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12 Ethics and Corporate Social Responsibility
12.2 Ethical Models
There are a range of ethical models which may be applied by an organization, they are dependent upon the ethical stance of the organization concerned and arguments can be made for each one.
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12.2.1 Egoism
Egosim is the concept that individuals should always seek the greatest personal benefit regardless of the consequence for others. It is a central tenet of many economic theories that this is how humans are programmed to behave, leading to the concept of ‘Homo Economicus’ where individuals always seek to optimise their personal economic outcome in every situation (there is a reason why Economics is known as ‘the dismal science’) (Aldred, 2009) . The extension of this to businesses is that they should always maximise their benefit in a given situation, regardless of other impacts. So, for example, a business would not consider the social or ecological impact of polluting rivers with effluent from their plants.
The only reason they might consider avoiding such action would be the potential or actual cost of polluting exceeding the cost of not polluting (through legislative penalties, loss of market share, etc.).
12.2.2 Formalism
Formalism comes from the works of philosophers such as Kant, and holds that there a certain set of ‘natural laws’ of ethics (Pollock, 2001). That these laws can be clearly defined and apply in all circumstances; there is no room for interpretation.
So, for example, slave labour is wrong; or moving production to an economy where costs of compliance with ecological mandates are reduced because of lower regulatory requirements is not acceptable. Virtue ethics is another form of this approach where an individual or group of individuals seeks to do ‘what is right’ regardless of the consequences for themselves or their interests. While it is hard to argue that a complete moral set of rules can be generated, organizations may choose to have a set of ‘absolutes’; the stance on slavery certainly seems uncontroversial for example. The company can leave room for manoeuvre on issues which are not so clear-cut and apply another approach in these cases.
12.2.3 Relativism
The relativist tradition suggests that morals (and thus ethical behaviour) are not absolute, but are rooted in the traditions, values or practices of an individual or group (http://www.moral-relativism.com, 2011). So, a company might define its own set of values. It may become complicated where an organization operates multi-nationally. Norms of acceptable behaviour are different around the globe. For example; in some parts of the world bribery of officials is an accepted cost of doing business, while in others it attracts outrage and heavy penalties. In this case, the question for a company rooted in the latter tradition is, do they refuse to offer bribes, despite the potential business impact and local norms, or do they flex to do so where it is accepted locally, but not in territories where it is frowned upon?
12.2.4 Utilitarianism
Based on the ideas of John Stuart Mill amongst others, utilitarianism is the idea that the best course of action is the one that creates the most benefit for the greatest number of people (Lyons, 1965). This makes sense as an abstract concept, but as with most moral philosophies, it is complicated to apply. For example, do business decisions need to consider the good of competitors (they have workers with families, etc. too)? How do we determine how many people will be affected, and to what extent, by our actions? If applied rigorously there could be very protracted debate and information gathering about apparently simple business decisions.
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12.2.5 Ethics in Practice
Practically organizations, and especially those which are profit oriented, will adopt a combination model. On certain issues they will take a formalist approach; murdering rivals might fit well into this category. There may be things upon which they choose to take a more utilitarian approach. For example, having a factory in a low-wage area and paying slightly higher than usual wages, or offering improved welfare provision might be deemed better than providing jobs in more developed nations where citizens already enjoy higher standards of living. This aspect of utilitarianism has a dose of relativism in it too. Outside of these kinds of situations the business is free to pursue self interest. For example, it may be possible to sell a luxury product for a lower price, but the company would maximise revenues as far as the market will bear since no-one is forced to buy the product, and thus any economic harm they come to is self-inflicted.
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Figure 12.1. A mixed ethical model
Clearly, the exact balance will be determined by the organization. It is important that the core values of the organization clearly set out their ethical principles openly and explicitly. This area is an oddity in the field of Quality Management, in that we eschew the usual concepts of co-creation and consultation and suggest that there are certain immutable rules which are not to be transgressed. Of course, the usual ideas of leaders modelling the behaviour and explaining why the ideas are so important will apply.
12.2.6 An Ethical Decision Making Model
Figure 12.2. Ethical Decision Model (Adapted from Vallance, 1995)
Based upon the foregoing and the work of Vallance (1995) an Ethical Decision Model might be suggested when significant business decisions need to be made.
Such a decision making process needs to be both explicitly deployed within the organization and to become part of the inherent behaviour of all employees in order to have maximum impact.
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