Moral Values and Ethics: Values Concepts

Values are beliefs that guide action and judgement across a variety of situations. Example: Businessman is expected to give the true information about his products. Values represent the basic conviction that a specific mode of conduct or end state of existence is personally or socially preferable to an opposite or converse mode of conduct or end state of existence. It contains moral values which carries an individuals idea as to what is right, good or desirable. Values have two attributes The first known as content attributes which merely states that the conduct or goal is important. The second is intensity attributes which specifies how important it is. Features of values Values represents that specific mode of conduct is socially preferable to an opposite mode of conduct. Values guide people to take specific positions on societal issues. Values are the most moral central to the core of a person. Values and ethics Ethics refer to the entire body of moral values that society attaches to the actions of a human being. Ethics represents the moral values. Values are interrelated.
1

Values are considered language of ethics Values and attributes

as

the

Value system is viewed as a relatively permanent standing which influences an individuals behaviour. Attributes is a predefined position to respond in a positive or negative way to someone or something in ones environment. Values are concerned with what should be and what is desirable. Values, belief and attributes Attributes can be defined as providing a state of readiness or tendency to respond in a particular way. Beliefs are concerned with what is known about the world; they centre on what is considered reality. Values are concerned with what should be and what is desirable.

Types and Formation of Values

Types of values: Reactive: Unaware of oneself and others as human beings, reacts to basic physiological needs Tribalistic: High degree of dependence, strongly influenced by tradition & the power exercised by authority figures. Egocentrism: Believes in rude individualism, aggressive, selfish. Conformity: Low tolerance for ambiguity, difficulty in accepting people with divergent values, desires that others accept his values Manipulative: Strive to accomplish goals by manipulating things and people, materialistic, actively seeks status & recognition. Sociocentric: Desires to be liked and go along with others rather then get ahead, dislikes materialism, manipulation and conformity. Existential: High tolerance for ambiguity and for people with divergent values, seek self fulfilment of needs through work Terminal values A terminal value is an ultimate goal or aim of a person. Like: comfortable life, family security, self respect, freedom and social recognition etc. Instrumental values Instrumental values relate to the means for achieving the desired
2

outcome or the end. It is a tool to acquire a terminal value. It has six major types: Theoretical: Interest in the discovery of truth through reasoning and systematic thinking. The ideal theoretical man values the discovery of truth. Economic: Interest in usefulness and practicality, including the accumulation of wealth. Ideal economic man values what is useful and is concerned with practical affairs. Aesthetic: Interest in beauty, form and artistic harmony. The ideal aesthetic man values artistic and aesthetic experiences in life. Social: Interest in people and human relationship. The ideal social man places great values on affection and love. Political: Interest in gaining power and influencing other people. Religious: Interest in unity and understanding the universe as a whole. Formation of values We start forming values in our childhood. First we learn to appreciate things that fulfil our basic needs, but we value especially those people that provide them to us. Their behaviour towards us becomes the main reference of what is valuable. Thus, our character and personality are moulded through the attitudes and behaviour of the people who

raise us, whether theyre our parents or other relatives. Their behaviours determine in large part what will subsequently become our most important beliefs and principles. Teachers, leaders, and value models at school can reinforce what was formed at home, but they cannot replace them. If the convictions formed at home are not solid, they will soon be exposed to an intense social competition against other beliefs. Values are learned and acquired through experiences with people & instances. For example parents will have substantial influence on their children's values. The parents reaction to everyday events demonstrates what is good & bad, what is acceptable and important. Values are taught in schools, religions and society. Each source contributes to our lives. Business values consist of the principles which define what creates good business, what objective should be examined and whose interest the business should serve. Every organisation has certain core values which represents the deeply in-built principles that guide its action and practices. The following types of factors influence the formation of values: Family factors: Family is most influential factor in the individuals learning of social behaviour, values & norms. Child adopts the some values

from childhood & remains in his mind throughout his life. Social factors: Of all the social factors, school plays the most important role in developing the value system of an individual. Child learns the basic discipline from the school, other factors are religious, economic & political etc. Cultural factors: Cultural factors include everything that is learned & passed on from generation to generations. Whether a person is cooperative, friendly & gentle depends upon the culture. Personal factors: They include intelligence, ability appearance and educational level of person. Organisational factors: Every organisation has its own culture. In the process of interacting with boss, colleagues, a person develops certain attributes and beliefs.

Ethics and Behaviour

Ethical behaviour: That which is accepted as good and right in the context of the governing moral code. Legal behaviour is not necessarily ethical behaviour. Personal values help define individual ethical behaviour. Terminal values Instrumental values Utilitarian view of ethics greatest good to the greatest number of people Individualism view of ethics primary commitment is to ones long-term self-interests Moral-rights view of ethics respects and protects the fundamental rights of all people Justice view of ethics fair and impartial treatment of people according to legal rules and standards Cultural issues in ethical behaviour Cultural relativism: Ethical behaviour is always determined by cultural context. No cultures ethics are superior. The values and practices of local settings determine what is right or wrong. When in Rome, do as Romans do. Cultural universalism: Behaviour that is unacceptable in ones home environment should not be acceptable anywhere else. Certain absolute truths apply everywhere. Universal values transcend cultures
4

in determining what right or wrong. Dont do anything you would not do at home. Factors influencing ethical managerial behaviourthe person, organisation, and environment: Manager as a person: Family influences Religious values Personal standards and needs Employing organisation: Policies, codes of conduct Behaviour of supervisors, peers Organisational culture External Environment: Government regulations Norms and values of society Ethical climate of industry

Values of Indian Managers

A 1982 report on group of 1400 executives rated the importance of values: Responsibility & honesty Capability Imaginative Logical Ambitious Core values of managers Honesty in dealing Service to customers Innovation & creativity Safety of products & services Achievements Gender equality Excellence Humility 88% 66% 55% 49% 37%

Indian managers are moving away from the concept of values and ethics. The lure for maximizing profit is leading them away from the value based managerial behaviour. There is a need for our managers today both in private and public sectors to develop a set of values and believes that will help them attain the ultimate goals of profits and survival and growth. They need to develop the following values: Optimum utilisation of resources Work commitment Attitude towards work - Managers have to develop the visionary perspective in their work. They have to develop a sense of larger vision in their work for the common good. Vision- Managers have a long term vision. The visionary managers must be practical, dynamic and capable of translating dreams into reality. The Indian managers need to: Move from the state of inertia to the state of righteous action Move from the state of faithlessness to the state of faith and self-confidence Move from unethical actions to ethical actions Move from untruth to truth

As decision makers, managers have more opportunities than others to set ethical values for company. They are the key people to act ethically or unethically. 3 questions when making a decision: Will it work? (Practical approach) Is it right? (Ethical approach) Is it pleasant? (Affective approach) Values most likely to influence at work are: Service to customers Honesty in dealing Organisational efficiency High productivity Achievement Loyalty to company
5

Managerial Excellence through Human Values

Managerial Excellence Managerial excellence is when a manager displays command over his or her function in the workplace and demonstrates good leadership skills. For example, a manager who comes in on time every day, is involved and concerned with their subordinates, works well with their peers, and consistently attempts to improve the way their job is done displays managerial excellence. The definition is subjective, as are many things in corporate world, but in general a manager should obey company policy and always remember to interact with their peers and team members. Displays command over functions Has good leadership skills Obeys & respects companys policies & procedures Gets the best from every employee Takes his employees along with him (team player) Involved & concerned about subordinates Works well with his peers Resolves/handles problems & situations Fully in control of his or her section & function Attempts to improve the way the job is done Handles all his resource (men, machine, materials, and time) in an optimum manner In recent times the term 'human values' has been used for this theistic
6

approach to value system. This is perhaps because of the need to highlight the universal humanistic aspects of this value approach, as against the merely speculative, mystical, or life-denying ascetic aspects. In the modern interpretation of theistic value approach the authors have shown its relevance and significance to the managers and other professionals. Another reason for the use of adjective 'human' before these values may be to distinguish this value approach from the modern, so-called scientific, approach to human phenomena and associated values. Interpreted in its narrow sense this scientific approach robs man of the dignity of his divine association, his spiritual nature and reduces him to a biological organism of a random collection of atoms. It denies any meaning and purpose to life and rejects all considerations of faith, belief, feeling and intuitive religious perceptions. This mechanistic, deterministic interpretation makes man merely a malleable automaton, to be 'programmed' to meet the demands of the existing socio-technological order, through manipulation of his lower order needs and desires. What are the effects in the managers' work and family lives, and do their decisions reflect an increased awareness of human values? Neither can we draw any conclusions about the duration of the effects, i.e. whether it will last for a day or week and then vanish, or if the effects are stable and enduring. It is also evident from the responses and the stated objectives of the course that the main

focus is on the self; self-awareness, self-analysis and self-development. It is consistent with the view that the individual is the cornerstone of all changes and transformations at the organisational as well as the societal levels. While the necessity of this self-development as a precondition for the value transformation in society may not be in doubt, the emphasis on it may convey the message that it is also sufficient for all the value problems of today's living. At the organisational level the difficulty may be posed in terms of two distinct, though related, categories of intra-personal and inter-personal values. The latter are of vital significance to managers organisational role of a team leader, a change agent or a member of a work group. A heightened sensitivity to personal virtues, which is very effective at the intra-personal level, in itself may not be sufficient for values needed for effectiveness at the inter-personal level. Additional emphasis on humanistic values like human warmth, friendliness, acceptance of the other person as s/he is, trust, empathy etc., may help bring about a better value balance. As indicated in our study, the emphasis on the inter- and intrapersonal levels, as also the extent to which other approaches to human values should be emphasised, may have to be adjusted depending on the type of organisation that is approached. The manager significantly affects, and is affected by, the value culture of the society, through the mediating agency of organisations and other social
7

institutions. Proper appreciation of this value dynamics requires understanding, and interiorisation, of the operation of human values at the societal and ecological levels of our categorisation. It is not clear as to what extent values at these levels can be developed and nourished through the human value workshops.

Development of Ethics
Business ethics The standards of conduct and moral values governing actions and decisions in the work environment Social responsibility Balance between whats right and whats profitable Often no clear-cut choices Often shaped by the organisations ethical climate

completely different sets of personal ethics? You may not realize that the ethical principles youve built your life on are not an established set of rules handed to you at birth. They grow and develop with you over time and many things influence how theyre crafted. Family influences personal ethics While your parents cant dictate your morality, they are typically the first to voice and demonstrate ethical boundaries for you. Most parents consider it one of their critical jobs to instil a strong sense of right and wrong in their children. When parents tell their children that stealing is wrong, they are building a foundation for their childs personal ethics. How parents behave has a strong impact as well. Children absorb the actions of their family, which contributes heavily to their sense of morality. Religious beliefs impact personal ethics Religious beliefs have a unique impact on personal ethics. In general, religion allows people to accept an established set of moral rules. By following these spiritual laws, people feel they are behaving ethically. Religion often promises rewards in the afterlife as motivation for following the rules. Interestingly, religion can inspire all kinds of acts, including violence. Some devout followers can come to embrace an ethical code that allows for incredible cruelty to be done in the name of a greater spiritual being.
8

Ethics are personal. Everyone has a different foundation on which they build their moral code. Explore five factors that contribute to the development of personal ethics. Personal ethics act as the foundation for your moral compass; the internal guide that tells you whats right and wrong. They drive your actions and, to a certain extent, your emotions, on a daily basis. But where do they come from? And why do people who appear similar sometimes have

Culture affects ethical norms Culture can dictate the ethical norms that people are used to and come to expect. The culture you live in may impact your ethical code more than you even realize, simply because it surrounds you. The customs and traditions of the society you inhabit become ingrained in your psyche, and the ethics of the group are generally accepted. Racism, gender discrimination and other forms of prejudice can become an accepted part of a persons ethical standards when surrounded by people who do it and allow it. Experience can shift your ethics The events that happen in your life can also impact your ethics. Emotion and personal understanding may cause a powerful shift in beliefs. For example, many people claim to be against the death penalty. However, if a loved one is murdered, they may find themselves feeling differently when looking into the eyes of the person responsible. Internal Reflection Personal ethics are also developed by our feelings. When we do something that is against our moral code, we feel bad, guilty or ashamed. Likewise, when we do something that fits into our ethical idea of right we feel good, proud or happy. This causes a sort of immediate feedback for creating our moral standards and making ethical decisions. The concept of personal ethics is incredibly complicated. It develops

from a variety of factors and deserves in-depth exploration. Development in United States Before 1960s: Ethics in business
Churches often discussed ethical issues related to business theologically. Religious leaders raised questions about fair wages, labour practices, workers rights and living conditions, and for improving the conditions of the poor.

1960s: Social issues rise in business

American society turned to causes. Widespread criticism arose regarding pollution and decay of inner city areas.

1970s: Business ethics as an emerging field

Academics began to teach and write about CSR, philosophers began to apply ethical theory to philosophical analysis to structure the area of business ethics. Business became more concerned with public image

1980s: Consolidation
Business academics & practitioners acknowledged business ethics as a field of study. Many firms established ethics committees to address ethical issues. At this time the Reagan and Bush eras took the view that self regulation rather than regulation by the government was in the public interest.

1990s: Institutionalisation
Clinton supported self regulation with organisational accountability for misconduct and damages. Attempt was made by business managers, academics and the government to link the concepts of ethical responsibility and decisionmaking within an organisation. 9

Ethical Decision Making

Making good ethical decisions requires a trained sensitivity to ethical issues and a practiced method for exploring the ethical aspects of a decision and weighing the considerations that should impact our choice of a course of action. Having a method for ethical decision making is absolutely essential. The more novel and difficult the ethical choice we face, the more we need to rely on discussion and dialogue with others about the dilemma. Only by careful exploration of the problem, aided by the insights and different perspectives of others, can we make good ethical choices in such situations. A Framework for Ethical Decision Making Recognize an ethical issue Could this decision or situation be damaging to someone or to some group? Does this decision involve a choice between a good and bad alternative, or perhaps between 2 "goods" or between 2 "bads"? Is this issue about more than what is legal or what is most efficient? If so, how? Get the facts What are the relevant facts of the case? What facts are not known? Can I learn more about the situation? Do I know enough to make a decision? What individuals and groups have an important stake in the

outcome? Are some concerns more important? Why? What are the options for acting? Have all the relevant persons and groups been consulted? Have I identified creative options? Evaluate alternative actions Evaluate the options by asking the following questions:
Which option will produce the most good and do the least harm? (Utilitarian Approach) Which option best respects the rights of all who have a stake? (Rights Approach) Which option treats people equally or proportionately? (Justice Approach) Which option best serves the community as whole, not just some members? (Common Good Approach) Which option leads me to act as the sort of person I want to be? (Virtue Approach)

Make a decision and test it Considering all these approaches, which option best addresses the situation? If I told someone I respect-or told a television audience-which option I have chosen, what would they say? Act and reflect on the outcome How can my decision be implemented with the greatest care and attention to the concerns of all stakeholders? How did my decision turn out and what have I learned from this specific situation?
10

Business Ethics: the Changing Environment & Stakeholder Management

Business ethics may be defined as moral principles or rules of behaviour, which should govern the conducts of business enterprises. It constitutes certain ethical moral principles within commercial context and the business enterprises need to take into account and consideration some code of conduct in relation to other enterprises. McNainara says, The concept (business ethics) has come to mean various things to various people, but generally it is coming to know what is right or wrong in the workplace and doing what is right- this is in regard to effects of product/services and in relationship with stakeholders. Need & importance of business ethics Moral consciousness: Entrepreneur must do ethical business as it is also good citizenship. Moral consciousness helps you avoid business evils like profiteering. Enlightened self interest: Live up to the promises you make to stakeholders and they will bring their business to you. Social pressure: Comes from environmental constituents like consumer forums, trade unions, shareholder associations etc. Legal imperative: It is ethical responsibility of business to comply with law of the land.
11

What are unethical business practices? Surveys have identified the following recurring themes to prominent everyday ethical issues facing businesses and their stakeholders: Managers lying to employees Office nepotism and favouritism Taking credit for others work Receiving/offering kickbacks Stealing from the company Firing an employee for whistleblowing Padding expense accounts Divulging confidential information or trade secrets Terminating employment without sufficient notice Using company property or materials for personal use

Levels of business ethics Because ethical problems are not only an individual or personal matter, it is helpful to see the different levels at which issues originate and how they move to other levels. Five levels are: Individual Organisational Association Societal International

Tools for promoting business ethics Vision/Mission statements Core values Business policies & procedures Code of conduct & code of ethics

 Grievance counselling mechanism Ethical dilemma resolution workshops Business ethics & the changing environment Businesses & governments operate in changing technological, legal, economic, social & political environments with competing stakeholders & power claims. Stakeholders are individuals, companies, groups & nations that cause and respond to external issues, opportunities, and threats. The rate of change and uncertainty in which stake- holders & society must make & manage business & moral decisions have accelerated due to the impact of: Internet & IT Globalisation Deregulation Mergers Wars

Legal Demographic

Stakeholder mgmt. approach The stakeholder management approach is a way of understanding the effects of environmental forces and groups on specific issues that affect real-time stakeholders and their welfare. This approach attempts to enable individuals and groups to articulate collaborative win-win strategies: based on: Identifying and prioritizing issues, threats, or opportunities Mapping who the stakeholders are Identifying their stakes, interests, and power sources Showing who the members of coalitions are or may become Showing what each stakeholders ethics are and should be Developing collaborative strategies and dialogue from a higher ground perspective to move plans and interactions to the desired closure for all parties

Environmental forces and stakeholders Local, national, and international environments are increasingly moving toward and into a global system of dynamically interrelated interactions among local, national, and regional politics, regulations, international law with technologies, demographics, and economies. Economic environment Technological Political Governmental and regulatory
12

Relevance of Ethics and Values in Business

Why business ethics? Business represents collective human activity Creation of goodwill Need of stable society Cost of being unethical may prove to be very high Higher job satisfaction Why not business ethics? No place for business ethics in perfectly competitive market Business manager should only pursue interest of their firm Obeying law is ethical enough Why use ethical reasoning in business? Ethical reasoning is required in business for at least three reasons: Many times laws are insufficient and do not cover all aspects or gray areas of a problem Free-market and regulated-market mechanisms do not effectively inform owners and managers about how to respond to complex issues and crises that have farreaching ethical consequences Complex moral problems require an intuitive or learned understanding and concern for fairness, justice, and due process to people, groups, and communities

Why do ethics matter in business? Doing the right thing matters to employers, employees, stakeholders, and the public. For companies, it means saving billions of dollars each year in lawsuits, settlements, and theft Tobacco industry Dow Corning

Costs to businesses include: Deterioration of relationships Damage to reputation Declining loyalty, creativity, and productivity of employees Ineffective information flow throughout the organisation Absenteeism

Benefits of ethical behaviour The main benefits for a business of behaving ethically are: Avoidance of expensive and embarrassing PR disasters Better image with consumers and better sales Better recruitment Better employee motivation because employees are proud of their jobs

13

Spiritual Values
The values of truth, righteousness, peace, love and non-violence are found in all major spiritual paths. These spiritual values are also human values and are the fundamental roots of a healthy, vibrant, and viable work career. Our collective business experience showed us that these five human values were the fundamental roots of a healthy, vibrant, viable organisation and of healthy, vibrant, viable individuals. For example: Truth fosters trust and honest communications. Righteousness fosters high quality work. Peace fosters creative and wise decisions. Love fosters self-less service based on caring for others' well being. Non-violence fosters win-win collaboration. Yet we have chosen to call them human values rather than spiritual values. Spiritual values implies that they are something that human beings need to aspire to and hopefully someday achieve. We are well aware that most people see human nature as anything but spiritual they typically see it as limited, imperfect, and so on. However, we know that we are spiritual beings first and foremost and that to be human is to be spiritual. So, by calling these spiritual values human values, it reminds us that they are inherent in our spiritual nature.
14

We emphasise three principles: These human values do not need to be taught or learned; rather, they must be evoked or unveiled, sometimes by unlearning the ways we keep them hidden. These human values represent humanity at its fullest. These human values can be understood from three perspectives: - Their spiritual essence, based on the principle that Divinity resides in all of creation - Their cross-cultural expressions, which we find in all societies though there may be variations and different emphasis from culture to culture - Their individual (personal) expressions, which reflect the attitudes and motivations beneath our unique behaviour and personalities While the spiritual essence of the human values is inherent within us, the cross-cultural and individual expressions are learned, developed and practised throughout our lifetime in the social environments we live and work in. By exploring the cross-cultural and individual expressions of these five human values, we can bring them forth in our everyday life and work. One point we found quite interesting is that since these human values come from a common spiritual foundation, they are an indivisible whole; one human value cannot exist apart from the others. This

integrated wholeness of the human values gives us tremendous strength as we seek to bring them forth in our work. So, what does each of these human values look like when expressed in the typical workplace? A professional would tell the truth about errors or delays, even if it meant a temporary reprimand. A clerical person would do his or her best quality work, even if no one were watching. An executive would continually strive to find creative new ways to deliver goods effectively and efficiently, without adding undue costs to his or her customers. A sales person would actively seek to serve people rather than hide behind bureaucratic rules. A manager would seek to keep the environment clean and unpolluted by wastes from the business. How can we practice all five human values in a practical way? Truthfulness: speak honestly with co-workers and customers. Righteousness: keep your agreements with your manager and co-workers, as well as customers. Inner Peace: practice equanimity, even in crises, in times of profit or loss, and in times of praise or blame. Love: listen generously and compassionately to others rather than being judgmental.

Non-Violence: find win-win solutions to problems, rather than winning at anothers expense. Explore for yourself: What does each of these five human values mean to me personally and how do I currently express each of them in my work?

15

Modern Business Ethics and Dilemmas

Today, things complicated:have got more

There is no longer one agreed moral code. Most people have a weak sense of religion or none at all. So their morals must come from somewhere else. There are competing religious and social moral codes, especially for multinational companies ("MNCs") operating in different parts of the world and employing people from different cultures. The pursuit of profit has become a goal in its own right, and this puts pressures on people to compromise their standards, not just ethically, but in less important areas also. For example, a very rude manager might be tolerated because he (it usually is a he) makes large profits. So when good behaviour and good profits come into conflict, businesses find it difficult to resist the profits. Businesses are only the people who work there; businesses dont decide anything its the people who make decisions. But businesses have group cultures with their own norms and standards. Individuals have a strong need to fit in and be accepted, so it is very difficult for any individual to stand up against attitudes and decisions they disagree with. Greater wealth in the western economies means people have less tolerance for ethically dubious behaviour. We are no longer so
16

desperate for growth and employment at any cost. People are also better educated and better informed. People are less deferential i.e. they are less accepting of what people in authority say. So there are higher expectations of how businesses should behave. Businesses have to sell to consumers and employ workers who have their own standards and opinions. They are not going to buy from or work for a business they disapprove of. So there is a competitive pressure for better behaviour from businesses. Many managers and owners have ambitions of social acceptance and recognition e.g. knighthoods, and so are not going to get caught behaving unethically. Modern technology creates ethical dilemmas which never existed until quite recently. Medical products, and gene technologies, are a good example of this. Should parents be allowed to alter the genes of their unborn children, and should businesses sell the products to do this? You can see that these factors all pull in different directions. It has all got a lot more difficult and a lot more complicated. Some businesses set up special committees to discuss and decide ethical problems, and they may even employ a professional philosopher to help them.

Overview of Corporate Social Responsibility and Sustainability

Definition of CSR Corporate Social Responsibility or Corporate Responsibility, Corporate Citizenship, and Responsible Business) is a concept whereby organisations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment. This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organisations voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large. This definition integrates the three dimensions: Economic, Social & Environmental aspects and responsibilities, which are usually called the Triple Bottom Line. Sustainability It is a concept that is generally regarded as having emerged from the environmental PoV. Sustainable development is that which meets the needs of the present without compromising the ability of future generations to meet their own needs. CSR dimensions Economic Integrity, economic corporate governance, development of the
17

community, transparency, prevention of bribery and corruption, payments to national and local authorities, use of local suppliers, hiring local labour and similar Social Human rights, labour rights, training and developing local labour, contributing expertise to community programs and similar Environmental Precautionary approaches to prevent or minimise adverse impacts, support for initiatives promoting greater environmental responsibility, developing & diffusing environment friendly technologies and similar CSR development CSR is critically linked to sustainable business growth and long term success. CSR recognises that in order to be successful over the long term, a business must actively manage and add value to all its stakeholder relationships, not just to the bottom line. CSR involves measuring the impact of the business on all its stakeholders to maximise the company's positive impact and minimise the negative impact. CSR is about good businesses behaviour over and above the legal requirements, adopted voluntarily because businesses deem it to be in their long-term interest.

CSR is not an optional `add-on' to the core business activity; it is an expression of the core value system and philosophy of the business CSR has moved from a position of ethics based corporate giving' to one of core corporate strategy. Drivers of CSR Ethical consumerism Globalisation and market forces Social awareness and education Ethics training Improved brand value Government laws and regulation Crises and consequences

progressive environmental and human rights policies. In general, business is described as green if it matches the following four criteria: It accompanies principles of sustainability into each of its business decisions. It supplies environmentally friendly products or services that replace demand for non-green products and/or services. It is greener than traditional competition. It has made an enduring commitment to environmental principles in its business operations Sustainability strategies Innovation & technology: This introverted method of sustainable corporate practices focuses on a company's ability to change its products and services towards less waste production and sustainable best practices. Collaboration: The formation of networks with similar or partner companies facilitates knowledge sharing and propels innovation. Process improvement: Continuous process surveying & improvement is essential to reduction in waste. Employee awareness of companywide sustainability plan further aids the integration of new and improved processes. Sustainability reporting: Periodic reporting of company performance in relation to goals often incorporated in the corporate mission (as Ford).
18

CSR stakeholders Government- adherence to legislations - information disclosure - environment protection Employees- safety - health - environment Customers- quality control - customer satisfaction Shareholders- proactive communication - information disclosure Suppliers- market information exchange (valued business partners) Sustainable business Sustainable business, or green business, is an enterprise to be that has no negative impact on the global or local environment, community, society, or economy. Often, they have

Managing Ethical Dilemmas at Work

Morality and values-based dilemmas in the workplace are, at best, difficult to handle when employees have to choose between whats right and whats wrong according to their own principles. Forward-thinking employers who implement workplace ethics policies are usually wellprepared for the potential conflicts of interest that arise due to the diversity of opinion, values and culture in the workforce. However, handling ethical issues in the workplace requires a steady and cautious approach to matters which can potentially be dangerous or illegal. In the workplace today, employees are continuously faced with ethical dilemmas. They are confronted with situations that require sound ethical judgment but in most cases find it difficult to do so because they lack the requisite skills. The cases range from simple situations of an employee deciding on whether or not to cheat on his/her boss, to complex scenarios where organisations are faced with a value conflict that pits their short-term survival interests against their long-term interests and those of the community. Giving employees skills with which to resolve complex workplace scenarios resulting from these ethical dilemmas should be the agenda of every manager and supervisor in any organisation. Ethical dilemmas arise in conflict of interest matters, use of company resources, staff issues, etc. They are also inherent in the workplace as a result of conflict
19

between the correctness and wrongfulness of our actions, and the goodness and badness of the consequences of those actions. When ethical dilemmas are ignored or poorly managed they tend to negatively affect business operations and staff productivity. An ethics management programme has the advantage of having clearly spelt out values and behaviour guidelines which operate as torch- bearers to direct employee behaviour and their decision-making patterns in situations of ethical dilemmas. As part of the ethics programme, organisations can develop and document a procedure for dealing with ethical dilemmas as they arise, and these should be distributed to all employees and be periodically reviewed as circumstances change. With such an instructive infrastructure in place, ethical dilemmas can be resolved without undermining business operations. Here are a few sequential tips employees can follow when faced with an ethical dilemma in the workplace. State the background and context of the dilemma. Identify the main ethical issues causing the dilemma. List possible solutions to the dilemma. Consider the likely impact of each solution. Eliminate the totally unacceptable solutions. Consider which company values are upheld and violated by each of the remaining solutions.

 Identify your solution, state it clearly including why it is best, then justify and defend it against criticism. Step 1: Develop a workplace policy based on your companys philosophy, mission statement and code of conduct. Incorporate the policy into your performance management program to hold employees accountable for their actions and alert them to their responsibilities to uphold professional standards throughout their job performance and interaction with peers and supervisors. Revise your employee handbook to include the policy and provide copies of the revised handbook to employees. Obtain signed acknowledgement forms from employees that indicate they received and understand the workplace ethics policy. Step 2: Provide workplace ethics training to employees. Utilize varied instruction methods to engage employees in learning how to address and resolve ethical dilemmas. Experiential learning, or role-play, is an effective way to facilitate workplace ethics training. Examples of workplace ethics simulations involve scenarios about the misappropriation of company funds, personal values related to improper workplace relationships and the organisations compliance with regulatory controls. Step 3: Designate an ombudsperson in charge of handling employees informal concerns pertaining to workplace ethics. Consider whether
20

your organisation also needs an ethics hotline, which is a confidential service employees may contact whenever they encounter workplace dilemmas that put them into uncomfortable or threatening positions. Confidential hotlines are an effective way to assure employees anonymity, which is a concern for employees whose alerts are considered whistle blowing actions. Step 4: Research the central, state and municipal labour and employment laws pertaining to whistle blowing. Refrain from making employment decisions, such as termination or suspension, in connection with whistle blowing or an employees right to protected activity under whistle blowing laws or public policy. Seek legal advice for employee reports of workplace ethics issues that increase your organisations liability under federal, state or municipal employment law. Step 5: Apply your workplace policy consistently when addressing workplace issues and employee concerns about workplace ethics. Use the same business principles in every circumstance, regardless of the perceived seriousness or the level of employees involved. Communicate the same expectations for all employees whether they are in executive positions or front-line production roles and approach every issue with equal interpretation of the company policy.

The Corporation and External Stakeholders Corporate Governance: From the Boardroom to the Marketplace
Managing corp. responsibility in the marketplace: crises and opportunities Managing legal and moral responsibility in the marketplace can be a significant part of a corporations activities. Corporate social responsibility refers to a businesss attention to and promotion of the welfare and goodwill of stakeholders. Evidence supports that corporations that are socially responsible have a competitive advantage in the following areas: Reputation Successful social investment portfolios Ability to attract quality employees Managing corp. responsibility with external stakeholders The stakeholder management approach views the corporation as a legal entity and a collective of individuals and groups. Social contract: rules & assumptions about behaviour patterns among various elements of society. The social contract between a corporation and its stakeholders is often based on implicit as well as explicit agreements. The covenantal ethic concept is related to the social contract view
21

and is also central to a stakeholder management approach. The covenantal ethic focuses on the importance of relationships, social as well as economic, among businesses, customers, and stakeholders. At a more general view, it is argued that a corporations obligations include, in addition to making a profit, acting justly, causing no unavoidable, unjustifiable harm, and preventing harm where possible. Five broad guidelines suggested by Keith Davis that business professionals should follow to be socially responsible include: Businesses have a social role of trustee for societys resources Business shall operate as a twoway open system with open receipt of inputs from society and open disclosure of its operations to the public Social costs/benefits shall be considered before proceeding The consumer shall pay for the costs of consumption Businesses have responsibilities where social needs exist Issues management should be a continuous strategic process that involves all business and functional units. Methods used in this process include: Environmental scanning Brainstorming Probability and impact matrix Three organisational levels at which companies use issues management are Corporate, Functional & Processoriented.

Corporate Responsibilities Towards Consumer Stakeholder and the Environment

Responsibility to consumer stakeholders Consumers may be the most important stakeholders of corporations. Corporations have certain responsibilities and duties toward their customers and consumers in society: Duty to inform Duty not to misrepresent Duty not to force or take undue advantage Duty to take due care to prevent any unforeseeable injuries Related rights consumers have in their social contact with corporations include: Right to safety Right to free and rational choice Right to know Right to be heard Right to be compensated

Corporate responsibility in advertising, product safety, and liability The purposes of advertising include: Inform customers about products and services Persuade customers to purchase The American Association of Advertising (AAA) has a code of ethics that help organisations monitor their own ads. The Federal Trade Commission (FTC) and the Department of Labor (DOL are federal agencies appointed and funded to monitor and eliminate false and misleading advertising when corporate self-regulation is not used or fails to control harm done to consumers. Advertising on the Internet presents new opportunities and problems for consumers. At issue ethically are the unlimited availability of and exposure to explicit and other questionable content on ads and websites. FTC provides regulatory guidelines for on-line advertising. Moral responsibility for consumers in advertising can be viewed along a continuum. Paternalism Illusion of free choice Enforcement of advertising include bans on ads. Arguments for advertising: Introduces people to and influences them to buy goods and services
22

The free-market theory holds that the primary aim of business is to make a profit. There are several arguments regarding the free-market theory. The mixed market economy perspective includes a balance between the private property systems and the government laws, policies, and regulations that protect consumers and citizens.

may

 Enables companies to be competitive Helps nations maintain a prosperous economy Helps a nations balance of trade and debt payments Enriches consumers lives Consumers are not ignorant and do know the difference Arguments against advertising: Cross the thin line between deception and puffery Tells half-truths Conceals facts Intentionally deceive with a profit goal in mind We also need to look at fast food industry advertising, tobacco and alcohol advertising ethics and advertising and advertising and free speech. Managing product safety should be priority number one for corporations. National Commission on Product Safety (NCPS) notes that product risks should be reasonable. Three steps firms can use to assess product safety from an ethical perspective include: How much safety is technically attainable? What is the acceptable risk level? Does the product meet standards? Product liability doctrines include Privity, Negligence, Strict liability and Absolute liability. Two broad purposes of product liability lawsuits are - provide a level of compensation for injured parties and act to deter negligent marketing.
23

Corporate responsibility and the environment Significant environmental problems: Toxic air pollution Water pollution & scarcity threat Hazardous waste & land pollution Causes of environmental pollution include: Consumer affluence Materialistic cultural values Urbanisation Population explosion New & uncontrolled technologies Industrial activities

Various US governmental regulatory agencies have been created to develop and enforce policies and laws to protect the general and workplace environments OSHA, CPSC, EPA, and CEQ. An innovative trend in new ecology ethical thinking is linking of: Green marketing Environmental justice Industrial ecology Ethical principles of rights and duties regarding treatment of environment & multiple stakeholders are: Rights of future generations Right to a liveable environment New assumptions and practices driving corporate changes toward the environment include: International community Green marketing Environment friendly strategies

The Corporation and Internal Stakeholders; Values-Based Moral Leadership, Culture, Strategy & Self-Regulation
Stakeholder mgmt. and valuebased organisational systems An organisations enacted purpose, values, and mission are central to its internal alignment and external market effectiveness. The stakeholders management approach argues that organisations succeed in market and nonmarket environments through open dialogue and a duty to assist stakeholders. The digital information technology revolution has increased pressure on industries and corporations to question to what extent ethical and stakeholder value-based mgmt. principles and practices still work. The visionary built-to-last companies are premier institutions, widely admired by their peers, and having a long track record of making a significant impact on the world around them. Not all organisations have the characteristics of built-to-last companies, nor would all companies agree with or support some of the ideologies, products, and strategies of visionary firms. Phillip Morris The concept of creative destruction should be referred to here.

Internal organisations are composed of systems and stakeholders, regardless of the nature of external environments. An interesting concept, and counterpart to the creative destruction argument is creative reconstruction, Dot com survivors The internal dimensions of an organisation are illustrated in the diagnostic contingency model. The purpose and core ideology of organisations are modelled by its leaders and embedded in its enterprise strategy. The culture of a company is at the centre spoke of the wheel of transformation. The vision and strategy, people, systems, structure, technology, and nature of work comprise the internal operations of the organisation. Stakeholder management theory, states that an organisation should treat its internal & external stakeholders ethically to be effective with its marketplace communities. From a stakeholder management perspective, it is the role of an organisations leaders, with the support of each professional, to ensure that the integration and market effectiveness of a company is based on the types of relationship and values that embody trust, collaboration, and a win-win goal for stakeholders and stockholders.

24

10 step, value - based stakeholder mgmt. assessment A stakeholder management approach that is value-based is argued to be more effective in implementing organisational change programs that include ethics and compliance training. There are many stakeholder management audits and assessment frameworks. Companies can use management, human resources, and ethics consultants to design and deliver these types of assessments. The 10-step assessment is as follows: Determine the problem or opportunity and gain top leader support Review and develop the vision, mission, values, and ethics code Use a value-based stakeholder readiness checklist Develop performance and responsibility measures and get feedback Identify stakeholder level of responsiveness and responsibility in the corporate strategy Determine the organisation's systems alignment Conduct baseline and gap analysis between current and desired future states Create benchmarks Develop summary report with recommendations Review results Leadership and strategy Leadership is a shared process, although the values and behaviours of company founders and CEOs often
25

frame and set the cultural tone for the organisations. A starting point for identifying a leaders values is the vision and mission statement of a company. From a stakeholder management, value-based assessment, a CEO and other organisational leaders would demonstrate the following skills: Define and lead the social and ethical, as well as the competitive, mission of organisations Build and sustain relationships with stakeholders Talk with stakeholders, showing interest and concern for others need beyond the economic and utilitarian dimensions Demonstrate collaborations and trust in shared decision making and strategy sessions Show awareness and concerns for employees and other stakeholders in the policies and practices of the company An emerging body of literature and practice describes leadership from a deeper spiritual and value-based perspective. Theological and philosophical literature has helped redefine leadership to include new concepts and vocabulary that capture the human and spiritual domains from which business leaders already work. Leadership styles may include any or many of manipulator, bureaucratic, professional and transforming, Seven symptoms of the failure of ethical leadership:

Ethical blindness Ethical muteness Ethical incoherence Ethical paralysis Ethical hypocrisy Ethical schizophrenia Ethical complacency

Organisational cultures are: Visible and invisible Formal and informal

Organisational cultures can be studied by observation, listening & interaction, and other ways. Signs of cultures in trouble or weak cultures include: An inward focus A short-term focus Morale and motivational problems Emotional outbursts Fragmentation and inconsistency Clashes among subcultures Ingrown subcultures Dominance of subculture values No clear values or beliefs Many and /or different beliefs Destructive/disruptive heroes Disorganised/disruptive routines

Strategy influences the goals and objectives of the company and its stakeholders. Sets the overall direction of business activities Reflects and models activities that management values and prioritizes Sets the tone and tenor of business activities and transactions inside the organisation Corporations formulate at least four levels of strategies: Enterprise Corporate Business Functional

Self-regulation: challenges and issues Establishing codes of ethical and legal conduct, implementing stakeholder management assessments, and enacting ethics programs can help a company financially and morally. Ethics codes- value statements that define an organisation Ombudspersons and peer review programs- to manage the legal and moral aspects of potentially problematic activities Ethics programs- another method for handling moral questions

The strategy management process involves: Formulating goals Formulating strategies Implementing strategies Controlling strategies Evaluating strategies Analyzing the environment

A corporations culture is the shared values and meanings its members hold in common, which are articulated and practiced by an organisations leaders.

26

Spiritual Leadership for Business Transformation

Spirituality is the basis for revolutionary, transformational leadership. Leaders develop within themselves a purity and unity of thought, word, and deed. Leaders actively express their spirituality in every aspect of their lives. Spiritual values transform all aspects of life in business and society. Were in a spiritual revolution in leadership that naturally results in living and working in harmony with creation and being spiritually fulfilled. This is the basis of achieving our desires and generating wealth and global prosperity. "Spirituality has many meanings: Tap into a deeper meaning of life Living in harmony with the essential nature of creation Having a relationship with the source of creation Experiencing union with divinity Spirituality is the thread that strings together the pearls of the worlds religions. Faculties of a spiritual-based leader Establish your spiritual view of life: learn and validate what is spirituality & what it means to you. Explore your spirituality from inside out: identify how you best grow your spiritual awareness Embody spiritual principles in your leadership: see what it looks like waking up as a spiritual leader

Engage in revolutionary activities: stretch your ideas about who you are, how you can lead, and what you can contribute to transforming your organisational culture, wealth creation activities, and relationship with society Revolutionise organisational culture Identify a spiritual theme for the organisation Develop the mission, vision, and values from that basis Involve people from throughout the organisation Align the various processes and procedures with these statements seek a unity of thought, word and deed throughout the system of the organisation Celebrate how much the culture is already spiritual based A process of involvement Develop a spiritual statement/theme for your organisation and from that basis develop the mission, vision and value statements. Pass them down and back up the organisation. Have people identify their own purpose/values. Have workgroups engage in a dialogue: Can we authentically align with this? How would we put it into actual practice?

27

Encourage creativity to align the culture with the spiritual theme; act on suggestions right away. Celebrate people who live it in their work. Revolutionise your wealth creation activities Be strong in your spiritual theme. Encourage everyone to express their creativity at work: As part of creation, we naturally share in creative powers. Develop new strategies, new products, new services, and new processes drawing from your spiritual theme. Make decisions in accord with your spiritual theme and values. Revolutionise your relationship with society Be strong in your spiritual theme. Practice triple bottom line reporting - (3Ps): People, the Planet, and Profits. Equate business societys health. health with

Your spirituality and your organisations role in society From my/our spiritual view of life: How do I/we see my/our organisations role in society? How would I/we lead my/our organisation to fulfil that role? Faculties of a spiritual-based leader Establish your spiritual view of life Explore your spirituality from the inside out Embody spiritual principles in your leadership Engage in revolutionary activities: Revolutionise workgroup culture Revolutionise your organisational culture Revolutionise the wealth creation activities Revolutionise your relationship with society

Help end the cycle of meeting unlimited desires through limited resources. Help shift societys focus from materialistic consumption to fulfilment and service. Promote spiritual-based leadership in public.

28

Organisational Excellence and Employee Wellbeing through Human Values

Organisational excellence An Excellent Organisation, by definition, is one that has successfully worked out its integrated portfolio of Needs, Results, Work and Competence. Organisational excellence is designed for permanent change by focusing on managing the five key pillars: Process management Project management Change management Knowledge management Resource management

reputation customers

in

the

mind

of

Fundamental focus and associated behaviours found in high performing teams Focus: Concern for teammates Associated behaviours: Using recruiting and hiring techniques to maintain values and culture Using techniques to resolve conflicts that preserve the sense of team and personal integrity Saying and doing things that show concern for fellow team members while building and supporting them Having formal and informal team building activities Focus: Concern for customers Associated behaviours: Concern for how customers respond to service/product Ongoing processes to establish two-way communication with customers Focus: Awareness constituencies Associated behaviours: Scanning the environment for threats and opportunities Seeking expert assistance to resolve problems when the skills of the team were insufficient Using techniques to maintain the boundary between the team and the external environment
29

Six essential factors of organisational excellence: Right customer focus which includes identifying and then connecting customers with relevant products and services Consolidation of current business including restructuring, mergers, acquisitions and more Operational efficiency across the organisation is needed. Dr. Asher suggests this step may be most important for long-term profitability and includes things like TQM & benchmarking activities Exploring new markets HRM which includes attracting, retaining, developing, and career planning Corporate image building by developing the companys

of

external

 Develop synergistic relationships with other internal teams to increase value to the company and to customers Focus: Concern for team output Associated behaviours: Focusing on and concern for the productivity of the team and the quality of its work Engaging in ongoing development and learning (individual and team) so both depth and breadth of skills are enhanced Displaying flexibility and adaptability in meeting challenges that face the team Management that establishes clear roles and goals, supports the team in achieving its goals, and focuses on building the team and its members Employee well-being That part of an employees overall well-being that they perceive to be determined primarily by work and can be influenced by workplace interventions. This definition allows organisations to operationalise employee wellbeing; it limits the term to those aspects of work which are perceived to influence well-being and are modifiable by the employer. Research shows consistently that employee well-being embraces a wide number of dimensions that can include advancement, organisational, managerial, social and physical workplace considerations as well as elements such as peoples physical
30

and psychological health. Dimensions vary according to sector and type of work. It can include: Advancement (training & dev.) Facilities (safety & comfort) Home & work balance / interface Physical health Psychological health Peer / manager relationships

How human values help in HR: Values based HR means treating everyone with values that are universally recognised, such as trust, respect and dignity. It doesnt mean you sacrifice performance standards or ignore economic reality; it means you use values as your North Star in HR strategic planning. It answers many questions & solves many issues. Deciding employee issues on the basis of what your common sense says is right not what is politically correct, what the handbook might say, what your boss wants, or what you think the rules are or arent will usually get you to the best place in the end. Over-reliance on policies and procedures is an abdication of leadership. Instead, instruct your employees to do what is right, and everything else takes care of itself. Using Ulrich's set of capabilities as a framework, seven critical steps to provide value-based HR mgmt. are: Attract and retain talent Master technology Foster a learning environment Define employer brand Drive innovation Develop leadership Communicate strategy

Corporate Social Responsibility: A Historical Perspective from Industrial Revolution to Social Activism
The history of social and environmental concern about business is as old as trade and business itself. Commercial logging operations for example, together with laws to protect forests, can both be traced back almost 5,000 years. In Ancient Mesopotamia around 1700 BC, King Hammurabi introduced a code in which builders, innkeepers or farmers were put to death if their negligence caused the deaths of others, or major inconvenience to local citizens. In Ancient Rome senators grumbled about the failure of businesses to contribute sufficient taxes to fund their military campaigns, while in 1622 disgruntled shareholders in the Dutch East India Company started issuing pamphlets complaining about management secrecy and self enrichment. With industrialisation, the impacts of business on society and the environment assumed an entirely new dimension. Farmers in Eastern Nigeria (Igboland) brought their first harvest for the famous communal New Yam Festival. Professional craftsmen were seen as custodians of history and many of their artworks were kept in the palaces of the chiefs (they were not paid for such pieces of arts). The corporate paternalists of the late nineteenth and early twentieth century used some of their wealth to support philanthropic ventures. By the 1920s discussions
31

about the social responsibilities of business had evolved into what we can recognise as the beginnings of the modern CSR movement. In 1929, the Dean of Harvard Business School, Wallace B. Donham, commented: Business started long centuries before the dawn of history, but business as we now know it is new new in its broadening scope, new in its social significance. Business has not learned how to handle these changes, nor does it recognise the magnitude of its responsibilities for the future of civilisation. Almost seventy five years later, these words ring just as true. Although today we face some novel concerns about the role of business in society, from internet spam to genetically modified foods, many of the issues under discussion are not very different to those being raised in the 1920s. There is a danger that social and environmental concern about business is an issue which, like sex, every new generation thinks that it has discovered. The interactive timelines below provide details of the evolution of the history of our environment, the history of business corporations, the evolution of the concept of sustainable development and the history of business law and socially responsible investment as forces seeking to shape the social and environmental impacts of business. The current emphasis on the role of businesses in society has been promoted by increased sensitivity to and awareness of environmental and

ethical issues. Issues such as environmental damage, improper treatment of workers, and faulty production that inconveniences or endangers customers are highlighted in the media. In some countries like the UK and other EU member states, government regulation regarding environmental and social issues has increased. In addition, standards and laws are often set at a supranational level for example the European Union has its own set of law about the environment. Some investors and investment fund managers have begun to take account of a corporations CSR policy in making investment decisions this is called ethical investing or socially responsible investment (SRI). According to Freeman and Liedtka (1991), the idea of corporate social responsibility has its roots in the writings of Andrew Carnegie and others in his time. Carnegie, who founded U.S. Steel, articulated two principles he believed were necessary for capitalism to work. First, the charity principle required more fortunate members of society to assist its less fortunate members, including the unemployed, the disabled, the sick, and the elderly. These have-nots could be assisted either directly or indirectly, through such institutions as churches, settlement houses, and other community groups. Second, the stewardship principle required businesses and wealthy individuals to see themselves as the stewards, or caretakers, of their property. Carnegies view was that the rich hold their money in trust for the
32

rest of society. Holding it in trust for society as a whole, they can use it for any purpose society deems legitimate. However, it is also a function of business to multiply societys wealth by increasing its own through prudent investments of the resources that it is caretaking. Pro-business Reagan govt. created a stumbling block as they accelerated deregulation. Corporate profits soared as global markets opened up in the 1990s under free-trade agreements negotiated by the Clinton administration, meanwhile negotiations on the UN code stalled permanently in 1981, after it had been made voluntary instead of binding. Since then the quest for profits has encouraged corporations to spread across the globe in search of cheap labour & lax environmental standards. Social, environmental, and human rights protections have largely neglected in the absence of strong government regulation (Rowe, 2005). Prior to the September 11, 2001 terrorist attacks, international organisations such as Amnesty International, Friends of the Earth, and the International Confederation of Free Trade Unions had initiated a program to develop voluntary codes of conduct with industry that will focus on improving wages, working conditions, and environmental degradation. The consensus now is that voluntary CSR isnt working, and these organisations are ready to bring government back into the marketplace to protect workers and the environment.

Moral Arguments for Corporate Social Responsibility

Businesses rely on the society within which they operate and could not exist or prosper in isolation. They need the infrastructure that society provides, its source of employees, not to mention its consumer base. CSR is recognition of that inter-dependence and a means of delivering on that obligation, to the mutual benefit of businesses and the societies within which they are based. CSR broadly represents the relationship between a company and the wider community within which the company operates. It is recognition on the part of the business that for profit entities do not exist in a vacuum, and that a large part of any success they enjoy is as much due to the context in which they operate as factors internal to the company alone. Charles Handy says: The purpose of a business is not to make a profit, full stop. It is to make a profit so that the business can do something more or better. That something becomes the real justification for the business It is a moral issue. To mistake the means for the end is to be turned in on oneself, which Saint Augustine called one of the greatest sins It is salutary to ask about any organisation, If it did not exist, would we invent it? Only if it could do something better or more useful than anyone else would have to be the answer, and profit would be the means to that larger end.

Advocates of CSR believe that the goal of any economic system should be to further the general social welfare. In advanced economies, the purpose of business should extend beyond the maximisation of efficiency and profit. Increasingly, society expects businesses to have an obligation to the society in which they are located, to the people they employ, and their customers, beyond their traditional bottom-line and narrow shareholder concerns. At a minimum, businesses operating in a community benefit from the infrastructure of that community (tangible, practical elements such as the roads, other transport infrastructure, the police, fire fighters, etc) as well as more intangible benefits, such as a safe or clean environment. But, in most cases, businesses also draw their most important resource, its employees, largely from the local community. Any business will be more successful if it employs a welleducated workforce that can attend good hospitals if they become sick, and who have grown up in a positive environment. This is not to mention consumers, also often members of the local community, without whom no business could survive. CSR advocates point out that no organisation exists in isolation. They believe that businesses, without exception, have an obligation to contribute as well as draw from the community, on which they rely so heavily.

33

Development of Corporate Conscience as the Moral Principle of Corporate Social Responsibility

As Justice Stevens said in Citizens United v. Federal Election Commission, the corporation has no conscience. Our founding fathers did not anticipate the proliferation of corporations. The Constitution and Bill of Rights did not address the rights and responsibilities of corporations. This has been left largely to the Supreme Court, which has gradually endowed the corporation with many of the rights of personhood, without addressing what corresponding moral obligations to society such personhood requires. That task has been left to us, the people. It is no longer the king who endows the corporation with its charter, but We, The People, through our elected representatives and government agencies. We, The People, have begun to ask whether or not there is a more responsible way to organize our commercial collectives. The fundamental question that the benefit corporation movement, conscious capitalism (see: consciouscapitalism.org), and even Occupy Wall Street are all trying to answer is: How can we best endow the modern corporation with a robust social and planetary conscience so that it can not only act appropriately as a responsible global citizen but also optimize profits for shareholders, its owners? Addressing this question requires an understanding of the historical
34

context of the evolution of the corporation. Benefit corporation legislation may, in fact, represent another evolutionary advance in capitalism. Its helpful to understand that, although the corporation has evolved over the centuries since its invention as a mercantile agent of empire of the kings of Europe, it remains a construct of the Middle Ages at its core. As such, its basic legal architecture still reflects the exploitative, mercantile consciousness of the monarchs of that era who created it. Benefit corporations, conscious capitalism and OWS are all part of a larger impetus to endow the modern corporation with legal architecture, operating principles and values that reflect and support a sustaining, planetary consciousness, and a more holistic corporate conscience while retaining its best attributes. To make a long story very short, monarchs would charter corporations, such as the Hudsons Bay Company, to gain dominion over foreign lands and provide additional sources of revenue for the royal treasury. HBC, for example, at one time controlled 15% of the landmass of North America for England. The last thing the king wanted was for a corporation to become a rival source of political and economic power so the corporation was separated from its conscience and intelligence. If the corporation misbehaved, the king could simply revoke the royal charter. With the king serving as the external conscience and intelligence, the corporation was essentially lobotomised to optimize it to serve its

mercantile and territorial purposes and to prevent it from becoming a political or economic rival to the king. This form of corporation is one of mans most successful social inventions and has been enormously effective as an agent of progress. The echo of its original mercantile dynamic is still reflected in the common assumption that corporations exist solely to maximize profits for shareholders and in the accepted legitimacy of the common practice for corporations to externalize the negative consequences of their behaviour on society and the environment. These constructs were appropriate and worked well in a world with infinite resources and a commons with perceived limitless capacity to absorb the effluent of corporate activity, but breaks down in a massively interdependent global economic system with finite resources and an overburdened commons. In short, the basic corporate form provides only primitive architecture to support the activation of the collective intelligence, conscience and consciousness of the people within the corporation. The shadow side of this architecture is a vulnerability to sociopathic behaviour (e.g. Enron) when the leaders have no moral scruples. A quiet legal revolution has been underway in the United States to develop a corporate conscience. Thirty one states have adopted what are called constituency statutes, which empower directors to consider the interests of a corporations stakeholders, in addition to
35

shareholders, in the exercise of their fiduciary duties. Benefit corporations, which generally require corporation to provide a material positive impact on society and the environment, represent another evolutionary step towards helping the corporation develop a conscience. Is there a need for corporations to adhere to the same of set of moral values as the rest of us? Indeed, each company's sole mission and main objective is to produce products and services, and generate profit for its owners. Since each such entity is made up by three distinct groups. The employees who produce those products and services The consumers, who buy them The shareholders of the company While in USA, by law, shareholders interest in these companies come above anyone else, or anything else, companies outside US do not necessarily adhere to primacy of shareholder value. Perhaps it is time to ask these poignant questions. Which of these groups should be considered the most important component in that triangle? The shareholders, who merely have partial equity in that company The employees (including management), without whom, no company can exists. Customer whose interest in that company products & Services could be a matter of life and death, such as the Health care Insurers, and providers

Corporate Social Responsibility of Business, Employees, Consumers and Community

Paths have been cleared for reintroduction of the Companies Bill, 2011, in the monsoon session. If the bill is passed after endorsing all the propositions made by the Parliamentary Standing Committee on Finance, corporate social responsibility (CSR) would become mandatory for the first time in the world in any country. The statement advocates that those companies with net worth above Rs. 500 crore, or an annual turnover of over Rs. 1,000 crore, shall earmark 2 percent of average net profits of three years towards CSR. Methodology of CSR CSR is the procedure of assessing an organisations impact on society and evaluating their responsibilities. It begins with an assessment of the following aspects of each business: Customers Suppliers Environment Communities Employees

negatively goals

affecting

the

business

CSR is not only about ecological accountability or having a recycling policy. It is about considering the whole representation of the company, from internal processes to your clients, taking in every step that a business takes during day-to-day operations. Rising economies such as India have also observed a number of companies enthusiastically engaged in CSR activities. Organisations in India have been quite sensible in taking up CSR initiatives and integrating them in their business processes. It has become progressively projected in the Indian corporate setting because organisations have recognised that besides growing their businesses, it is also important to shape responsible and supportable relationships with the community at large. Companies now have specific departments and teams that develop specific policies, strategies and goals for their CSR programs and set separate budgets to support them. Most of the time, these programs are based on welldefined social beliefs or are carefully aligned with the companies business domain. Employees and CSR Creating a culture of change and responsibility starts with HR. Getting the younger employees, who are already environmentally conscious; excited about fresh CSR initiatives is a great way to begin. Committed employees infuse enthusiasm for
36

Triumphant CSR plans take organisations ahead of compliance with legislation and lead them to respect moral values and respect people, communities and the natural environment. Corporate social responsibility is sustainable involving activities that an organisation can uphold without

such programs would enable friendly competition & recognition programs. CSR can go a long way in rehabilitating employer brand with potential new hires & society at large. It can help defeat the image that corporate objectives are rooted in single minded profit at the expense of society and the environment. Social and community connections that are encouraged by employers give employees permission to involve their companies in meaningful ways with the community. Employers can connect with their employees and the community through: Company matches to employee charitable contributions Community programs & volunteer days Corporate sponsorship of community events; and Encouraging employees to participate in walkathons, food banks, and so forth Consumers and CSR Consumers are beginning to regard social responsibility as a quality that adds commercial value to products. (PRODUCT)Red campaign worldwide (AIDS, TB & Malaria control) and recent initiative by HT to put a percent of newspaper sales revenue to education of underprivileged is important here. Eighty six percent of consumers are more likely to trust and even pay extra to a company that reports its corporate social responsibility results, while 82% will more likely purchase a product that clearly demonstrates the results of the companys CSR initiatives,
37

according to the US 2012 Cone Communications Corporate Social Return Trend Tracker. Forty percent of respondents say they will not purchase a companys products or services if CSR results are not communicated. Community and CSR Use of facilities: Making facilities such as rooms, Xerox machines available to local charities, interest groups etc. is cheap, gives opportunity to people to see company, projects positive image of company as a helping resource. Old equipment/product donation is also cheap and less obvious. Its also possible to donate surplus stock. Training for local community at low or no cost using internal training resources makes company a resource for community and helps reward both staff and trainees. It requires long term commitment. Open days and visitor centres are cheap. They help motivate staff and is also popular with education charities. It is also a good recruitment source. Visitor centre costs a bit more but allows local job creation and tracking of community mood. Community sponsorship can include books etc for schools, donation to local charities in resources and effort. Community awards and events, both business and cultural can also be sponsored.

Corporate Governance and Code of Corporate Governance

What is corporate governance? Corporate governance refers to the set of systems, principles and processes by which a company is governed. They provide the guidelines as to how the company can be directed or controlled such that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society. The management of the company hence assumes the role of a trustee for all the others. Principles underlying corporate governance Corporate governance is based on principles such as conducting the business with all integrity and fairness, being transparent with regard to all transactions, making all the necessary disclosures and decisions, complying with all the laws of the land, accountability and responsibility towards the stakeholders and commitment to conducting business in an ethical manner. Another point which is highlighted in the SEBI report on corporate governance is the need for those in control to be able to distinguish between what are

personal and corporate funds while managing a company. Importance Fundamentally, there is a level of confidence that is associated with a company that is known to have good corporate governance. The presence of an active group of independent directors on the board contributes a great deal towards ensuring confidence in the market. Corporate governance is known to be one of the criteria that foreign institutional investors are increasingly depending on when deciding on which companies to invest in. It is also known to have a positive influence on the share price of the company. Having a clean image on the corporate governance front could also make it easier for companies to source capital at more reasonable costs. Unfortunately, corporate governance often becomes the centre of discussion only after the exposure of a large scam. Why was it in news recently? Corporate governance has most recently been debated after the corporate fraud by Satyam founder and Chairman Ramalinga Raju. In fact, trouble started brewing at Satyam around December 16 when Satyam announced its decision to buy stakes in Maytas Properties and Infrastructure for $1.3 billion. The deal was soon called off owing to major discontentment on the part of shareholders and plummeting shareprice. However, in what has been seen as one of the largest corporate
38

frauds in India, Raju confessed that the profits in the Satyam books had been inflated and that the cash reserve with the company was minimal. Ironically, Satyam had received the Golden Peacock Global Award for Excellence in Corporate Governance in September 2008 but was stripped of it soon after Raju's confession. Code of corporate governance Corporate governance codes of best practice are sets of nonbinding recommendations aimed at improving and guiding the governance practices of corporations within a countrys specific legal environment and business context. These codes are typically based on principles and focus on countryspecific issues. They can differ in their focus or scope and be more or less detailed. Whether intended to restore investor confidence or to support a better investment climate, codes of best practice have now been adopted in many countries as a way to introduce international standards and adapt them to the local environment. Very few governance codes apply to all categories of business activity. Country codes are geared mostly toward listed companies. In countries with a limited number of traded companies, the issue is whether to develop a code targeted at listed companies or to opt for a more comprehensive code. Developing a code for listed companies may be seen as an opportunity to attract capital and increase the number of
39

listed firms. But for the economy as a whole, it might be more relevant to craft a more generic code that could eventually include specific recommendations for listed companies. Countries with a developed, active capital market typically have national corporate governance codes targeted at listed companies. The United Kingdom has one of the most sophisticated codes of this kind. Securities regulators in developing countries with large numbers of traded companies such as China and Russia have also introduced codes to comply with investor and shareholder expectations. The country with the largest capital market in the worldthe United States has never formally adopted a national corporate governance code of best practice. According to the National Association of Corporate Directors (NACD), the cautious pace and limited scope of governance codes in the United States can be attributed to several factors. These include the countrys federal system of government consisting of 50 states and the federal government, which share power under the U.S. Constitution. Advantages of code Building confidence Preventing financial crisis Curbing corporate scandals Building consensus for reform Adapting international standards Guidance for company sub-codes Measuring corporate governance practices

Consumerism
Todays consumption is undermining the environmental resource base. It is exacerbating inequalities. And the dynamics of the consumptionpoverty-inequality-environment nexus are accelerating. If the trends continue without change not redistributing from high-income to low-income consumers, not shifting from polluting to cleaner goods and production technologies, not promoting goods that empower poor producers, not shifting priority from consumption for conspicuous display to meeting basic needs todays problems of consumption and human development will worsen. The real issue is not consumption itself but its patterns and effects. Inequalities in consumption are stark. Globally, the 20% of the worlds people in the highest-income countries account for 86% of total private consumption expenditures the poorest 20% a minuscule 1.3%. More specifically, the richest fifth: Consume 45% of all meat and fish, the poorest fifth 5% Consume 58% of total energy, the poorest fifth less than 4% Have 74% of all telephone lines, the poorest fifth 1.5% Consume 84% of all paper, the poorest fifth 1.1% Own 87% of the worlds vehicle fleet, the poorest fifth less than 1% Runaway growth in consumption in the past 50 years is putting strains on the environment never before seen.

Americans and Western Europeans have had a lock on unsustainable over- consumption for decades. But now developing countries are catching up rapidly, to the detriment of the environment, health, and happiness, according to the Worldwatch Institute in its annual report, State of the World 2004. Perfectly timed after the excesses of the holiday season, the report put out by the Washington, D.C.-based research organisation focuses this year on consumerism run amuck. Approximately 1.7 billion people worldwide now belong to the "consumer class"the group of people characterised by diets of highly processed food, desire for bigger houses, more and bigger cars, higher levels of debt, and lifestyles devoted to the accumulation of nonessential goods. Today nearly half of global consumers reside in developing countries, including 240 million in China and 120 million in Indiamarkets with the most potential for expansion. "Rising consumption has helped meet basic needs and create jobs," Christopher Flavin, president of Worldwatch Institute said in a statement to the press. "But as we enter a new century, this unprecedented consumer appetite is undermining the natural systems we all depend on, and making it even harder for the world's poor to meet their basic needs." The report addresses the devastating toll on the Earth's water supplies, natural resources, and ecosystems exacted by a plethora of disposable cameras,
40

plastic garbage bags, and other cheaply made goods with built in product-obsolescence, and cheaply made manufactured goods that lead to a "throw away" mentality. "Most of the environmental issues we see today can be linked to consumption," said Gary Gardner, director of research for Worldwatch. "As just one small example, there was a story in the newspaper just the other day saying that 37 percent of species could become extinct due to climate change, which is very directly related to consumption." From luxuries to necessities Globalisation is a driving factor in making goods and services previously out of reach in developing countries much more available. Items that at one point in time were considered luxuriestelevisions, cell phones, computers, air conditioningare now viewed as necessities. China provides a snapshot of changing realities. For years, the streets of China's major cities were characterised by a virtual sea of people on bicycles, and 25 years ago there were barely any private cars in China. By 2000, 5 million cars moved people and goods; the number is expected to reach 24 million by the end of next year. In the United States, there are more cars on the road than licensed drivers. Increased reliance on automobiles means more pollution, more traffic, more use of fossil fuels. Cars and other forms of
41

transportation account for nearly 30 percent of world energy use and 95 percent of global oil consumption. Changing diet, with a growing emphasis on meat, illustrates the environmental and societal toll exacted by unbridled consumption. To provide enough beef, chicken, and pork to meet the demand, the livestock industry has moved to factory farming. Producing eight ounces of beef requires 6,600 gallons (25,000 litres) of water; 95 percent of world soybean crops are consumed by farm animals, and 16 percent of the world's methane, a destructive greenhouse gas, is produced by belching, flatulent livestock. The enormous quantity of manure produced at factory farms becomes toxic waste rather than fertilizer, and runoff threatens nearby streams, bays, and estuaries. Chickens at a typical farm are kept in cages with about nine square inches (about 60 square centimetres) of space per bird. To force them to lay more eggs, they are often starved. Chickens slaughtered for meat are first fattened up with hormones, sometimes to the point where their legs can no longer support their weight. Crowded conditions can lead to the rapid spread of disease among the animals. To prevent this, antibiotics are included in their feed. The World Health Organisation reports that the widespread use of these drugs in the livestock industry is helping breed antibiotic-resistant microbes, complicating the treatment of disease in both animals and people. Inroads are being made. In 2002, McDonald's announced it

would stop buying eggs from suppliers who keep chickens confined in battery cages and that are forced to lay additional eggs through starvation. By 2004, the fast-food chain will require chicken suppliers to stop giving birds antibiotics to promote growth. Wendy's, Burger King, and Kentucky Fried Chicken have all hired animal welfare specialists to devise new animal care standards. The World Bank has also rethought its policy of funding livestock factory farming. In 2001, a World Bank report concluded "there is a significant danger that the poor are being crowded out, the environment eroded, and global food safety and security threatened." Not much happier The increase in prosperity is not making humans happier or healthier, according to several studies. Findings from a survey of life satisfaction in more than 65 countries indicate that income and happiness tend to track well until about $13,000 of annual income per person (in 1995 dollars). After that, additional income appears to produce only modest increments in self-reported happiness. Increased consumerism evidently comes at a steep price. People are incurring debt and working longer hours to pay for the high-consumption lifestyle, consequently spending less time with family, friends, and community organisations. "Excess consumption can be counterproductive," said Gardner. "The irony is that lower levels of consumption can actually cure some of these problems." Diets
42

of highly processed food and the sedentary lifestyle that goes with heavy reliance on automobiles have led to a worldwide epidemic of obesity. In the United States, an estimated 65 percent of adults are overweight or obese, and the country has the highest rate of obesity among teenagers in the world. Soaring rates of heart disease and diabetes, surging health care costs, and a lower quality of day-to-day life are the result. Some aspects of rampant consumerism have resulted in startling anomalies. Worldwatch reports that worldwide annual expenditures for cosmetics total U.S. $18 billion; the estimate for annual expenditures required to eliminate hunger and malnutrition is $19 billion. Expenditures on pet food in the United States and Europe total $17 billion a year; the estimated cost of immunizing every child, providing clean drinking water for all, and achieving universal literacy is $16.3 billion. There is, of course, no easy solution to the problem. The authors call for green taxes (to reflect the true environmental costs of a product), take-back programs that require manufacturers to recycle packaging or goods, and consumer education and awareness programs. But first and foremost we need to reorient our way of thinking, says Gardner. "The goal is to focus not so much on sacrifice, but on how to provide a higher quality of life using the lowest amount of raw materials. We need to change the way we produce goods and the way we consume them."

Current CSR practices of the firms in India and abroad

The evolution of corporate social responsibility in India refers to changes over time in India of the cultural norms of corporations' engagement of corporate social responsibility (CSR), with CSR referring to way that businesses are managed to bring about an overall positive impact on the communities, cultures, societies and environments in which they operate. The fundamentals of CSR rest on the fact that not only public policy but even companies should be responsible enough to address social issues. Thus companies should deal with the challenges and issues looked after to a certain extent by the states. Among other countries India has one of the richest traditions of CSR. Much has been done in recent years to make Indian Entrepreneurs aware of social responsibility as an important segment of their business activity but CSR in India has yet to receive widespread recognition. If this goal has to be realised then the CSR approach of companies has to be in line with their attitudes towards mainstream business- companies setting clear objectives, undertaking potential investments, measuring and reporting performance publicly. CSR development- four phases in India The history of CSR in India has its four phases which run parallel to India's historical development and
43

has resulted in different approaches towards CSR. However the phases are not static and the features of each phase may overlap other phases.

The first phase In the first phase charity and philanthropy were the main drivers of CSR. Culture, religion, family values and tradition and industrialisation had an influential effect on CSR. In the preindustrialisation period, which lasted till 1850, wealthy merchants shared a part of their wealth with the wider society by way of setting up temples for a religious cause. Moreover, these merchants helped the society in getting over phases of famine and epidemics by providing food from their godowns and money and thus securing an integral position in the society. With the arrival of colonial rule in India from 1850s onwards, the approach towards CSR changed. The industrial families of the 19th century such as Tata, Godrej, Bajaj, Modi, Birla, and Singhania were strongly inclined towards economic as well as social considerations. However it has been observed that their efforts towards social as well as industrial development were not only driven by selfless and religious motives but also influenced by caste groups and political objectives. The second phase In the second phase, during the independence movement, there was increased stress on Indian

Industrialists to demonstrate their dedication towards the progress of the society. This was when Mahatma Gandhi introduced the notion of "trusteeship", according to which the industry leaders had to manage their wealth so as to benefit the common man. "I desire to end capitalism almost, if not quite, as much as the most advanced socialist. But our methods differ. My theory of trusteeship is no make-shift, certainly no camouflage. I am confident that it will survive all other theories." This was Gandhi's words which highlights his argument towards his concept of "trusteeship". Gandhi's influence put pressure on various Industrialists to act towards building the nation and its socioeconomic development. According to Gandhi, Indian companies were supposed to be the "temples of modern India". Under his influence businesses established trusts for schools and colleges and also helped in setting up training and scientific institutions. The operations of the trusts were largely in line with Gandhi's reforms which sought to abolish untouchability, encourage empowerment of women and rural development. The third phase The third phase of CSR (196080) had its relation to the element of "mixed economy", emergence of Public Sector Undertakings (PSUs) and laws relating labour and environmental standards. During this period the private sector was forced to take a backseat. The public sector was seen as the prime mover
44

of development. Because of the stringent legal rules and regulations surrounding the activities of the private sector, the period was described as an "era of command and control". The policy of industrial licensing, high taxes and restrictions on the private sector led to corporate malpractices. This led to enactment of legislation regarding corporate governance, labour and environmental issues. PSUs were set up by the state to ensure suitable distribution of resources (wealth, food etc.) to the needy. However the public sector was effective only to a certain limited extent. This led to shift of expectation from the public to the private sector and their active involvement in the socio-economic development of the country became absolutely necessary. In 1965 Indian academicians, politicians and businessmen set up a national workshop on CSR aimed at reconciliation. They emphasised upon transparency, social accountability and regular stakeholder dialogues. In spite of such attempts the CSR failed to catch steam. The fourth phase In the fourth phase (1980 until the present) Indian companies started abandoning their traditional engagement with CSR and integrated it into a sustainable business strategy. In 1990s the first initiation towards globalisation and economic liberalisation were undertaken. Controls and licensing system were partly done away with which gave a boost to the economy the signs of

which are very evident today. Increased growth momentum of the economy helped Indian companies grow rapidly and this made them more willing and able to contribute towards social cause. Globalisation has transformed India into an important destination in terms of production and manufacturing bases of TNCs are concerned. As Western markets are becoming more and more concerned about and labour and environmental standards in the developing countries, Indian companies who export and produce goods for the developed world need to pay a close attention to compliance with the international standards. Current state of CSR in India As discussed above, CSR is not a new concept in India. Ever since their inception, companies like the Tata Group, the Aditya Birla Group, and Indian Oil Corporation, to name a few, have been involved in serving the community. Through donations and charity events, many other organisations have been doing their part for the society. The basic objective of CSR in these days is to maximize the company's overall impact on the society and stakeholders. CSR policies, practices and programs are being comprehensively integrated by an increasing number of companies throughout their business operations and processes. A growing number of companies feel that CSR is not just another form of indirect expense but is important for protecting the goodwill and reputation, defending
45

attacks and increasing competitiveness.

business

Companies have specialised CSR teams that formulate policies, strategies and goals for their CSR programs and set aside budgets to fund them. These programs are often determined by social philosophy which have clear objectives and are well defined and are aligned with the mainstream business. The programs are put into practice by the employees who are crucial to this process. CSR programs ranges from community development to development in education, environment and healthcare etc. For example, a more comprehensive method of development is adopted by some corporations such as Bharat Petroleum Corporation Limited, Maruti Suzuki India Limited, and Hindustan Unilever Limited. Provision of improved medical and sanitation facilities, building schools and houses, and empowering the villagers and in process making them more self-reliant by providing vocational training and a knowledge of business operations are the facilities that these corporations focus on. On the other hand, the CSR programs of corporations like GlaxoSmithKline Pharmaceuticals focus on the health aspect of the community. They set up health camps in tribal villages which offer medical check-ups and treatment and undertake health awareness programs. Some of the non-profit organisations which carry out health

and education programs in backward areas are to a certain extent funded by such corporations. Also companies increasingly join hands with Non-governmental organisations (NGOs) and use their expertise in devising programs which address wider social problems. For example, a lot of work is being undertaken to rebuild the lives of the tsunami affected victims. This is exclusively undertaken by SAP India in partnership with Hope Foundation, an NGO that focuses mainly on bringing about improvement in the lives of the poor and needy. The SAP Labs Centre of HOPE in Bangalore was started by this venture which looks after the food, clothing, shelter and medical care of street children. CSR has gone through many phases in India. The ability to make a significant difference in the society and improve the overall quality of life has clearly been proven by the companies. Not one but all companies should try and bring about a change in the current social situation in India in order to have an effective and lasting solution to the social woes. Partnerships between companies, NGOs and the government should be facilitated so that a combination of their skills such as expertise, strategic thinking, manpower and money to initiate extensive social change will put the socio-economic development of India on a fast track.

No clear definition, but plenty of debate The problem with corporate social responsibility (CSR) is that nobody is very clear about what exactly it encompasses. The Indian government has been trying to make it mandatory for companies to spend at least 2% of net profits on CSR. Facing strong criticism, it gave up the effort in mid-July and made the spending voluntary. But the debate continues. If the proposed rule had come into play, the government would have had to spell out what constitutes CSR. That would have gone some way in removing the vagueness that exists about the term. Today, CSR to some companies means providing lunch to employees. To others, it's about tackling global warming and environmental issues. Instead of defining CSR, the Indian government recast it as "responsible business" in a set of voluntary guidelines for firms released July 8 by then Union minister of corporate affairs Murli Deora. The recent unsuccessful effort isn't expected to be the last word on mandatory CSR spending, however. In meetings with industry, Deora has repeatedly expressed the personal view that CSR should be compulsory. In the latest round of recommendations, the government asks that companies keep tabs on CSR spending and disclose it to their principal stakeholders.

46

The CSR measures are actually part of a new Companies Bill that has been in the works for several years. The Companies Act of 1956, which is currently the rule of law, has several clauses inappropriate to the current business and economic environment. A revision process was started in October 2003 and a Companies Bill 2008 was tabled in Parliament. That legislation lapsed with the dissolution of the Lok Sabha (the lower house of Parliament) in 2009. A new bill -- the Companies Bill 2009 -- has been tabled. It is wending its way slowly through various committees. While the Companies Bill contains many provisions that are of great importance to industry, it's the CSR piece that has created the most debate. Deora's predecessor, Salman Khurshid (now Union minister for law), at one time supported making the spending mandatory. Later, he veered around to the view that if CSR spending figures are made public, it will put adequate peer pressure on the corporate laggards. Industry has been almost totally against a mandatory clause. The Federation of Indian Chambers of Commerce & Industry (FICCI) has suggested tax breaks instead for those who meet the voluntary targets. Rival chamber the Confederation of Indian Industry (CII) says that compulsory corporate responsibility would be counterproductive. "Companies may resort to camouflaging activities to meet such regulations, particularly during recessionary periods and
47

economic downturns," argues the lobbying group. India's philanthropic community is also against compulsory CSR. "It is a crazy idea," says Dhaval Udani, CEO of non-governmental organisation (NGO) GiveIndia. "Once you make it mandatory, people will find ways and means to get out of it. The rules will be so vague that the reporting will be even vaguer." Deval Sanghavi, cofounder & CEO of Dasra, a strategic philanthropy foundation, agrees. "I am not in favour of mandatory CSR. When you make things mandatory, the chances of their not being done are greater," he notes. Industrialist Adi Godrej adds, "It's good to say that CSR is desirable. Then people should decide what to do" Philanthropist Rohini Nilekani is more critical. "I just don't get it," she says. "This is outsourcing of governance. This is taking the failure of the state and the companies and trying to create a model out of it. If you want, you tax the companies and put the money into social programs. But you can't dictate CSR." The world over, very few countries have a CSR requirement; Saudi Arabia is possibly the only exception. "The laws in developed countries do not stipulate mandatory CSR contributions," according to KPMG partner (development sector practice) Sudhir Singh Dungarpur. "In the recent past, many European countries have specified that companies must include CSR information in their annual reports."

Blurred boundaries India has a tradition of corporate philanthropy. The trouble is that somewhere along the way, the lines between giving and CSR have grown hazier. "Corporate philanthropy and CSR are really two different things, but get blurred, particularly in India," Dungarpur notes. "CSR should actually relate to the way you conduct your business, whereas it gets confused with giving to the local communities in which you operate." He, too, is against a government mandate. "Generally the carrot approach -- where companies understand the value in focusing on philanthropy and act upon it in that regard -- is better than the stick approach. It is not necessarily the quantum of funds spent that matters, it is how you spend it." Adds Parul Soni, executive director and practice leader at Ernst & Young (India): "CSR is a journey and not a destination." "I don't think there is a clear distinction," between philanthropy and CSR, says Arpan Sheth, Mumbai-based partner with Bain & Company and the author of Bain's recently-released "India Philanthropy Report 2011". "It's like a Venn diagram where there's overlap between the two. I think in many ways, in India in particular, CSR is almost a 100% overlap with whatever the promoter family's passions are." Recently, the government also sought to include vocational training for employees as part of CSR. But
48

that term, too, is difficult to define. Would Infosys, which runs a huge university of sorts for entry-level employees, qualify? Or is would the vocational training umbrella only include those who are taught manual skills? The first government paper on CSR -- released by the ministry of corporate affairs in 2009 -- also talks of health, cultural and social welfare, and education coming under the CSR head. Indeed, just about everyone sees CSR through a different lens. When Bill Gates and Warren Buffett came to India earlier this year to popularize their Giving Pledge, which asks the wealthy to commit to giving the majority of their fortunes to philanthropy, they told Indian companies that the effort was not CSR but CSC -- corporate social compulsion. An Ernst & Young white paper titled, "The Emerging Role of Business -- Not Just for Profit," offers other options: "CSR could be and is used synonymously with terms like corporate responsibility, corporate citizenship, sustainable responsible business, corporate social performance and corporate sustainability." Stepping into the breach is the Institute of Chartered Accountants of India (ICAI). The accounting regulator has set up a subcommittee to identify what should come under the CSR umbrella and what shouldn't. But that effort has spawned its own debate with some others questioning ICAI's right to be heard.

The arguments will likely continue because, as a white paper by KPMG and the Associated Chambers of Commerce and Industry of India (ASSOCHAM) presented at the first International Summit on CSR held in New Delhi in 2008 put it: "CSR is comprehended differently by different people." The report -- titled, "CSR: Towards a Sustainable Future" -- noted that until the 1990s, CSR was dominated by the idea of philanthropy and that business efforts were often limited to one-time financial grants. "Moreover, businesses never kept the stakeholder in mind while planning such initiatives, thereby reducing the efficacy and efficiency of CSR initiatives," according to the report. "However, over the past few years, the concept of CSR has been changing. There has been an apparent transition from giving as an obligation or charity to giving as a strategy or responsibility." The view from Delhi When former minister of corporate affairs Khurshid released the 2009 guidelines he noted that though India's business sector has generated wealth for shareholders for decades, the country continues to grapple with problems of poverty, unemployment, illiteracy and malnutrition. "Corporate growth is sometimes seen as widening the gap between India and Bharat [rural India] through its income-skewing capability," Khursid said. "This gap needs to be bridged. While the government undertakes extensive developmental initiatives through a series of sectoral
49

programs, the business sector also needs to take the responsibility of exhibiting socially responsible business practices that ensure the distribution of wealth and the wellbeing of the communities in which the business operates." A report from global accounting and consulting firm Grant Thornton that used data collected in late 2010 and early 2011 noted that CSR activities across the world have increased dramatically in recent years as "businesses realize their value not only commercially, but also in terms of boosting employee value, attracting staff and cutting costs." Incidentally, "Saving the planet" came in sixth in the survey of drivers of CSR. The Grant Thornton International Business Report was launched in 1992 and now covers over 11,000 respondents per year in 39 economies. Despite this seemingly irreconcilable divergence, some management thinkers feel a meeting of minds is possible. In a 2006 Harvard Business Review article titled, "The Link between Competitive Advantage and CSR," authors Michael E. Porter and Mark R. Kramer argue that creating shared value (CSV) should take precedence over CSR. "CSV should supersede CSR in guiding the investments of companies in their communities," they wrote. "CSR programs focus mostly on reputation and have only a limited connection to the business, making them hard to justify and maintain over the long run. In contrast, CSV is integral to a company's profitability and

competitive position. It leverages the unique expertise and resources of the company to create economic value by creating social value." Global trends in CSR Going global The relentless march toward globalisation will continue to stretch the scope of corporate responsibility. For instance, the new conflict minerals requirement in the DoddFrank Financial Reform Act breaks new ground for the scope of corporate responsibility, by requiring many types of businesses to track four minerals back to their sources to ensure they dont fuel conflict in the minefields of Central Africa. As this and similar requirements arise, the trend is clear: Corporate social responsibility leaders will be increasingly accountable for responsible behaviour all along their supply chains. Triumph (or tyranny) of transparency The pressure for ever increasing levels of transparency and disclosure will build in 2012. Last year, according to CorporateRegister.com, more than 5,500 companies around the world issued sustainability reports, up from about 800 a decade ago. Also, the Rate the Raters report from SustainAbility.com found that more than 100 sets of ratings measure which companies are the most responsible. All the big four accounting firms are expanding their practices to audit all of these disclosures and are also sponsoring
50

the expanded fourth edition of the Global Reporting Initiative Guidelines, which outline standard CSR disclosures. In 2012 a promising new initiative, the Global Initiative for Sustainability Ratings, will endeavour to standardize the ratings framework, but beyond that there is little relief in sight for the surveyfatigued CSR manager. Employee engagement emerges The connection between CSR and engaged employees continues to grow. A Hewitt & Associates study looked at 230 workplaces with more than 100,000 employees and found that the more a company actively pursues worthy environmental and social efforts, the more engaged its employees are. The Society for Human Resources Management compared companies that have strong sustainability programs with companies that have poor ones and found that in the former morale was 55% better, business process were 43% more efficient, public image was 43% stronger, and employee loyalty was 38% better. Add to all that the fact that companies with highly engaged employees have three times the operating margin (Towers and Watson) and four times the earnings per share (Gallup) of companies with low engagement, and youve got a compelling business case for this trend to continue into 2012 and beyond. Political pitfalls The elections will dominate the public conversation in the U.S. in 2012, and corporations will be

alternately described as greedy, polluting, untrustworthy political puppet masters and job-creating paragons of virtuewith little room in the middle. Beyond the rhetoric, candidates wont be able to resist highlighting company success stories featuring economic, environmental and social benefits. CSR leaders should choose what they promote wisely and set clear boundaries to avoid becoming political footballs. Collaboratition As CSR becomes more of a differentiator, companies will both compete and collaborate on CSR issues. Companies both compete and collaborate on CSR at the same time. The numerous CSR ratings, together with data from the Reputation Institutes 2011 Pulse Survey, which indicate that CSR is responsible for more than 40% of a companys reputation, lay the basis for CSR competition. On the other hand, there are a plethora of associations and multi stakeholder networks that foster collaboration on CSR topics. Groups like the Electronics Industry Citizenship Coalition demonstrate how competitors can partner on CSR issues like conflict minerals. Why would they? Such issues are so massive that working together is clearly more efficient. On the other end of the spectrum are initiatives like GEs ecomagination program, which furthers competitive advantage. Collaboratition means that companies can and will collaborate on CSR efforts when that is more efficient, while continuing to
51

compete on their signature CSR programs. Sustainability shoppers Consumers are increasingly tuned in to sustainability when making their buying decisions. Green labels have been around for a long time, but Wal-Marts sustainability index is taking it up a notch. Already driving WMT suppliers to improve performance, in the future the index could appear on a point-of-sale label for products. Expect green marketing in 2012 to up the ante based on the successes of campaigns like Timberlands Earthkeepers line (Nature Needs Heroes). Perhaps the high water mark for eco-minded advertising was Patagonias brilliant Dont Buy This Jacket messaging. Its Common Threads Initiative asks customers to pledge to only buy what they need and instead repair, reuse, and recycle their clothing. Nothing inspires confidence in your ecovalues more than telling customers not to buy your products. Independent certification schemes like the GoodGuide will continue to proliferate, as will cause marketing, for the simple reason that it works. Cone Communications reports in its 2010 Cause Evolution Study that even as cause marketing continues to grow, consumers are eager for more. In fact, 83 percent of Americans want MORE of the products, services and retailers they use to support causes. Occupy from the inside PriceWaterhouseCoopers has found that 88% of millennials, or echo

boomers, choose employers based on strong CSR values, and 86% would consider leaving if the companies CSR values no longer met their expectations. As a new generation goes to work in corporate America, it is bringing strong social justice values with it. At the same time, companies are under increasing pressure to go green. So despite the popular view that corporations are in a race to the bottom, 2012 will see more jobs created for CSR professionals who want to change business from the inside out. Companies of all kinds are looking for people to help improve their environmental, social, and ethical performance throughout their value chains. There are recruiters like Ellen Weinreb and Martha Montag Brown who specialize in CSR jobs, and the big recruiters have caught on too. Social media rules I will admit that I originally got a Facebook account just to annoy my children. Now Facebook and Twitter are essential communications tools for any serious CSR program. Social media is not a replacement for hefty annual CSR reports, but those reports are increasingly static reference documents, used mainly for looking up facts and grading performance. Social media opens a way for stakeholders to interact directly with a companys CSR program. Through social media, companies gain a following of people who are interested in their CSR performance and can keep tabs on stakeholder sentiment on any
52

emerging issue. These tools are still very new, and no company has perfected their use, but it is clear that social media is a game you cannot afford sit out. Human rights Since the 2008 publication of the Ruggie Report on human rights and transnational corporations, companies have been waking up to human rights issues across their value chains. For example, the major Internet search companies are embroiled in basic human rights questions ranging from the protection of free speech during the Arab Spring to being compelled to identify dissidents in repressive regimes. In a time of globalisation, hyper-transparency, and increasing expectations among informed stakeholders, the risk in even tacit complicity in human rights violations is growing. Wise companies will take a hard look at their human rights policies and practices in 2012 and act to mitigate any liabilities.

Challenges of Environment: Principles of Environmental Ethics

The underlying principle of environmental ethics is that nature has intrinsic value. This means that nature and its parts are not merely means for accomplishing ones purposes but are ends in and of themselves. This statement can be called the categorical imperative of ecology. Responsibility for nature Business affects the natural environment at different levels of the organisation of nature. Individual biological creatures are affected by business via hunting, fishing, agriculture, animal testing, etc. Natural ecosystems are affected by business via mining, regulating rivers, building, polluting the air, water and land, etc. The Earth as a whole is affected by business via exterminating species, contributing to climate change, etc. In his magnum opus The idea of responsibility Hans Jonas argues for a new kind of ethics appropriate in our technological age. The major theses on which Jonas theory of responsibility is based are as follows: The altered, always enlarged nature of human action, with the magnitude and novelty of its works and their impact on mans global future. Jonas argues that the nature of human action has changed so dramatically in our times that it calls
53

for a radical change in ethics as well. He emphasizes that in previous ethics, all dealing with the nonhuman world was ethically neutral. Ethical significance belonged to the direct dealing of man with man, including man dealing with himself: all traditional ethics is anthropocentric. The effective range of action was small, the time span of foresight, goal-setting, and accountability was short, control of circumstances limited. According to Jonas new dimensions of responsibility emerged because nature became a subject of human responsibility. This is underlined by the fact of the irreversibility and cumulative character of mans impact on the living world. Knowledge, under these circumstances, is a prime duty of man and must be commensurate with the causal scale of human action. Man should seek: not only the human good but also the good of things extra human, that is, to extend the recognition of ends in themselves beyond the sphere of man and make the human good include the care of them Ecosystem ethics At the level of natural ecosystems the so-called ecosystem ethics is relevant for business. The maxim of ecosystem ethics was first stated by American environmentalist Aldo Leopold in his classic Sand County Almanac. He writes: A thing is right when it tends to preserve the integrity, stability, and

beauty of the biotic community. It is wrong when it tends to otherwise. Ecosystem ethics requires that business organisations interact with the ecosystem in a way that the health of the ecosystem is not damaged. From ecosystem ethics the following ethical implication can be derived for business; Business should use natural ecosystems in a proper way that is, not damaging the health of the ecosystem during use. Ecosystem ethics implies nondeclining natural wealth. In more exact terms it requires that the ecological value of the natural ecosystems be not decreasing over time. Awareness-based ethics At the level of individual biological creatures the so-called awarenessbased ethics is adequate for business. The most eloquent protagonist of this branch of environmental ethics is Australian philosopher Peter Singer. He says: If a being suffers there can be no moral justification for refusing to take this suffering into consideration. From awareness-based ethics a major ethical implication can be derived for business: Business should assure natural life conditions and painless existence for animals and other sentient beings.

Gaian ethics At the level of the Earth as a whole, Gaian ethics applies to business. The Gaia theory developed by British independent scientist James Lovelock proposes that the biosphere and the physical components of the Earth (atmosphere, cryosphere, hydrosphere and lithosphere) are closely integrated to form a complex interacting system that maintains the climatic and biogeochemical conditions on Earth in a preferred homeostasis. It was named after the Greek supreme goddess of Earth. The theory is frequently described as viewing the Earth as a single organism. Lovelock defines Gaia as a complex entity involving the Earths biosphere, atmosphere, oceans, and soil; the totality constituting a feedback or cybernetic system which seeks an optimal physical and chemical environment for life on this planet. The essence of Gaian ethics is the respect for the self-regulating character and evolutionary uniqueness of the biosphere. From Gaian ethics the following ethical implication can be derived for business: Business should not contribute to the violation of the systemic patterns and global mechanisms of the Earth. The most important impacts what business organisations make on the living planet include CO2 emission and reducing biodiversity.

54

Environmental Challenges as Business Opportunity

Businesses and corporations are very well placed to challenge many of the problems facing our globe as they possess the technology, the resources, the capacity and the global reach required to make a difference. These global challenges open up tremendous opportunities for businesses; companies have the opportunity to sell solutions to the global social and environmental problems. The profit motive will undoubtedly accelerate the transformation to global sustainability. Stuart Hart, author of Capitalism at the Crossroads, describes three different global economies the money economy, the traditional economy and the nature economy which all present opportunities for business. The money economy, which comprises of the developed economies and emerging economies in which 2 billion people participate, requires lower material and energy consumption and the development of clean products and technologies. In the traditional economy, which consists of village-based systems such as barter exchange, and is made up of 4 billion people (2/3rds of humanity), there is the potential to foster village-based businesses to understand and serve the needs of the worlds poor at the base of the economic pyramid. In the nature economy, which consists of the ecosystems and resources which support the other two economies, we must ensure the sustainable use of
55

natural capital by internalising our externalities. Companies must widen their corporate bandwidths and develop entirely new native capabilities that emphasize deep dialogue and local co-development. A more inclusive commerce thus requires innovation not just in technology, but also in business models, business processes, and mental frames. The Sustainable Value Framework (Hart, 2005) or Eco-advantage strategy (Esty, 2006) outlines the potential benefits of this environmental perspective; firstly there are great potentials for upside benefits. These include higher revenues through lower operational costs and lower lending rates from banks which see reduced risks in companies with considered environmental strategies. This perspective enables companies to manage the downside risks by increasing the efforts to cut waste and reduce resource use and save money. Similarly it encourages them to redesign processes to use less energy, reducing the exposure to external gas or oil prices. Furthermore, meeting the needs of the poor and developing this market at the BoP is a significant opportunity for businesses and is perhaps the best place to incubate the technologies of the future. The economist Joseph Schumpeter described the dynamic pattern in which innovative upstarts uproot established firms as creative destruction. He suggested that this disequilibrium is the driving force behind capitalism. Hart discusses how at every technological

crossroads in history- from the coal age to the oil age to the information age- the technological and socioeconomic infrastructure of society experiences a dramatic transformation. The information and digital age is now and therefore, Hart suggests, we are in the early stages of a revolution in which we will see a dramatic change in society and how we consume. He suggests this change is imperative and it is businesses which must lead the way; the major challenge and opportunity of our time is to create a form of commerce that uplifts the entire human community of 6.5 billion and does so in a way that respects both natural and cultural diversity. Indeed, that is the only realistic and viable pathway to a sustainable world. And business can and must lead the way. He predicts that creative destruction will ensue in the coming decades with the innovation of clean and sustainable technologies. Farsighted companies can turn many of the current environmental problems to their commercial advantage. For many years, the problems which politicians, scientists and the business sector have been focusing on have involved climate issues. To establish the commercial opportunities stemming from these environmental issues, companies need to know how societys reactions to climate change affect the conditions for their own business operations. Rising temperatures can cause more severe droughts, increased precipitation and storms,
56

all of which can have economic consequences. In some countries, the forestry industry can look forward to increased forest growth, but also significant infestations of harmful insects. Various measures aimed at reducing climate change also affect the economy. The price of grain, for example, has risen as the demand for the raw material required for the production of ethanol as fuel has increased. These effects at industry level have an impact at national level which, in turn, spreads to individual companies. Many industries have also started to react to the changing conditions they face as a result of climate change and the policies surrounding this issue. Banks are reviewing the risk of granting credit for construction in climate-sensitive areas. Insurance companies are looking for methods which they can use to cover climate-related risks in their premiums. The automotive industry is investing huge amounts in producing fuel-efficient cars and vehicles which can operate on alternative fuels. For the aircraft industry, the problem of reducing emissions is an enormous challenge, but progress is being made. The winners from a warmer climate may be environmental consultants & clean-tech companies who see commercial advantages in the increasing demand for solutions aimed at slowing down climate change. This is true of traditional industrial operations, provided that they are sufficiently farsighted and quick on their feet. Companies are being forced to sharpen their climate analysis.

Affirmative Action as a form of Social Justice

India continues to face challenges relating to caste, religion and gender inequality. The question is how society creates a more level playing field where there is equal opportunity for all. Indian government has introduced various reservation bills to improve the status of backward classes and women. According to the XI Planning Commission MidEvaluation report on Social Justice the government strategy is targeted towards providing social empowerment, economic empowerment and social justice to ensure removal of disparities and elimination of exploitation. The issue discussed in this post is that in light of huge disparities is affirmative action by government the right approach. Would you consider it socially ethical? To put forth my views I am first providing some background information on income disparities and gender inequality problems in India. In the end, I have added Michael Sandels lecture video on Affirmative Action. It is an hour-long lecture and discusses the ethical dilemmas relating to affirmative action. Indian social structure Amongst Hindus, the Brahmins were according to Hindu philosophy superior to the other three castes. The Harijans/Dalits now called scheduled castes, scheduled tribes and other backward classes were
57

considered untouchables belonging to the lower caste order. This caste differentiation was abolished after independence, however differences in education and financial status continue. Same problems prevail in Muslim community. Not only are Muslims earning lesser, they have lower education levels, and culturally higher restrictions on women. According to 2001 Census scheduled castes, scheduled tribes and minorities consist 42% of the total Indian population. The income disparities continue to be huge. As per Planning Commission assessment 27% Indian population is below poverty line and in the top 10-world billionaire Forbes list of 2011 there are two Indians, Lakshmi Mittal and Mukesh Ambani. Successive governments have partially succeeded in running various programs for backward classes by reserving seats in educational institutes and government offices. The irony is that lower caste Hindus who adopted Islam or Christianity to get rid of the cursed caste tag, now wish to be classified as Dalit Muslims and Dalit Christians to leverage the advantages of reservations. Status of women India was one of the few countries that in its constitution provided equal rights to women. According to Hindu religion women are avatars of goddesses. In Hindu religion, the three main representatives of God are Lord Brahma, Lord Vishnu and Lord Shiva. Respectively their roles

are of creator, manager and destroyer of the world. The devis (goddesses) are Durga, Saraswati and Laksmi. The goddesses bestow power, knowledge and wealth to their followers. Delving in the Hindu philosophy shows that women are considered equal. In the present scenario, one would assume that Indian women would be in a better position. A few women hold politically powerful positions. Ms. Pratibha Patil was President of India, Ms. Sonia Gandhi is leader of the ruling party Congress, Ms Sushma Swaraj is leader of opposition party BJP and Ms. Meira Kumar is Speaker of the House. Four key positions held by women, and the Women Reservation Bill is awaiting approval in Lok Sabha for quite some time. However, we cannot say no progress has been in made. In the last decade a few laws, namely Prohibition of Child Marriage Act, Protection of Women from Domestic Violence and Hindu Succession (Amendment) Act, have been passed. Still the road ahead is extremely difficult. India has a high rate of female infanticide, dowry deaths, sexual harassment and violence against women. Therefore, Indian women continue to struggle for equality and fight a multitude of gender biases. To offer support and eliminate such extreme disparities in the Eleventh Plan Ministry of Women and Child Development has Rs 56,765 crores (USD 12,549 million) allocated for women welfare.

India corporate sector is doing no better in promoting diversity. The Economic Times article Tough climb for women up India Inc ladder on Womens Day stated A population of 500 million women, but only 258 of them hold some of the top jobs in the country. Thats how skewed India Incs diversity ratio is.. There are only 16 women on the board of directors of the 30 Sensex companies, or 4.8% of the 335 people who hold directorship positions The privileged class view Most people would proclaim that effective measures should be implemented for uplifting the underprivileged. However, there is a wide gap between words and actions. The good intentions are not followed through as the social cost has to be borne by the privileged class. The socially affluent have benefitted from the legacy privilege and the belonging to the right network. The privileged classes do not wish to consider that minorities and women need the extra support since they dont have the right connections. Reservations for backward classes and women have men complaining that they are being forced to sacrifice their individual rights for societys betterment. The wrongs were done for centuries, so why does the present generation need to pay the price for it.

58

Issues in Moral Conduct of Business and CSR: Failure of Corporate Governance

There are various concerns that need to be addressed by good corporate governance for the achieving better results. Some of the these problems to be discussed in the following lines resulted in abuse and the collapse of major companies and therefore made a way for reform in corporate governance in the UK. Though these problems are different in nature and have different dimension but some of them could be avoided if effective non-executive directors are available on board. One of the problems faced by corporate governance is the principal-agent problem or agency cost problem. This notion is based on the separation of ownership and control. As the directors remain in charge of company's finances which make them the agents and the company and the company as principal of the agents i.e. directors. There is likely- hood of the danger that the directors may in certain circumstances will be tempted to ignore the interest of the company and work for their own interest. To avoid this clash of interest between agents here the directors and principal, here the company, there is need to require agents to promote the success company, or in other words the success of the principal. One of the other solutions to manage the agency cost problem is to have non-executive directors in the company.
59

Conflict of interest is another problem which needs due attention in the corporate governance debate. In many cases loyalties are compromised for personal benefits. In Enron the husband of the chairman of the audit committee received political donations from the company. Such unethical activities lead to securing personal gains instead of giving priority to the company affairs. Transparency is one of the essential requirements of good corporate governance but sometimes companies lie about their accounts for various reasons. One of such technique is called creative accounting. It is the falsification of accounts figures. The main purpose of this unfair practice is to inflate profits and attract investment. This can be seen in the case of Enron where devious accounts showed enormous profits while in fact this was not the fact. Now in the US accounting frauds are regulated through the Sarbanes Oxley Act 2002. The results of audit failures are very serious and in a big company like Enron they could send shock waves to the many countries. This results not only in corporate failures but diminishes the confidence of the investors on the auditing profession. Failure by the auditors to find fraudulent activities may result in the abuse of company finances and thus may lead to failure of the company. Another issue of corporate governance is about the cases where

the executive directors have been dominant over the non-executive directors and so non-executive directors lack independence and are not effective. This results in lack of monitoring of the executive directors. This was seen in the case of Enron and Parmalat. In Parmalat the director was not independence while in Enron the executive were dominant over the non-executive directors. In many cases executive are paid very high salaries and bonuses without any considerations to their performances. Or in other words they are paid excessive remunerations. These excessive remunerations gave birth to the notorious term of fat cat' arising from British Gas where executive were paid excessively. Because of public and shareholders outcry in 1995 the Greenbury committee was formed to look in to the directors remunerations. Greenbury recommended that remunerations must be linked to performance. Recently MG Rover, a case of corporate collapse, one of the director received $40 million in terms of wages and pension during his time in the company while an inquiry held that the company was suffering from mismanagement but the directors pay was excessive. In this case four of the directors were banned to serve as directors of company in the future. Had there been effective and independent directors there might have been better supervision and the results might have been different.

Along with these problems is the issue when companies give too much power in the hands of an individual. In many cases one person enjoy the powers of two separate positions i.e. to work at the same time as Chief Executive officer and chairman of the board. The combination of these two important position results in the concentration of powers in the hands of one person and thus results in the abuse of powers. This can be seen from the collapse of Maxwell Communications, where Robert Maxwell was in charge of two main positions. Robert Maxwell held the positions of Chief executive and chairman in Maxwell Communications from 1981till 1991. He abused his powers and the result was the scandal was so big that his scandal at that time was termed as the biggest scandal of the 20th century. He stole approximately 727 million from the pension funds of the companies he of which was charge as chief executive and chairman. Cadbury also emphasised on the separation of powers at these two positions and held there must a balance of powers between individuals.

60

Social Audit
What is it? The social audit is a business statement published every year to present a set of information about the social projects, benefits and actions addressed to employees, investors, market analysts, shareholders and the community at large. It also functions as a strategic instrument to evaluate the practice of corporate social responsibility. Through its social audit the company shows what it does on behalf of its professional staff, their families, collaborators and the community at large. Transparency is given to the activities developed to improve quality of life. Its main function is to make public the company's social responsibility, thereby strengthening the links between company, society and environment. When put together by multiple professionals, the social audit shows and measures the company's concern about people and about life in our planet. Background In the United States and Europe during the 60s, public repudiation of the war in Vietnam triggered a movement to boycott the goods and shares of some companies that were associated with the conflict. Society demanded a new ethical attitude and some companies began to provide accounts for their social actions and objectives. Drawing up and publishing annual reports containing
61

information of a social nature led to what we now know as "the social audit". Why social audit? Because it's ethical! Being fair, good and responsible is a reason in itself. Because it adds value! The social audit gives the company a reference that is being more and more appreciated by investors and consumers throughout the world. Because it reduces the risks! In a globalised world where information takes only some minutes to be spread all over international markets, ethical and transparent conduct has to be an integral part of any organisation's strategy. Because it's an instrument of modern management! The social audit is a valuable tool for the company to administer measure and publicize the practice of social responsibility in its undertakings. Because it's an instrument of evaluation! Investors, market analysts, investors and financing agencies now include the social audit in the list of documents required to assess a company's risks and projections. Because it's innovative and transforming! Publishing an annual social audit means changing the old approach indifferent to the satisfaction and welfare of employees and clients to a modern view where the company's objectives include the

concern of social and environmental responsibility. Who benefits? The social audit benefits all groups involved with the companys activities. It provides useful information for directors to make decisions regarding the social programs the company sponsors. Preparing the social audit stimulates the employees to take part in choosing social actions and projects, thus improving internal communication and integration between managers and staff. Suppliers and investors learn how the company faces its responsibilities with regard to human resources and the environment, which is a good indicator of how the company is run. The social audit shows consumers its philosophy and the quality of the product or service that is provided, pointing to the way the company chooses to make itself known. The State also benefits through the identification and formulation of social policies. The model Since 1997, people have been calling the attention of the business community to the importance and need for a single and simple model for the social audit. People believe that simplicity guarantees a greater number of companies involved. So, after meeting and debating with different sectors of society and various representatives of public and private
62

companies a model was developed that is simple and objective, which stimulates companies to publish their social audit regardless size and sector. If information is not presented according to a minimum standard, it becomes difficult to make a proper evaluation of a company's social function over the years. The predominance of objective data is fundamental to enrich this type of statement. Although it is no easy task to correlate financial factors with social data, the indicators presented in the model help the comparative analyses of the company over time or among other companies of the same sector. Society and the market are the chief auditors of the process and the results achieved.

Unethical Issues in Sales, Marketing, Advertising and Technology: Internet Crime and Punishment
Ethical issues in marketing: the context of developing countries Marketing, in contemporary times, has seen a tumultuous change in the way it's conducted in developing countries. The oft cited dictum that only change is constant in the marketing genre is an opposite one. Just as the media of social communication themselves have enormous influence everywhere, so advertising and marketing, using media as their vehicles, are pervasive, powerful forces shaping attitudes and behaviour in today's world. Four reasons are attributed to the fugacious nature of the way marketing practices are being carried out in developing countries: The role of Information and Communication technologies: As ICTs evolve so do marketing practices. If yesterday it was television that revolutionised the way advertisements could create a lasting impact on the consumer, then today the internet and phone text messages are doing just that. The world today is an increasingly global village: Social and ethnic boundaries are fast falling in the wake of cable television and the like. Rapid economic expansions in countries like China and India have meant that marketers have to quickly respond to the changing socio-economic scenarios. Millions
63

of people have entered the middle class and millions more are poised to do so. For marketers, the consequences can be mind boggling-as incomes and spending powers rise, marketers have to respond to increasing demands from consumers. Better and improved marketing research has meant that the entire populace is not seen in totality but rather as a congeries of different types of consumers. The upshot But the outcome of such developments is that a number of ethical issues have arisen. While the globe is indeed becoming a smaller place, marketers have to bear in mind national, local and cultural sensitivities. Very often, in the hope of tapping a larger consumer base, marketers jump headlong in new markets without keeping in mind ethnic and social issues typical to certain areas. While marketers do have to act with celerity in gaining footholds in emerging markets such as China and India, care has to be taken in ensuring that the mores, etiquettes of the land are not encroached upon. The incorporation of newer technologies has meant that a number of issues such as invasion of privacy and credibility have arisen. Ergo, in these rapidly changing circumstances, marketers and consumers alike face a nimiety of ethical issues that have to be addressed. This paper looks at some of the ethical issues in the developing countries context.

Exploiting social paradigms In the hopes of making a fast buck, marketers often resort to exploiting social paradigms typical to certain areas. In India, for example, a large multinational corporation ran an ad campaign that depicted a young woman who because of her dark facial complexion was unable to find jobs. But as the ad showed, as soon as the woman started using the facial whiteness cream manufactured by the corporation, she got the job of her choice. Needless to say, there was a big backlash against it and the ad campaign had to be scrapped. On an ethical standpoint, marketers have to exercise restraint in exploiting such social paradigms to their commercial advantage. Surrogate advertisements in India Alcohol & cigarette advertisements were banned outright some years back. However, alcohol and cigarette companies alike are using the avenue of surrogate advertisements to press forward their case. For the viewer though, the 'subtle' pointer towards the real deal is enough as the surrogate advertisements leave no ambiguity in their minds. Subliminal advertisements One of the most controversial and ethical issues in advertising is regarding subliminal advertisements. Inserting subliminal messages in an advertisement is an inherently misleading action. It is an attempt to manipulate a person's thinking without the person realizing that any
64

such manipulation is occurring. The west has had its fair share of subliminal advertisements related hullabaloos primarily because the advertisement, marketing and regulating media themselves have been quite active in raising such issues. During the US Presidential elections of 2000, it came to light that a political advertisement for George W. Bush subliminally flashed the word 'RATS' when criticizing Al Gore's prescription medicine plan. While the ad maker denied that the quickly flashed word was a subliminal message designed to surreptitiously sling mud at Gore, many others, however, concluded that 'RATS' was indeed inserted with the intention of secretly causing viewers' to associate vermin with Al Gore. In line with the techniques of subliminal messaging, the questionable word appeared on the screen for only a microsecond (1/30th of a second), passing by so fast that it was almost unrecognizable to the conscious mind-especially when passively lulled by television. According to the theory of subliminal advertising the image would, indeed, register in a viewer's subconscious mind, thereby causing the viewer to negatively associate Al Gore with a rodent. The effects of subliminal advertisements are real and financially significant. Each year, consumers spend roughly $US50 million for self-help tapes embedded with subliminal messages that are supposed to teach a person a foreign language while they sleep, or help them lose weight, or quit smoking. Additionally, some stores

embed subliminal messages in their background music in an effort to discourage shoplifting. Time magazine reported in 1979 that messages such as 'I am an honest person' and 'Stealing is dishonest' were being utilised in over fifty department stores. One department store utilizing the hidden messages reported a savings of $US600, 000 by reducing theft 37 percent during a nine month period. So, if subliminal messages evidently work in self-help tapes and embedded in department store music, it certainly seems reasonable that they would also work and perhaps even work better in a visual medium such as television. In developing countries the regulating watchdogs & related establishments are still in stages of latency so that the possibility that viewers who would be subject to such measures would probably never ever know that they were the focus of such procedures. Ethical issue of 'creating demand' In the words of Pope John Paul II, advertising also can be, and often is, a tool of the phenomenon of consumerism. Sometimes advertisers speak of it as part of their task to 'create' needs for products and services - that is, to cause people to feel and act upon desires for items and services they would ordinarily not need. A piquant issue arises when consumerist attitudes and values are transmitted by communications media and advertising to developing countries, where they exacerbate socioeconomic problems and harm the
65

poor. While a judicious use of advertising can stimulate developing countries to improve their standard of living, serious harm can be done to them if advertising and commercial pressure become so irresponsible that communities seeking to rise from poverty to a reasonable standard of living are persuaded to seek this progress by satisfying wants that have been artificially created. The result of this is that they waste their resources and neglect their real needs, and genuine development falls behind. Predatory pricing In developing nations where the bulk of the populace is still employed in small and medium enterprises, the use of predatory pricing by large multinational corporations in order to wipe out competition is an ethical issue. While proponents of no holds barred pricing would attribute this to an unfettered free market, the fact remains that the larger issue is the threat of wiping out the livelihood of a large number of people. In India, a related issue is the entry of western discount stores that might eventually threaten the existence of millions of people employed in traditional momand-pop stores. Wal-Mart's 'takeover of small towns' in the U.S.A. is also a related concern. Countries like India need to take a leaf out of the China book-China opened its market to these stores in 1991 and only recently allowed 100% foreign direct investment (FDI) in such ventures.

False & misleading advertisements Then there is the issue of false and downright disingenuous ads. While in itself this is an important ethical issue, an extension of this is the question of credibility. Nowadays, newspaper columns are rife with advertisements which blatantly compare features of brands with those of their competitors. Citing the opinion of 'experts', these advertisements claim their brands to be quantitatively and qualitatively better than those of their rivals. In India a leading car manufacturer had to recall its ad campaign when it incorrectly stated that one of its car models was superior to that of its competitor's. Post purchase dissonance What you see is not often what you get Since very often what companies claim their products or services deliver is not what the consumers actually get, the issue of post purchase dissonance arises. There are two more non-contrasting viewpoints on this issue. One states the typical examples of TeleShopping Networks (TSN) and the internet. Since there is no element of tangibility, the consumer would typically end up getting an end product which he/she didn't literally ask for. The other viewpoint states that such establishments would be punished by market forces since in today's world the consumer is undoubtedly the king. But in associating such concerns to the game play of market forces, the

larger ethical issue is unfortunately trivialised. Depicting groups in stereotyped roles All too often, marketing contributes to the invidious stereotyping of particular groups that places them at a disadvantage in relation to others. Women and children unfortunately end up being cast as stereotypes in ad campaigns the world over. Often, the role of women in business or professional life is depicted as a masculine caricature, a denial of the specific gifts of feminine insight, compassion, and understanding. In India, which has traditionally been a patriarchal society, tremendous cultural changes have been brought in with the advent of cable television and the exposure to western content. Urban women are enjoying more freedom than they've had before. Yet, promotional campaigns of certain firms still show the Indian woman of yore-a fallback to a time when women did not enjoy the freedoms they have today. The ber kid In India, objections have been raised against advertisements that showed mothers benchmarking their children to the so called 'super-kid'one who excels in studies and sports alike simply because he consumes a particular health drink. Promotion of alcohol, tobaccocreating demand for vice Cigarettes are one of the most heavily marketed products in China and other developing nations. An increasing percentage of those
66

marketing dollars is dedicated to what are probably the most sophisticated consumer marketing databases in the business world. Tobacco advertising is no longer just the province of multi-million dollar ad budgets pushing the Marlboro Man, Joe Camel's phallic face or the women in the Virginia Slims' ads who have 'come a long way.' It is equally the province of direct marketers, pushing free packs to targeted prospects and mailing slick magazines-published by tobacco companies-to influence the behaviour and retain the loyalty of tens of millions of smokers And the problem is pandemic-is is prevalent in both developing as well as developed countries alike. In the US for example, cigarette smoking is responsible for the deaths of almost half a million people a year. Tobacco use is responsible for more than one in six deaths in the United States. Smoking accounts for 30% of all cancer deaths. It is a major cause of heart disease, and it is associated with conditions ranging from colds and gastric ulcers to chronic bronchitis, emphysema and vascular disease. Smoking caused an estimated 264,087 male and 178, 311 female deaths in the United States each year from 1995 to 1999. The U.S. Congress Office of Technology Assessment estimates the cost of smoking (direct and indirect) to the economy at $150 billion a year. Each day more than 3,000 teenagers in the U.S. become addicted to cigarettes. The tobacco industry argues that its advertising is not aimed at recruiting these young new smokers. Its
67

representatives say, disingenuously, that advertising by individual tobacco companies' targets adults only and serve only to encourage regular smokers to switch brands or to retain brand loyalty. However it has been seen that perception of cigarette brand advertising actually is higher among young smokers and that changes in market share resulting from advertising occur mainly in this segment. Cigarette advertising thus undoubtedly encourages youth to smoke. In a survey conducted by the Journal of the American Medical Association, it was stated that the success of the tobacco industry is dependent on recruiting people who don't believe that tobacco kills-thus enticing children, developing nations populations, and disadvantaged members of society to smoke is the only way for tobacco companies to make up for the number of smokers who quit or die Intrusive promotions A number of companies offer a plethora of freebies in terms of services and add-ons, however all these come with the proverbial strings attached. These are particularly true for telecom and internet services related companies. Mobile network providers in India for example are notorious for literally bombarding the users with promotional text messages. Many a times these companies share customer data with other companies without the explicit permission of the customers themselves. The issue at hand is such measures compromise

the confidentiality of company-client relationships and trivialize the privacy concerns of the customers. Copyright, trademark violations Copyright and trademark violations are ubiquitous throughout the developing world. One of the major grouses of multinational corporations in countries like China and India is the lack of a robust legal framework that harshly penalizes violators. Data piracy is a major concern in South East nations and millions of illegal compact discs are made in such countries which cost software, music and movie companies billions of dollars. Advertisements as mirrors of prevailing norms Marketers claim that advertising simply mirrors the attitudes and values of the surrounding culture. No doubt advertising, like the media of social communications in general, does act as a mirror. But, also like media in general, it is a mirror that helps shape the reality it reflects, and sometimes it presents a distorted image of reality. Advertisers are selective about the values and attitudes to be fostered and encouraged, promoting some while ignoring others. This selectivity does not impart credence to the notion that advertising does no more than reflect the surrounding culture. For example, the absence from advertising of certain racial and ethnic groups in some multi-racial or multi-ethnic societies can help to create problems of image and
68

identity, especially among those neglected, and the almost inevitable impression in commercial advertising that an abundance of possessions leads to happiness and fulfilment can be both misleading and frustrating. Advertising also has an indirect but powerful impact on society through its influence on media. Many publications and broadcasting operations depend on advertising revenue for survival. This often is true of religious media as well as commercial media. For their part, advertisers naturally seek to reach audiences; and the media, striving to deliver audiences to advertisers, must shape their content so to attract audiences of the size and demographic composition sought. This economic dependency of media and the power it confers upon advertisers carries with it serious responsibilities for both. The ethical issue of political marketing Political advertising can support and assist the working of the democratic process, but it also can obstruct it. This happens when, for example, the costs of advertising limit political competition to wealthy candidates or groups, or require that office-seekers compromise their integrity and independence by over-dependence on special interests for funds. Such obstruction of the democratic process also happens when, instead of being a vehicle for honest expositions of candidates' views and records, political advertising seeks to distort the views and records of opponents and unjustly attacks their

reputations. It happens when advertising appeals more to people's emotions and base instincts-to selfishness, bias and hostility toward others, to racial and ethnic prejudice and the like- rather than to a reasoned sense of justice and the good of all. Ethical Issues in Internet, e-commerce The Internet is quickly becoming a major conduit for business. On-line business has raised a host of new issues such as honesty and responsibility, accountability, privacy and confidentiality, protection of data (i.e. credit card numbers), freedom from invasiveness (i.e. so-called sticky websites that automatically track and retain customer contact and information), quality of the goods delivered, disclosure and reliability of information, sources of goods, Internet economics vs. traditional economics, impacts of global Internet business, employment through the net (local and global telecommuting), web advertising, competition on the Internet (hacking into data, falsification of data), public information and financial disclosure (investor relations on the Internet), and others. The small print The major ethical issues facing business over the internet are the ones regarding the small print i.e. the policy notices or practices on websites. These issues include: Usage of obfuscating and vague language The policy may be hard to find or difficult to read and understand.
69

It may not contain all the disclosures May fail to provide a contact address or procedures for dealing with complaints, corrections, or conflict resolution It may not have clear access requirements or procedures for verifying a valid requester before granting access May not be linked to or displayed on every page where information is collected World Wide Web versus the Wild Wild Web To many, the utopian concept of the internet is that of a valueless zone-a free network that is outside the purview of human control and restrain. But we feel that line of reasoning is flawed. The internet is the progeny of civil society. This means that the World Wide Web is not the Wild Wild Web, but instead a place where values in the broadest sense should take a part in shaping content and services. This is recognition that the Internet is not something apart from civil society, but increasingly a fundamental component of it. Ownership and responsibility The internet is largely a boundary less network. The involvement in content of companies hosting information is highly debatable. There are two sides to the proverbial coin: The Internet as a medium supports all kind of contents. By espousing the principle of allowing anyone to post any material on the

net as a means of furthering information exchange is extended by many as the raison dtre of absolving the hosts of complicity of posting the material. In India, a major debate between the erudite arose when the CEO of the Indian chapter (bazee) of ebay.com was arrested over charges of allowing the exchange of video clips showing explicit scenes. The sympathizers of the site owners cited the fact that the websites are merely enabling people to exchange data over a common platform. What information is exchanged does not fall under the purview of the responsibilities of the website managers. The opposing view was the hosts cannot turn a blind eye to the activities being carried out through the medium of their site. We feel that although, given the nature of the Internet, they cannot possibly be expected to precheck content, once they receive a notification or a complaint about something they are carrying or hosting, they have to take a view. Thus if one is attempting to bring a sense of ethics to the Internet in any particular instance, it is essential to know who has the control and the responsibility. Increasingly the debate about the content of the Internet is not national but global, not by specialists but by the general populace. There is a real need for this debate to be stimulated and structured and for it to lead to 'solutions' which are focused, practical and urgent.

Conclusion- Good Marketing Citizens All in all, it can be seen that ethical issues in marketing in the context of developing countries is highly sensitive to cultural, social and ethnic issues. The larger issue is thus not merely an occidental versus an oriental one. For the marketing fraternity to be a good ethical citizen, the onus lie on themselves-for indeed, marketers have to stop indulging in unethical practices and start respecting local mores and values. Ethics in technology Ethics in technology is a subfield of ethics addressing the ethical questions specific to the Technology Age. Some prominent works of philosopher Hans Jonas are devoted to ethics of technology. It is often held that technology itself is incapable of possessing moral or ethical qualities, since "technology" is merely tool making. But many now believe that each piece of technology is endowed with and radiating ethical commitments all the time, given to it by those that made it, and those that decided how it must be made and used. Whether merely a lifeless amoral 'tool' or a solidified embodiment of human values "ethics of technology" refers to two basic subdivisions: The ethics involved in the development of new technology whether it is always, never, or contextually right or wrong to
70

invent and implement a technological innovation The ethical questions that are exacerbated by the ways in which technology extends or curtails the power of individualshow standard ethical questions are changed by the new powers In the former case, ethics of such things as computer security and computer viruses asks whether the very act of innovation is an ethically right or wrong act. Similarly, does a scientist have an ethical obligation to produce or fail to produce a nuclear weapon? What are the ethical questions surrounding the production of technologies that waste or conserve energy and resources? What are the ethical questions surrounding the production of new manufacturing processes that might inhibit employment, or might inflict suffering in the third world? In the latter case, the ethics of technology quickly break down into the ethics of various human endeavours as they are altered by new technologies. For example, bioethics is now largely consumed with questions that have been exacerbated by the new lifepreserving technologies, new cloning technologies, and new technologies for implantation. In law, the right of privacy is being continually attenuated by the emergence of new forms of surveillance and anonymity. The old ethical questions of privacy and free speech are given new shape and urgency in an Internet age. Such tracing devices as RFID, biometric analysis and identification, genetic
71

screening, all take old ethical questions and amplify their significance. Ethical issues in cyber-age Ethical issues involved in the above social problems are many and varied. However, it is useful and desirable to focus four most important issues relating to privacy, accuracy, intellectual property and access. These can be summarised by an acronym PAPA. Privacy: This is related with what information about ones self or ones association must a person reveal to others, under what conditions and what safeguards. Accuracy: Misinformation has a way of fouling up peoples lives, especially when the party with the inaccurate information has an advantage in power and authority. Property: One of the most complex issues we face, as a society is the question of intellectual property rights. There are substantial economic and ethical concerns surrounding these rights; concerns revolving around the special attributes of information itself and the means by which it is transmitted. Access: One must have the intellectual skills to deal with information such as reading, writing, reasoning, & calculating. We are creating a large group of information poor people, who have no direct access to the more efficient computational technology and who have little training in its use.

Intellectual Property Rights

The ethics of copyright can be approached in two ways: If, as Hettinger suggests, every creator stands on the shoulders of giants what is the essential morality in allowing the last contributor to reap the full reward or to have the right to prevent others from building on her contribution If, as postulated by Locke, an individual is entitled to what he or she creates, what are the ethics of limiting creators rights in regards to his or her creation? Earlier United States copyright law was better aligned with the encouragement theory and the ethical position that creative works belonged to society as a whole. Only the exact copying of a work was prohibited, not new works based on a previous work. Subsequent authors were free to adapt novels to the stage, abridge scholarly works for the masses, and translate works into other languages without paying a license fee to the creator or to whomever the creator had transferred his or her copyright. However as copyright law has expanded to grant creators more rights the law has all but abandoned the concept of allowing, let alone encouraging, transformative or productive use. Copyright no longer has a consistent theory, let alone an ethical position. It has become what is often called an equitable rule of reason, which attempts to balance
72

the rights of authors with the rights of users. It is often not clear whether this balance is to be obtained by granting rights via law or by recognizing the intrinsic rights of each. Given the strong connection between a creator and her work (especially in literary genre) it is difficult to assert that granting no rights to the creator is ethical. Likewise given the fact that almost all works, including those that are literary, owe a debt to the sum of works that have gone before, it is difficult to assert that granting exclusive perpetual rights in a work to a creator is ethical. However, the arguments for personal ownership and control of intellectual works are appealing, since they accords with concept of ownership as awarded to physical works, since original works can satisfy all four approaches to private property: occupancy, labour, personality and a means to an economic end. This is no longer the case with the advent of technologies that allow intellectual works to be easily copied and shifted from media to media. Not only is the enforcement of copyright more difficult but the nonconsumable and non-exclusive nature of intellectual property becomes evident, along with its low marginal cost of reproduction. Intellectual property laws tend to stuff creative works back into containers, creating an artificial scarcity. Copyright, in as much as it attempts to balance the interests of creators

and society could be considered based on ethics. However, while such ethical considerations might have been present in the minds of those who crafted copyright law they were never stated either in the Constitution or in the law. In short, plagiarism may be unethical but it is not illegal if it can be justified by fair use, which does not specify that the source of work used by must be cited. If copyright does not protect facts it also does not protect labour Where is the ethics of stating that intellectual creations are the sum of the labour of many and belongs to society, then having a policy of encouraging creativity by offering creators of original work protection only for their expression, while providing additional protections to those who produce unoriginal works clearly based on the work of others? Once moral rights are recognised as distinct from economic rights a possible way out of the copyright maze presents itself. One could declare that society owns the economic rights of creative works while the author retains the moral rights. Copyright clearly illustrates Waldrons (1988) contention that the utilitarian arguments for private property are defective in that they treat all interests as equal, even if pain and suffering is caused to others. The interests of the very few members of society who are authors and publishers are weighed evenly
73

with the interests of the vast body of citizens who are not creators. The interests of a few publishers who would not make an additional 5% profit unless additional protections are provided is often weighted equally with those of thousands of students who will not do as well as their classmates because they would not be able to afford access to information if additional protection raised the cost of research. The issue of group rights to intellectual property has also been raised in regard to the cultural symbols and folklore of Native Americans and indigenous peoples and in biological patents. The ethics of copyright have also been raised when the rights granted by copyright have come in to conflict with those of freedom of speech, freedom of the press and privacy. For example Martin Luther King Jr.s I Have A Dream speech was ruled to be in the public domain (Estate Of Martin Luther King, Jr., Inc., v. CBS, Inc.) and the unlicensed use of Zapurders copyright video of President John F. Kennedys assassination permitted based on the public interest in the topic (Time Inc. v.. Bernard Geis Assoc. Inc). Conversely J.D. Salinger was found to have the right to limit the use of his unpublished letter, and their use a scholarly biography was found not to be fair, though Salinger had donated those letters to a library for study (Salinger v. Random House, Inc.). This prompted an amendment to the Copyright Act which expressly extended fair use to unpublished works. Are these contortions and

amendments of copyright law an attempt to fine tune public policy or to create an ethical law, probably some of both. Another area where the copyright law are raised to the area of ethics rather than policy is in the international arena. The copying of intellectual property in countries that have not declared this illegal has been branded piracy and a great effort has been made to export United States copyright law to the Peoples Republic of China, Taiwan and Latin America even where the tradition of copying is part of recognizing established values. While it is undoubtedly true that producers and distributors of intellectual property suffer economic harm though loss of sales in those countries that do not stringently protect or enforce intellectual property rights, one wonders how that which is stated as a policy choice can be raised to a level of ethics when applied to the action of citizens of other countries. The moral and ethical pose often in the international copyright arena is perhaps ironic, considering that for almost half its existence the United States was a major intellectual property pirate, printing literary and scholarly works with little or no compensation to their British creators. Indeed in the 1800s protecting the copyright of non United States nationals was viewed by average citizen as an undesirable policy and one that would drive up the price of books. Ethics are often raised as well in regard to copying software. The
74

Software Publishers Association (SPA), which merged with the Information Industry Association (IIA) in January of 1999 to form the Software & Information Industry Association (SIIA), offers a guide on Software Use and the Law (SPA 1997) which states it is intended to provide a basic understanding of the issues involved in ethical software use. The same document declares that it is wrong for a school to duplicate software. While copying software except for backup or archival purposes is clearly illegal does this automatically make such actions unethical? Unless one considers all laws ethical, and that breaking any law to be unethical, illegality and unethicalness cannot be automatically equated.

Corruption in Business and Administration

Corporate corruption generally takes two forms: Engaging in bribe-making, usually as a supplier of bribes Violations of ethical and professional standards with the intent to deceive or defraud investors With respect to bribes, corporate corruption could consist of a representative of the firm receiving bribes in order to make a decision advantageous to the bribe-maker, or as a bribe-giver, either to another private party or to a representative of a domestic or foreign government. In either public or private corruption, a dichotomy exists between what a person is charged to do and his or her actions. With public service, one is charged with serving the public and is compensated with a salary. Corruption occurs when one serves the public arbitrarily and with bonuses to ones salary. With private service, one is charged with serving the shareholders, or owners, of the firm for which one receives compensation. Corruption occurs when the workers individual interests are served in a way that is not analogous to the interests of the company as a whole. This problem only occurred in modern capitalism when ownership and management separated. Both forms of corruption involve misuse of ones position for personal gain or in some cases company gain at the expense of others, usually ones constituency.
75

All definitions of corruption include political corruption. Government for sale is the phrase used to describe corruption where government property or services are privatised Corruption is defined by the World Bank (2005) similarly, as the extent to which public power is exercised for private gain, including petty and grand forms of corruption, as well as capture of the state by elites and private interests. The misuse of powers afforded by a government monopoly on services is the most restrictive definition of corruption. The above definition defines the act by the actor, not by the action itself. All cases of corruption in the public sector include some combination of public officials, individuals, firms, or industries on one side and public officials on the other. That is, one cannot exclude private individuals or firms from even public corruptions definition. For this reason, broadening the definition of corruption and dealing with the action, rather than the actor, is the most sensible way to define corruption. Corruption research is moving in this direction, although many corruption indicators still explore only political corruption. Transparency International, a leader in fighting corruption, has broadened its definition: Corruption is the abuse of entrusted power for private gain. It hurts everyone whose life, livelihood or happiness depends on the integrity of people in a position of authority .This allows one to look at abuses of power rather than which type of actors are engaged in corrupt behaviour.

Corruption in the public sector, involving public officials and employees, on the other hand, is illegal in most countries, though it may be highly tolerated. Consideration of the law and consideration of business ethics and corruption are necessarily two different, albeit closely related, matters. Many firms have legal counsel to advise them and to set their anti-corruption policies. This will help companies to follow the laws of their home countries and their foreign bases of operations. It will not necessarily help them to avoid scandals, as many corrupt practices may be perfectly legal, such as offering incentives to a representative who is accepting bids in order to win a contract. One of the ways that corruption may be differentiated is by discussing public corruption versus private corruption. Public corruption could occur when a member of the tax-paying public is given poor service or asked to pay a bribe by one who is engaged in public service: a judge, a policeman, a civil servant, etc. An example of private corruption could be when public company managers, whose job it is to look out for the interests of shareholders, engage in side deals or make decisions for the company in order to benefit them personally, rather than doing what is best for the firm and the shareholders. Why Corruption Hurts Corruption reduces countries economic growth rates Corruption reduces private investment
76

Corruption limits economic development and well-being through depressed per capital income, increased child mortality, and illiteracy Corruption affects how countries formulate their economic policies Costs rise due to public-sector corruption. Bribes must be paid. Uncertainty in regulation and bureaucratic costs exists. Delays are tacked onto production schedules. Producers and consumers lose. Ultimately, value to shareholders falls as firms produce less and costs rise Private corruption, such as embezzlement, engaging in side deals, unfair bids, etc., the costs rise, profits fall, and shareholders enjoy less return on their investment. When these costs are added to the costs of production, production decisions may be altered, thus causing market distortions (less efficient use of resources). Corruption is correlated with economies that are dependent upon fuel exports, have less trade openness, and have more restrictive regulatory climates. Corruption is lower in developed economies, historically liberal democracies, countries with a free press, and countries with a high proportion of women in government, and economies that are historically open to trade.

BS/ISO Guideline on CSR Management (ISO-26000)

While the importance of corporate social responsibility is generally accepted, there are as many definitions of social responsibility as there are organisations. The new standard ISO 26000: Guidance on social responsibility offers a definition of what it means to be a socially responsible organisation and why it is important that companies adopt this position. To bring focus to and offer a general roadmap for social responsibility, experts from more than 75 countries came together to develop ISO 26000: Guidance on Social Responsibility, released November 2010. The standard provides a common vernacular and outlines key areas of impact. ASQ assumed a major leadership role in the endeavour by serving as the U.S. Technical Advisory Group administrator. In ISO 26000, social responsibility is described as a multi-faceted approach that, like quality, should be integrated into all aspects of how a company conducts its business: According to ISO 26000, social responsibility is not merely a neutralizing action applied at the end of production/distribution to fix what has been generated or displaced. Rather, it is a proactive mind-set that should be incorporated across all levels of planning, execution, and stakeholder interaction.
77

ISO 26000 acknowledges that applying a lens of social responsibility can be complex. Competing priorities, cultural differences, and other unique variables can create a muddied picture concerning right action. The standards make it clear, however, that a situations complexity should not be used as an excuse for inaction, and that companies should proceed in good faith, applying the seven principles of socially responsible behaviour as outlined in the standard: accountability, transparency, ethical behaviour, respect for stakeholder interests, respect for the rule of law, respect for international norms of behaviour, and respect for human rights. Accountability An organisation is answerable to those affected by its decisions and activities, as well as to society in general, for the overall impact on society and its decisions and activities. Transparency An organisation should disclose, in a clear, accurate manner and to a reasonable and sufficient degree, the policies, decisions, and activities for which it is responsible, including known and likely impacts. Ethical behaviour An organisations behaviour should be based on the ethics of honesty, equity, and integrity.

Respect stakeholder interests In addition to owners, members, and customers or constituents, other individuals or groups may also have rights, claims, or specific interests that should be taken into account. Respect for the rule of law An organisation is to comply with all applicable laws and regulations. It informs those within the organisation of their obligation to observe and to implement measures. Respect international norms of behaviour An organisation respects international norms of behaviour while adhering to the principle of respect for the rule of law. An organisation should not stay silent in response to or benefit from wrongful acts. Respect for human rights An organisation respects and fosters rights set out in the International Bill of Human Rights. This includes situations where human rights are not protected. ISO 26000 then applies those principles to seven core subjects that describe socially responsible areas of activity or focus.

78