As recently as five years ago if any speaker was asked to speak on “a global perspective on ethical and socially responsible business” they would respond “one or the other – I can’t do both”.
The methodologies and subject matter of ethics and social responsibility were seen as distinct and separate entities.
Ethics was viewed as narrowly defined and strictly applied set of principles, methods and prohibitions that were widely shared.
In contrast, social responsibility was seen as being rooted in the company’s distinctive sense of identity – its industry, location, work force and traditions, to name just few of the most important criteria.
Our findings document the convergence of these once separate notions.
Global companies are articulating core principles that are relevant to business practice in large number of diverse cultures and industries.
This exercise has led them to enlarge their sense of ethics and, in so doing, to define minimum standards of social responsibility.
A broad consensus now exists for the most traditional ethical requirements – honesty and loyalty to the company.
It is also evident that there is developing agreement worldwide regarding global moral minimums such as gender discrimination and environmental responsibility.
The emerging consensus in global business ethics
Business ethics is now truly worldwide subject of concern. In less than two years I have spoken at and attended business ethics meetings on all five continents – and my experience is by no means unusual.
Fifteen years ago small number of academics were engaged in defining discipline that was focused on few cautionary tales about how bad things can happen to good companies.
Today, in addition to expertise in markets, ethics and law, academics have accumulated important practical experience as consultants and expert witnesses while their corporate counterparts are demonstrating growing familiarity with analytical tools for ethical decision-making.
The business ethics synergy between scholars who also work in the real world and business decision-makers who enjoy the give and take of academic debate has enabled The Conference Board to bring leaders from all sectors of society (business, academe, government) together. They are exchanging views on global business principles and the practical issues in promoting them.
The Conference Board is global network of businesses, academic institutions, governmental and non-governmental organisations with members in over 60 countries.
Founded in the United States in 1916, its two-fold purpose is to improve the business enterprise system and enhance the contribution of business to society.
Its Working Group on global business ethics principles seeks to facilitate an exchange of views between different sectors of society regarding the most effective ways to:
? Define standards for global business practice,
? Apply core principles in different political, social and cultural environments, and
? Achieve support of and cooperation with non-business institutions.
To achieve these objectives, the Working Group held meetings in Asia, Latin America and Europe in which business, academic, governmental and non-governmental leaders discussed issues of common concern. These sessions have been supplemented by two surveys of companies that are active in global markets.
As proved to be the case in our earlier 1987 and 1992 studies, the foundation of most 1999 corporate ethics programmes is the company code or business conduct statement.
Company business ethics principles statements stress two objectives:
1. Improving employee capability for making decisions that are in accord with corporate policy and legal requirements, and
2. Giving concrete expression to the company’s sense of mission and its views of the duties and responsibilities that corporate citizenship entails.
Despite the crucial role that codes play in the articulation and application of company’s ethical principles, only 13 percent of the 1987 responding code companies were willing to give us copy of their statement. By 1991, this increased to 37 percent, and in the 1999 survey, 68 percent included their code with the returned questionnaire.
Although company codes vary in their purpose, tone and degree of specificity, there is consensus among North and South American, European and Asian participants about the five principles essential for vigorous debate on business practices:
Role of business
A company’s first imperative is to maintain its own health and viability, but profits are not an end in themselves. The dominant participant view argues two propositions:
? Public opinion and non-business institutions will judge some business activity within the context of its social impact, and
? Under certain circumstances, profit maximisation can be at odds with company health, viability and even survival.
Historically the determination of the proper role of business institutions in society has turned on the outcome of the struggle between proponents of the ?property’ and ?social entity’ concepts of corporate purpose.
Maximising profit
Drawing upon the authority of Anglo-American legal precedent, the ?property’ advocates insist that corporation belongs to its owners and it exists solely to advance their objectives. Absent instructions to the contrary, it is reasonable to assume that the proprietors favour profit maximisation over all other goals.
Social profits
The ‘social entity’ view prevalent in much of continental Europe construes corporate accountability more broadly to include notions of social contribution with business competence. For example, the Caux Roundtable Principles for Business state, “The value of business to society is the wealth and employment it creates and the marketable products and services it provides to consumers at reasonable price commensurate with quality.”
Finding common ground
The need for worldwide set of business conduct standards has led to search for common ground between the property and social entity views.
The area of agreement lies in the recognition that certain situations require the company to show some degree of moral restraint with regard to profit-making activity. To be sure, each side has its own reasons for accepting some self-imposed limits on profit making.
Property theorists acknowledge strategic imperative while social entity ethical constraints are accepted as part of the entry requirements for doing business.
In the global market place, these contrasting rationales already have diminishing practical significance in the response of companies to specific problems.
For example, US and European apparel manufacturers are under pressure to acknowledge common set of child labour standards worldwide.
Company autonomy
The need for autonomy and the desire to avoid legislative or judicial intrusions occasionally requires businesses to take actions not based on market or profit considerations.
When faced with these choices, they are relying on an understanding of the company’s imbedded policy consensus regarding its goals, values, and mission.
A major purpose of ethics codes is to equip employees with the ability to recognise ethical problems and to resolve them in manner that enables the company to avoid harmful precedents for future governmental or third party intervention.
Children and criminals
The preservation of independence and autonomy is essential to institutional growth and effectiveness. In this regard, companies are no different from people.
Independence depends on self-imposed ethical constraints.
For this reason, children are given little freedom and criminals are allowed none.
With regard to business practice, there is growing recognition among people of otherwise divergent economic, political and social
