global ethics and corporate social...

INTERNATIONAL MARKETING

WONKWANG UNIVERSITY

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Professor In Woo Jun / Bcom, MBA, Ph.D.2015

GLOBAL ETHICS AND CORPORATE SOCIAL RESPONSIBILITY

I. ETHICS IN GLOBAL MARKETING 1. The Importance of Ethics 2. Ethics in Cross-cultural Context 3. Corruption4. Managing Ethical Behavior

II. CORPORATE SOCIAL RESPONSIBILITY1. The Importance of CSR 2. Management Philosophy : Traditional vs. Modern 3. Changes of Management Philosophy 4. The Development of CSR Concept 5. CSR and Competitive Advantage 6. Approach to CSR 7. BOP & CSR (CSV)8. Child Labor & CSR9. ISO 26000 : Social Responsibility10. Social Responsibility : 7 Core Subjects11. Samsung CSR12. Some Questions of CSR

CONTENTS

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1. The Importance of Ethics

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ETHICS IN GLOBAL MARKETING

Ethical behaviour is personal behaviour in accordance with guidelines for good conduct or morality.

Ethics are an individual’s personal beliefs about whether a decision, behaviour, or action is right or wrong.

Ethical management is not a matter of choice, but it has already become the basic or crucial role of the companies.

Thus, many companies have started to realize the importance of ethical management.

2. Ethics in Cross-cultural Context

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Cultural Context

Behavior of Organization toward

Employees

Behavior of Employees toward

Organization

Behavior of Employees/Organization

toward Other Economic Agents

Source : Griffin, R. W., and Pustay, M. W. (2013), “International Business”, Pearson, p. 145


2.1. Behavior of Organization toward Employees

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One important area of cross-cultural ethics is how an organization treats its employees (e.g. Hiring, firing, wage, working conditions)

An organization should strive to ;- hire the best people, - provide ample opportunity for career development,- provide appropriate compensation and benefit, and - respect the personal rights and privacy of each employee.

All these organizational practices should be based on ethical framework/standard, regardless of an employees’ gender, age, nationality, religion and other non-work-related factors.

But, each culture/country has a different approach toward this issue. - Some countries provide legal guideline, but- The others have no guideline.


2.2. Behavior of Employees toward Organization

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The second important area of cross-cultural ethics is how an employee treats its organization.

- Does employee keep its company’s secrecy and confidentiality?- Does employee consider a company’s common goal first, rather than its

personal goals?

2.3. Behavior of Employees/Organization toward Others

The third important area of cross-cultural ethics is the relationship between the company and its employees with other economic agents. (e.g. customers, competitors, suppliers, labor unions, etc.)

Do they behave ethically in the process of i) advertising, ii) price negotiation, iii) ordering and purchasing, iv) contracting, etc.


3. Corruption

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Corruption can be defined as ‘the abuse of public office for private gain’ (Lasserre, 2003).

Any action or behaviour of abusing a position of trust for personal gain (Jun, 2013)

Corruption includes bribery, fraud, money laundering, cronyism, extortion, and embezzlement.

One of the major sources of information on corruption : The Index of Transparency International (TI) – A non-governmental organization (NGO)


3.1. The Corruption Perceptions Index 2007 (CPI)

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Rank Country CPI Score Rank Country CPI Score

1 New Zealand, Denmark, Finland

9.4 56 Greece 4.6

4 Singapore 9.3 61 Poland 4.29 Australia 8.6 72 China, India,

Brazil3.5

12 UK 8.4 105 Argentina, Egypt 2.916 Germany, Japan 7.8 162 Bangladesh 2.020 USA 7.2 178 Iraq 1.543 Korea 5.1 179 Somalia 1.4

Source : Transparency International, 2007


Increase the costs of doing biz.

Corruption negatively affects international business.

Erode competitive advantage

Block access to int’l markets

Damages market efficiency

Loss of reputation

Source: Lee, K. and Carter, S. (2009), “Global Marketing Management”, Oxford University Press, p. 145

Corruption in International

Business

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3.2. Corruption and Its Impact on Business


4. Managing Ethical Behavior

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Ethics reside in individuals.

But, many companies try to manage the ethical behavior of their managers and employees with various ways.

The most common ways of doing this are through the use of i) code of ethics, ii) ethics training, and iii) organizational practice and the corporate culture.


4.1. Codes of Ethics

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Code of Ethics : A written statement of the value and ethical standards that guide the firm’s actions.

But, the existence of a code of ethics does not ensure ethical behaviour. It must be backed up by organizational practice and the firm’s corporate culture.

[ Samsung’s Code of Ethics ]

Source: www.samsung.com


4.2. Ethics Training

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Many MNEs deal with ethical issues proactively by offering training to their employees how they to cope with ethical dilemma.

For example, POSCO Energy has recently declared that it will strengthen employees’ ethics and personality in the process of evaluation.

[ POSCO Energy’s Announcement ]

Source: www.poscoenergy.com


4.3. Organizational Practices and Corporate Culture

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Organizational practices and the corporate culture also contribute to the management of ethical behaviour.

Organizational practices

- According to a survey, bribery to be acceptable in Russia, China, Taiwan, and Korea.

- However, bribery is not acceptable in Sweden, Switzerland, Austria, Canada, Japan and USA. (Financial post, May 15, 2002)

Corporate culture : If the top managers behave ethically, then everyone in the organization will understand that the company expects all employees to behave in an ethical manner.


1. The Importance of CSR

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Over the past decade, more companies have engaged in the concept of Corporate Social Responsibility (CSR).

Like ethical management, CSR has already become one of the most important issues in global business.

In order to respond to stakeholders and NGOs pressure, many companies now have a proactive stance towards CSR.

In the modern business environment, CSR is a new source of a firm’s competitive advantage.

CORPORATE SOCIAL RESPONSIBILITY

2. Management Philosophy : Traditional vs. Modern

Traditional ManagementPhilosophy

Modern ManagementPhilosophy

- Maximizing Profit

- Shareholder’s Interests

- Maximizing Profit - Stakeholder’s Interests

+

- Contribution to Society- CSR

Competitive Advantage

Source : Developed by In Woo Jun (2011)15


3. Changes of Management Philosophy

Short-termShareholder

Interest

Longer-term ShareholderInterests

Multiple StakeholderInterests

Contribution to Society(CSR & CSV)

Source : Redeveloped by In Woo Jun (2014) based on Johnson, J., and Scholes, K. (2002), “Exploring Corporate Strategy” Prentice Hall, , p. 217

The Way of Becoming a Global Company

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4. The Development of CSR Concept

Corporate Social

Responsibility(CSR)

Stakeholder Model

Social Responsibility

of BusinessmanBusiness Ethics

Sustainable Development

Triple Bottom Line

Corporate Citizenship

Creating Shared Value

(CSV)

Source : Redeveloped by In Woo Jun (2014) based on De Bakker, et al (2005), 288.

2011~

1970~1990

1970~1990

1950~1960

2000


5. CSR and Competitive Advantage

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CSR

Reputation Management

Source: Lee, K. and Carter, S. (2009), “Global Marketing Management”, Oxford University Press, p. 160

CompetitiveAdvantage

Risk Management

Employee Satisfaction

Innovation and Learning

Access to Capital

Improved Financial Performance


6. Approach to CSR

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Least Responsible

Most Responsible

Obstructionist stance

Source : Griffin, R. W., and Pustay, M. W. (2013), “International Business”, Pearson, p. 154

Defensive stance

Accommodative stance

Proactive stance

There are four stances that a firm can take its responsibility to society.

- Obstructionist : Stance as little as possible to deal with social issues.- Defensive : Do everything that is required legally, but nothing more.- Accommodative : Meet legal and ethical requirements, but also do more in

selected cases. - Proactive : Carry out the highest degree of CSR


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Tier Population in MillionsAnnual Per Capita Income

More than U$20,0001

75~100

2 & 3

4(BOP)

Less than U$1,500

U$1,500~U$20,000 1,500~1,750

4,000

[ The World Economic Pyramid ]

Source : C.K. Prahalad and Stuart L. (2002), “The Fortune at the Bottom of the Pyramid”, Security and Strategy, 26, 4.


7. BOP & CSR (CSV)

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[ Proportion of Out-of-school Children ]

Source : UNICEF (2014), “Global Initiative on Out-of-School Children - South Asia Regional Study”, 22.


8. Child Labor & CSR

Source : http://www.iso.org (2014)

9. ISO 26000 : Social Responsibility

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10. Social Responsibility : 7 Core Subjects

Source : ISO (2014)


11. Samsung CSR

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Source : http://www.samsung.com (2014)

12. Some Questions of CSR : Should Organizations be responsible for...

Internal Aspects External Aspects

Employee WelfareProviding medical care, assistance with mortgages, assistance for dependants, etc.?

Green IssuesReducing pollution to below legal standards if competitors are not doing so?Energy conservation?

Working ConditionsEnhancing working surroundings, social and sporting clubs, above-minimum safety standards, etc.?

ProductsDanger arising from the careless use of product by consumers?

Job DesignDesigning jobs to the increased satisfaction of workers rather than for economic efficiency?

Markets and MarketingDeciding not to sell in some markets?Advertising standards?

Intellectual PropertyRespecting and not claiming corporate ownership of the private knowledge of individuals?

SuppliersFair terms of trade?Blacklisting suppliers?

EmploymentPositive discrimination in favour of minorities?Maintaining Jobs?

Community ActivitySponsoring local events and supporting local good works?

Source : Johnson, G., and Scholes, K. (2002), “Exploring Corporate Strategy”, 6th Edition, Prentice Hall, p. 22125


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