socially diverse suppliers; encourage diversity within
your own organization; proactively promote diverse employment practices thro-
ughout the supply chain [17], [18]. Because the social responsibility principle is
much broader than the ethical standard, a direct relationship is not as well defined
as that concerning ethics and questions begin to emerge:
Is this ethical standard compatible only with the first item under the social responsibi-
lity principle? Are the second two items of the social responsibility principle mutually
exclusive?
Can you be ethical and demand, as a condition of a contract, that a supplier ensure
diversity within its organization?
Can you go beyond encouraging diversity and demand, as a condition of a contract,
that a supplier have a diversity-supplier program in place?
If mandates such as these are placed in contracts, how does this square with the ethi-
cal standard on supplier relationships that demands impartiality?

CONCLUSION
CSR and business ethic are hot topic in current age. Understanding the impor-
tance of ethics in business is the key to success. Customers, management, and
employees all appreciate honest and ethical practices. Business ethics are impor-
tant because they help maintain a clean reputation and they ultimately benefit
everyone involved. Ethically the business should also have social responsibility to-
wards shareholders, employees, customers, community &government. Corporate
responsibility is an integral part of business ethics and should be practiced by all
entities, whether large or small. Corporate responsibility simply means that each

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individual within a company is practicing personal and professional responsibility

in a way that will benefit him and others. It is extremely difficult to create a set of
strict guidelines that will work for every organization, across each standard and
principle, in every situation, and in every country within which it may conduct
business.

REFERENCES

2 Baucus M. S., Near J. P.: Can Illegal Corporate Behavior Be Predicated? An Event

c 2005, p. 6. Available from:

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6 De George R.T.: The Status of Business Ethics: Past and Future. Journal of Busi

te identity, ethics and corporate social responsibility. Journal of Business Ethics,

2007, 76, pp. 1–5.

The communication of corporate social

responsibility: United States and European Union multinational corporations. Jo

Boston, 2002.
15 Business for Social Responsibility. BSR News Monitor summary of articles from

www.prweek.com
16 More E, Webley S. Does Business Ethics Pay? Institute of Business Ethics. Nor

17 ISM Principles and Standards of Ethical Supply Management Conduct with Ac

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 Hrehová D., Antošová M.: Business ethics and corporate social responsibility

20 Stevens, B.: The Ethics of the U.S. Business Executive: A Study of Perception.

21 Stolowy H.: Nothing like the Enron affair could happen in France. European Acco

23 Thinking shift: Corporate Social Responsibility. The Evolution of

The article was prepared within the solution of project MŠVVaŠ SR VEGA no.
1/1033/12 - Indicators of corporate social responsibility small businesses and me-
dium-sized enterprises in the context of regional development.

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