Ethical and Social Responsibilities

of Business
Leadstar College of Management and Leadership
Ethics and Social Responsibility

 Business Ethos – operational and functional quality

that is led by values and practices of corporate or
business social responsibility (CSR)
Ethics and Social Responsibility

 Corporate Social Responsibility can be defined at three

levels:

 1. General definition – CSR is the relationship between

business and its stakeholders
Ethics and Social Responsibility

 Corporate Social Responsibility can be defined at three

levels:

 2. Global definition – the relationship between global

corporation, governments and individual citizens
Ethics and Social Responsibility

 Corporate Social Responsibility can be defined at three

levels:

 3. Local/National Definition – relationship between

corporations and local society in which it operates and
resides
 Globalization and Corporate Social
Responsibility

 There is a constant tension between globalization and

nationalization
 Globalization and Corporate Social
Responsibility

 Globalization is fundamentally driven by technology

and information while nationalization is driven by
geography and territorial loyalty
 Globalization and Corporate Social
Responsibility

 Globalization in this context can be defined as the free

movement of goods, services and capital.
 Globalization and Corporate Social
Responsibility

 Globalization is also a process which integrates;

 World economies,
 Culture,
 Technology and
 Governance
 Globalization and Corporate Social
Responsibility
 There five fundamental involved in globalized economic
system;

1. Transfer of information
 Globalization and Corporate Social
Responsibility
 There five fundamental involved in globalized economic
system;

1. Transfer of information
2. Skilled employee mobility
 Globalization and Corporate Social
Responsibility
 There five fundamental involved in globalized economic
system;

1. Transfer of information
2. Skilled employee mobility
3. The exchange of technology
 Globalization and Corporate Social
Responsibility
 There five fundamental involved in globalized economic
system;

1. Transfer of information
2. Skilled employee mobility
3. The exchange of technology
4. Financial funds flow
 Globalization and Corporate Social
Responsibility
 There five fundamental involved in globalized economic
system;

1. Transfer of information
2. Skilled employee mobility
3. The exchange of technology
4. Financial funds flow
5. Geographic arbitrage between developed countries and
developing countries
 Globalization and Corporate Social
Responsibility

 Globalized Business systems have multiple dimensions

such as;

 Religious
 Environmental and
 Social
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 1. Increased competition

 Competitions are related to product, service, cost, target market,

technological adaptation, quick response and quick production
 In Global economy customers have choices those choices will increase
expectations on corporations or business,
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 2. Exchange of Technology

 Globalization increased the speed of technology transfer and

technological improvement
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 2. Exchange of Technology

 Globalization increased the speed of technology transfer and

technological improvement
 Markets are driven and directed by customer expectations, customers
expect use of technology to enhance efficient marketing and business
transactions
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 2. Exchange of Technology

 Globalization increased the speed of technology transfer and

technological improvement
 Markets are driven and directed by customer expectations, customers
expect use of technology to enhance efficient marketing and business
transactions
 In order to adapt to the fast paced technological evolution companies
must develop rapid adaptability, efficient technology management and
efficient R & D management
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 3. Knowledge and Information Transfer

 There are two major facts about information in business;

 1. Information is the most valuable economic and business factor in the

current global environment
 2. Information can easily be transferred and exchanged from one country
to another.
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 3. Knowledge and Information Transfer

 Companies can survive and thrive in this changing global environment based
on two factors;

 1. Having the mechanism to collect and analyze information

 2. Having agility, adaptability to flexibility to use that information
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 4. Portfolio Investment (Financial fund flows)

 Globalization encourages and facilitates increased international

portfolio investment.

 The other key factor is the fact that financial markets have become
increasingly open to international capital flow.
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 4. Portfolio Investment (Financial fund flows)

 Developing countries such Ethiopia face a major problem in increasing

financial liquidity therefore one of the major ways of increasing
liquidity is attracting FDI (foreign direct investment)
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 4. Portfolio Investment (Financial fund flows)

 One critical matter is looking at the short term and long term impact
of portfolio investment and FDI
 Short term benefits can be seen in infrastructure development,
increased employment, growth of local economy…
 Long term impact can be seen if that company withdraws its funds and
business, financial market indicators can plummet immediately.
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 5. Regulation/Deregulation and international standards

 Globalization needs more regulations of the market economy. There are

three factors connected to matters of regulation and deregulation;

 1. There are many new and complicated financial instruments and methods
in the market and such instruments easily transfer and trade in other
countries because of the globalization effect.
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 5. Regulation/Deregulation and international standards

 Globalization needs more regulations of the market economy. There are

three factors connected to matters of regulation and deregulation;

 2. Every new system, instrument and tool requires new rules and regulations
to determine its impact area.
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 5. Regulation/Deregulation and international standards

 Globalization needs more regulations of the market economy. There are

three factors connected to matters of regulation and deregulation;

 3. These regulations are necessary to protect countries against global risks

and crises.
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 5. Regulation/Deregulation and international standards

 Regulation and deregulation factor looks at managing crisis that comes out
of one country with an increased impact or influence on another country
through trade channels and fund transfers. This kind of globalized economic
impact can be seen and called as the “Contagion effect.”
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 5. Regulation/Deregulation and international standards

 Global economic system has shareholder and stakeholders in many different

countries
 International rules and regulations offers protection to small investors by
means of international accounting and auditing standards.
 Due to this globalized business sphere, this globalized world has more rules
and more regulations and international standards than before.
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 6. Market Integration

 In this globalized economic platform many markets and economies are

experiencing conversion into becoming one.

 In market integration creating the financial structure capable of handling

the higher risk in the new economy.

 Management of market integration requires keep the balance between risks

and rewards of global market integration.
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 7. Qualitative Intellectual Capital Mobility

 In globalization there is heightened human capital mobility through

knowledge and information transfer.
 There are three facts connected to qualitative intellectual capital mobility;

 1. Globalized economic system creates subsidiaries partners and

agencies in different countries.
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 7. Qualitative Intellectual Capital Mobility

There are three facts connected to qualitative intellectual capital mobility;

 2. Global economic system needs skilled and experienced international

employees and rotation from country to country to provide
appropriate international business practice.
 3. Global economic system requires skilled and movable employees
who can adapt quickly to different market conditions.
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 8. Financial Crisis-Contagion Effect-Global Crisis

 Crisis in one major multinational corporation or crisis in one country can

turn into a global crisis.
 Financial crisis usually comes from the following major factor in play on the
global economic platform;
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 8. Financial Crisis-Contagion Effect-Global Crisis

 Financial crisis usually comes from the following major factor in play on the
global economic platform;
 1. International funds/Capital flow
 2. Lack of proper regulation and unilateral regulation changes
 3. Financial instrument complexity
 4. Rapid development of financial markets
 5. Asymmetric information and information transfers
 Globalization and Corporate Social
Responsibility
 Globalization affects the economy, business life, society
and environment in eight different ways;

 8. Financial Crisis-Contagion Effect-Global Crisis

 Based on these factors one country’s crisis can turn into a global crisis from
one country to another country.
How Globalization Affects CSR

 Economic growth and economic development might not be

without social and moral consequences and implications.

 CSR – looks into balancing the benefit of shareholders and

stakeholders of all global and local business operations.
How Globalization Affects CSR

 The key question in this statement is – Who is responsible

in this woke of ensuring CSR
How Globalization Affects CSR

 1. Government – regulator of markets and lawmakers

 2. Business management – responsible to take action and

create viable and responsible business structure and
strategy.
 3. Consumer responsibility through customer behavior that
is informed, responsible and sensitive/selective
How Globalization Affects CSR

 CSR is changing business behavior of global and national

companies.
 According to international norms and expectation
companies have to take the following factors into account;
 Social
 Ethical
 Environmental issues
How Globalization Affects CSR

 CSR is changing global consumer expectation, therefore

consumer expectation is no more limited to cost of products
by related to:

 People who produces those goods/products

 Proper production process and
 Environmental sensitivity.
Three major chapters at the end
of this Module;

 Chapter 11 – CSR and strategy

 Chapter 12 – CSR and Leadership

 Chapter 13 – CSR and Motivation