Corporate Social Responsibility or CSR is one of the most discussed topics in present literature and global business organisations. Almost every global company is engaged in CSR’s to some extent and therefore 90% of global companies formally report on CSR that is not limited to Australia or America only (Glavas, 2016). Although, corporate ethics have increased significantly, mechanisms that relates corporate ethics with firm performance is very little known for which most of the researchers and authors focusses on study related to CSR and use of business ethics in global business environment. Earlier, studies related to CSR and ethics in business operations gave more emphasis on firm’s reputation employed on external perspectives and associations with external stakeholders only. Petite attention was given to corporate ethics in firm’ internal practices even though it had great potential to transform business practices into ethical move. But, things have changed dramatically in the past few years where scholars and researchers are revealing inter-relationship between corporate ethics, organisational citizen behaviour (OCB), employee’s commitment as well as financial position of organisations ( Kim & Thapa, 2018).
According to Chin, Shin, Choi, & Kim (2013), “Of the three dimensions of corporate ethics, internal ethics is most strongly related to employees’ collective organizational commitment.” When employees recognise that the workplace in which they are working adheres ethical and legal standards, they get more committed to their work as well as behaves in a manner that aligns with organisational goals and objectives. Moreover, internal ethics not only fosters internal environment of organisations but also provides with positive and ethical relationship between employer and employees (Gökmen & Öztürk , 2012). Reflecting upon present trend in literature and global business environment, the concept of CSR and business ethics have become primary factor that needs to be present in institutional and macro level (Tellez, 2017). However, Glavas (2016) argues that due to various schools of thoughts, there are various over lapping and confusing definitions of CSR among which words have been used interchangeably like corporate citizenship (OCB), stakeholder theory, corporate social performance and sustainable development. The author states that since every scholar made different definition for CSR, challenges and opportunities in accepting them can be present depending upon the situation. The challenge is difficulty in understanding CSR results due to the lack of clarity in definition. This confusion has made many scholars implement the study of CSR and ethics in their studies related to current global businesses. Yet, opportunity can be realised since CSR is a broader subject for which there is a great potentiality in giving variances about how organisations perceive CSR. For instance, set of employees may perceive CSR like a moral obligation to the firm while others may feel that CSR shall be used to improve relationships among organisations and its stakeholders only. However, these differences in perceptions can further affect employees’ attitude and work behaviour according to variation degrees (Chun, Shin, Choi, & Kim, 2013).
According to Pisan, Kourula, Kolk & Meijer (2017), CSR have spread extensively among global societies on the part of researchers as well as practitioners. A new infrastructure named CSR has emerged and is practiced in multitude of companies across civil, public and corporate society playing role for development in each sector. In academics and journals, scholars are also paying great attention in uses of ethics and CSR in which few of them demonstrates their growing interest in both organisational perspective as well as management angle (Pisan, Kourula, Kolk, & Meijer, 2017). The authors showed urgency in making further investigation regarding CSR practices especially in developing nations as persuasive institutional abysses weakens their settings. Therefore, over the previous year’s scholars have focussed much upon reasons behind such abysses when assessing organisations operations, concerning specially to their CSR and ethical practices. In fact, recent reports point out capability of CSR in linking institutional abyss with conflict-affected areas along with giving specific logics practiced in developing country organisations (Turyakira, 2018).
According to Turyakira (2018), “Ethics refers to a system of moral principles or rules of behaviour which involves doing the right thing in the right manner”. Contemporary business organisations are facing increased pressure to perform their business operations ethically along with following standards which prove to be economical, effective and efficient to increase overall work performance. Due to intense competition in global business environment, organisations find alternative ways to meet competition rather than following traditional ways of lowering prices or offering quality products (Turyakira, 2018). It can be noted here that current businesses employ individuals who poses diversified backgrounds in relation to religion, nationality, race, area, and socio-economic status. These diversified cultural backgrounds further create challenges for individuals and managers as realising ethical stance becomes difficult due to diversified ideas and work principles. However, according to current literature global business firms have understood that ethical delinquency may cost high not only for the firm but also for the society in large. Furthermore, customers nowadays have also become mindful in selecting those company’s products whom they feel are trustworthy (Chun, Shin, Choi, & Kim, 2013). Therefore, many SME’s and traditional firms faces breakdowns due to lack of strategic alliances and failure in implementing ethical practices.
Many earlier definitions of CSR showed generalised perceptions like in 1960, CSR was defined as “seriously considering the impact of the company’s actions on society.” Another definition stated, “Social responsibility is the obligation of decision makers to take actions which protect and improve the welfare of society along with their own interests” (Carroll, 2016). Nevertheless, CSR had been undertaken in policies and practices in which businesses employees and managers needs to ensure that all their strategies and operations are made after considering and protecting society, environment and stakeholders (Chun, Shin, Choi, & Kim, 2013). In some of the scholarly articles, definitions of CSR argued that actions taken must be voluntary while considering socially responsible aptitude whereas others argued that legal compliances is indulged in CSR strategies. Still, others believed that ethics is also a part of CSR and thus, virtually every definition incorporated that organisations providing corporate philanthropy followed their part of CSR. In 1990s Carroll’s four-part pyramid defining CSR stated that legal, ethical, economic and discretionary expectations create infrastructure or foundations that characterize business nature and responsibilities towards society. At that time, this theory was universally accepted, however, with time and changes in cultural as well as globalising of companies, issues were raised about applicability of Carroll’s CSR pyramid. According to Nalband & Kelabi (2014), Carroll’s models was considered best at that time but present studies demands more universal model that can be accepted in every country including globalised corporate firms.
Present studies made by scholars, as identified in scholarly articles have found positive relationship between citizenship behaviour and CSR. If organisations perform beyond its principal mission like financial goals and contributes in greater wellness of society like managing CSR, the employees will also go beyond their core duty while contributing greater wellness in organisational success like OCB (Yerby, 2013). In addition, studies suggest that ethics and CSR in business improves organisation’s reputation that in turn makes employees feel proud of their company they work in. Social identity theory further suggests that if treating others in good manner becomes a part of staff’s self-concept, then they would also be identified and treated with dignity by others due to connectivity with the firm. Recent literature also puts emphasis on developing leadership theories and human resource management in regards to inter-relationship between ethical leadership, CSR and organisational performance. According to Kim & Thapa (2018), leadership theories that are based on ethical grounds broadens idea about conventional leader-employee relationships to a leader-stakeholder relationship. The authors considered inevitable need for bridging leadership theories to CSR literature while calling an integration between different corporate practices and leadership dimensions. Ethical leadership can further bring social oriented changes in workplaces along with initiating organisations to consider ethical standards and demonstrating integrity. Although ethical leadership is measured as key driver of firm’s success and bringing employee efficiency, CSR enhances and initiates organisational consequences (Gökmen & Öztürk , 2012).
In last 10 years many companies have voluntarily integrated environmental and social issues in their operations and business models by adopting corporate related policies. Such integrations have made many scholars arise further questions for the organisations: How do policies made by companies following CSR differ from that of others and in what manner? (Tellez, 2017) In fact, many scholars argued that ways in which global organisations competes to pursue maximum profits, they give more importance on long-term sustainability rather than gaining short-term revenues. Therefore, more and more organisations are focussing on ethical grounds while giving lesser importance to shareholders as compared to stakeholders (Glavas, 2016).
The above essay has been prepared after evaluating various peer reviewed scholarly literature between 2012 and 2018 that supports CSR and ethics in global businesses. It can be noted that in mainstreaming and promoting CSR and use of ethics in international companies, peer reviewed scholarly literature plays a key role. In present global business environment, journal editors may utilise special issues or sections highlighting unexplored topics and research gaps after identifying contributions made in those issues. Similarly, many business practitioners can also find these academic outlets and special editions helpful in exploring present use of ethics in global businesses along with identifying the significance of CSR in current business operations.
References:
Carroll, A. B. (2016). Carroll’s pyramid of CSR: taking another look. International Journal of Corporate Social Responsibility, 01(03), 1-8.
Chun, J., Shin, Y., Choi, J. N., & Kim, M. S. (2013). How Does Corporate Ethics Contribute to Firm Financial Performance? : The Mediating Role of Collective Organizational Commitment and Organizational Citizenship Behavior. Journal of Management, 39(04), 853-877.
Glavas, A. (2016). Corporate Social Responsibility and Organizational Psychology: An Integrative Review. Multidisciplinary Psychology Journal, 07(144).
Gökmen, A., & Öztürk , A. T. (2012). Issues of Business Ethics in Domestic and International Businesses: A Critical Study. International Journal of Business Administration, 03(05), 82-88.
Kim , M. S., & Thapa, B. (2018). Relationship of Ethical Leadership, Corporate Social Responsibility and Organizational Performance. Sustainability, 10(447), 1-16.
Nalband, N. A., & Kelabi , S. A. (2014). Redesigning Carroll’s CSR Pyramid Model. Journal of Advanced Management Science, 02(03), 236-239.
Pisan, N., Kourula, A., Kolk, A., & Meijer, R. (2017). How global is international CSR research? Insights and recommendations from a systematic review. Journal of World Business, 52(05), 591-614.
Tellez, J. S. (2017). Marketing and Corporate Socia lResponsibility (CSR). Moving between broadening the concept of marketing and social factors as a marketing strategy. Spanish Journal of Marketing, 21(01), 04-25.
Turyakira, P. K. (2018). Ethical practices of small and medium-sized enterprises in developing countries: Literature analysis. South African Journal of Economic and Management Sciences, 21(01).
Yerby, J. (2013). Legal and ethical issues of employee monitoring. Online Journal of Applied Knowledge Management, 01(02), 44-55.
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