1. ETHICS AND CORPORATE SOCIAL RESPONSIBILITY IN A GLOBAL CONTEXT
Chapter 6

2. Ethics and corporate social responsibility in a global context
Learning objectives
Explain how conflict affects business and give examples of how business can contribute to conflict prevention and management.
Identify and assess the challenges faced by companies in selling their products and services to the poor.
Outline and evaluate the ways in which corruption affects the economy and business.

3. Ethics and corporate social responsibility in a global context
TOPICS
The global context of business activity
Operating in conflict zones
Role of business in poverty alleviation
Corruption: From business as usual to economic malaise

4. THE GLOBAL CONTEXT OF BUSINESS ACTIVITY
Ethics and corporate social responsibility in a global context
THE GLOBAL CONTEXT OF BUSINESS ACTIVITY
Globalisation of economic activity
Globalisation of culture
Globalisation of politics
Ethical issues:
Corruption,
Labour standards
Product safety
Imposing foreign values
Workspace practices
Management across national borders
Human rights issues
Global ethical standards
WTO, UN

5. Ethics and corporate social responsibility in a global context
OPERATING IN CONFLICT ZONES

6. Ethics and corporate social responsibility in a global context
OPERATING IN CONFLICT ZONES
Business risk and costs:
Security costs
Material losses
Impact on share prices
Litigation costs
What can businesses do?
Mediation (venue, funding)
Upholding of sanctions
Peacekeeping (facilitate relationships and information)

7. Ethics and corporate social responsibility in a global context
ROLE OF BUSINESS IN POVERTY ALLEVATION
The nature of poverty:
Poverty has physical, material and psychological dimensions.
The state has been ineffective in helping the poor.
The poor depend on friends and informal networks.
Families suffer under the tension of poverty.
Social network and support are unravelling.

8. Ethics and corporate social responsibility in a global context
ROLE OF BUSINESS IN POVERTY ALLEVATION

9. ROLE OF BUSINESS IN POVERTY ALLEVATION
Ethics and corporate social responsibility in a global context
ROLE OF BUSINESS IN POVERTY ALLEVATION
Helping the poor through business
The poor represent a large pool of potential customers and offer a good market to test and develop products.
It benefits companies but also helps the poor access to services and reduce their cost of living.
Distribution and adaptation of product and service is key. E.g. Shampoo, tea and medicine can be sold in s ingle-servings rather than in mega-packs
However, selling to the poor is not the same as responsible business

10. Ethics and corporate social responsibility in a global context
CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE

11. CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE
Ethics and corporate social responsibility in a global context
CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE
Factors that influence corruption across countries:
Regulatory power of state
Economic development
Education and human capital
The less power the public sector has, the fewer opportunities for corruption
Low income countries tend to have greater levels of corruption
Low human capital (poor education) tend to lead to corruption with countries

12. CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE
Ethics and corporate social responsibility in a global context
CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE
Factors that influence corruption across countries:
Public sector wages
Culture and social norms
Expectations on corruption
Low wages is associated with corruption as bureaucrats seek to top-up their wages
Exchanging gifts are in many countries seen as a part of the business relationship
The fewer the people that are believed to be corrupt the less corruption tend to take place

13. Ethics and corporate social responsibility in a global context
CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE
But is corruption really so bad?
Corrupt governments may be more efficient that non- corrupt once
Corruption may improve allocation efficiency.
Corruption may speed up the slow process of government bureaucracy.
Corruption has less adverse effects when it is centralized as opposed to decentralized.

14. Ethics and corporate social responsibility in a global context
CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE
Fighting corruption
The fight against corruption has intensified since the 1990s
Voluntary initiatives:
The Global Compact
The international Chamber of Commerce Rules against Extortion and Bribery
The Extractive Industry Transparency Initiative
A number of regulatory measure has been taken:
US Foreign Corrupt Practicse Act (1977)
EU Convention on Corruption (1997)
OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transaction (1999)

15. Ethics and corporate social responsibility in a global context
CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE
Fighting corruption
US foreign Corrupt Practices Act (FCPA), enacted in 1977, which prohibits US companies from providing anything of value to foreign officials for obtaining or retaining business.
EU Convention on Corruption, adopted in 1997, which consdiers bribes to be paid inside and outside the European Union Criminal and in this way provides for the prosecution of civil servants from the EU and its members states.

16. Ethics and corporate social responsibility in a global context
CORRUPTION: FROM BUSINESS AS USUAL TO ECONOMIC MALAISE
Fighting corruption
OECD Convention on Combating Bribery of Foreign Public Officials in International Transactions from 1999 requires participating countries to introduce and enforce laws that make it a crime for domestic companies to ‘offer, promise, or give any undue pecuniary advantage, whether directly or through intermediaries, to any foreign public official’ to gain advantage or business relations
The Global Compact, a voluntary initiative set fourth by the United Nations,. Invites companies to ‘work against corruption in all its form, including extortion and bribery’ through the development of policies and concrete programmes.

17. Ethics and corporate social responsibility in a global context
SUMMARY
The poor are increasingly seen as a promising market segment.
Corruption distort competition and functioning of the free markets by giving and invisible advantage to companies that are ready to pay a bribe.
Few industries gain from violent conflict. Zones of conflict are normally a source of risk and additional expenses for companies.