Ethics - Aashish Maloo

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Name AASHISH DILIP MALOO................................................................. MBA FT MIB Undergraduate

................................................................................................................................... MBA PT MSc Diploma Certificate

................................................................................................................................... Specialization......................................................................................................

....................................................................................... Intake °0904

Student ID Number (s) ................................................................................... Grenoble main Campus Off site (state which one)

Subject Ethics ........... ............ ............ ............ ............ ........... ............ ............. ........... ........... Singapore ........... ............ ........

Assignment Oral Presentation Exam Project Proposal Management Project/Dissertation

Title Sustainability thru Corporate social Responsibility in Developing Countries.......................................................................................................................

I hereby declare that the attached assignment is my own work and understand that if I am suspected of plagiarism or other form of cheating; my

work will be referred to the Disciplinary Committee, which may result in my exclusion from the program.

Signature AASHISH DILIP MALOO

.................................................................................................... Date 9th June 2010

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SustainabilityThru

CorporateSocialResponsibilityin

Developing

Countries

AashishDilipMaloo(G0887943K)

MastersinInternationalBusiness(MIBD0904)

9thJune2010



TableofContentsPgNo.

- Abstract1

- Introduction2

- LiteratureReview3

- Methodology13

- Conclusion14

- Bibliography15



“..Foranybusinesstobesustainable,thecommunitythebusinessservedshould

besustainable”–NevilleIsdell–ChairmanandCEO,Coca-Cola(March2008)

Abstract

Intheglobalizingworld,alltheMULTINATIONALSarefocusingonthedeveloping

economies,countriessuchasIndia,AfricancountrieslikeSouthAfrica,Zimbabwe,

Nigeria,China,Russiaarethehotpropertyforthecompanies.Everycompany,bigor

smallwantstoenterthedevelopingcountries.Itisalsoacheaperoptionforthe

companiestoshifttheirproductionunitstothesecountriesduetheavailabilityof

resourcesinabundanceandatamuchcheapercost.CountriessuchAfricaandIndia

withhighpopulationandliteracyratesthesecompaniescangetcheaplabourand

usetheresourceshowverytheywantwithverylittletogiveinreturn.Thispaper

discusseswhatandhowdothecompaniesdeliverthevaluebacktothecountry.



Introduction

TherehavebeenalotofSociallyresponsiblepracticesinthedevelopedcountriesbutthispaperisabouthowdocompaniespracticeCSRinthedevelopingcountries.

Allthemultinationalsarenowexploringthemarketsofdevelopingcountriesand

evenusingthesecountriesproductioncapacitytomeettheirglobalneeds,this

paperdealswithhowdothesecompaniesconducttheCSRinthesecountries,by

whatmeansandwhatmeasuresdotheyusetoconductCSRandhoweffectiveisit.

ThispaperalsoanswersthequestionsoftheimportanceofCSR.Intoday’sworld

customersandinvestorsarelookingforcompanieswhicharesociallyresponsible,

forexampleifwegotobuyaAircon,wewouldlookforwhichcompanyisenergy

efficient,becausethatwillpreserveourenvironmentandisbeneficialforusaswell.

Socompaniestodayinordertobesustainablehavetolookaftermanythingsjust

apartfromprofit,likeifaIndustryhelpsthepeopleitisservingtoinotherwaysit

createsabrandimageforthecompanyandpeopletendtolikethecompany.For

e.g.TatainIndia,itisonethemostsociallyresponsiblecompaniesinIndiaitis

knownforitsbestcustomercareandemployercareandalsoworksforthesociety,

thatisthereasonitisthemostsuccessfulcompanyinIndia.

Thispaperclearlyjustifiesthatinordertosurviveandtosustainableinthemarket

todayCSRisveryimportant.



LiteratureReview

Wayne,considersdriversasoneofthemostpowerfulwaytodetermineCSRindevelopingcountriesandhedistinguishesthesedriversas:

• PoliticalReform:

CSRcannotbeseparatedfromthepoliticalreformsinacountry,becausepolitical

reformisthekeydriverforabusinessincountrytowardsethicalandsocialbehavior.

• Socio-EconomicPriorities:

Itisthesocio-economicconditioninwhichthebusinessworksthatpersuadesthe

businesstosetupitspriorities.

•

Governancegaps

Itdependsonthegovernmentswilltosharetheresponsibilitywiththecorporateto

developthesociety.

• CrisisResponse

Itisacompany’sresponsetothenaturalcalamitiesordisasterprevailinginthe

country.



• MarketAccess

IncentralEuropeandAsiaCSRworksasacompetitiveadvantage.

• InternationalStandardization

CSRalsoworksonthestandardsimposedbymultinationalsonitssubsidiariesin

developingcountries.

• InvestmentIncentives

CSRindevelopingcountriesactsawaytoattractinvestmentfromunknownforeign

firms.

• StakeHolderActivism

Peopleholdcompaniesresponsibleforthesocietiesdownfallorupliftmentsoitis

waytoattractstakeholders.

• SupplyChain

ItsistheWal-Marteffect,i.e.CSRaddsvaluetoallitssuppliers.

-CorporateSocialResponsibilityInDevelopingCountries–WayneVisser



Pedersenhereexplainsusthatthekeyorganizationsofthesocietyneedtopartner

withthesmallerorganizationsandworkincongruenceforthebettermentofthe

society,andthisisonlypossiblewhenbothcomeintocompleteagreementover

theirtasks.Healsorecognizesthekeyandsmallorganizationasfollows:

Pedersenseescorporatecitizenshipasdevelopmentdonebytheprivatesectorand

PSDprogramscanbeusedasaneffectivetooltodevelopcorporatecitizenship.PSD

programsarethemosteffectivewayusedtosupportprivateinitiativessuchas

betterworkingconditionandfightingHIV/AIDS.

PSDprogramsaffectthewholepartnershipprocess;byprovidingadviceand

financialsupportPSDprogramshasinfluenceoneverythingrightfrominitial

meetingstothedevelopmentofpartnership.ThePSDprogramprocessconsistof

threestages:



Thepreparatoryphaseconsistoftheresearchpart,i.e.recognizingtheright

opportunity.Theimplementationphaseconsistofthelegalformalitiesandtofulfill

otherrequirementtostartthepartnershipandthemaintenanceandimprovement

looksovertheworkingandcontributionofthepartners.

-TheRoleofDevelopmentAgenciesinDrivingCorporateCitizenship-EsbenRahbek Pedersen



Tobealeader,youhavetoleadhumanbeingswithaffection-J.R.D.Tata.

CSRisayoungmovementinthedevelopingnationandtoomuchcontributionintoolittletimeisexpectedfromthesmallfirmsinthedevelopingcountries,whichdoes

notlookpossibleateverylayman’sscale.Itisthesubsidiariesandcounterpartsof

multinationalsfromthedevelopedcountriesthatsetthestandardsofCSRin

developingcountriesandtheyarealsoexpectedtoleadthemovement.Butevenin

theshorttimeandlowscaleithasbeenprovedthatsmallcompaniesinare

embracingtheCSRintotheirbusinesspracticesandalsopublishtheirenvironmental

practices(JeremyBaskin).

CSRindevelopingcountriesinmajorlyforthosefirmsthatareinvolved

internationallyintheirbusinesspractices.CSRgivesthesefirmsacompetitive

advantageovertheothersintheglobalmarket.

CSRindifferentcountriesislookedupondifferently,likeitisnotmuchpracticedin

MalaysiaandPakistanastheydonotfollowthewhatIslamsaysaboutthebusiness

ethics,similarlyGhanabelievesthatCSRinthehelpoftheprivatesectorwherethe

governmentfallsshort.

Industriesindevelopingcountriespracticeirresponsiblereportingtoshowthatthey

aresociallyresponsible,thisitselfisnoCSR.Thusthedevelopingcountriesneed

moretimetoadaptandconductCSRsuccessfully.

- CorporateSocialResponsibilityinEmergingEconomies–JedrzejGeorgeFrynas(Greenleaf

Publishing,Winter2006)



Jenkinsconsidersthedevelopmentagenciesasthekey-drivingfactorofCSRfor

transnationalcompaniesinthedevelopingcountries,likeUnitedNationsMillennium

DevelopmentGoal(MDG),whichgavestrategyandrulesforthecompaniestohelp

thedevelopingcountrieswithissuessuchashealth,educationandmostlypoverty.

JenkinsconsiderthemainresponsibilityofCorporateindevelopingcountriesisto

eradicatepoverty.TheNGO’splayavitalroleinutilizingtheCSRofmultinationalsto

helpthepeopleofthestate.Theyarethelinkbetweenthecommonpeopleandthe

companies.

AlanWintersrecognizesaframeworkfortheeradicationofpovertythruFDI:

• EnterpriseChannel:

FDIdirectlycreatesemploymentandwhentheemploymentincreasesandshortage

ofunskilledlaborcreatesmoreemploymentforthepoor.

• DistributionChannel:

Thischanneltreatsthepoorastheconsumerandprovidingthemwiththeproducts

thatareaffordablebythem.

• TheGovernmentandrevenuechannel:

JenkinsinthischannelarguesthatFDIprovidesrevenueforthegovt.intermsof

taxesthatshouldbeutilizedbythegovt.toeradicatepoverty.

-Globalization,CorporateSocialResponsibilityandpoverty-RhysJenkins(InternationalAffairs81,

2005)



TheargumentgivenbyPayneinthejournaliswhatIfindtobethemostreasonable

argumentforacompanytobesociallyresponsible,hesaysthat‘ifacountryandits

peoplehelptomeetyourdevelopmentneedthenitisalsoyourdutytohelpthem

meettheirdevelopmentneed’.Whenamultinationalisworkinginnewcountryand

withnewenvironmentitdoesnotknowwhataretheneedofthepeopleandthe

society,sosimilartoPedersenPaynealsosuggeststhatlikebusinesspartnerships

whereyoupartnerwitharespectivefirmwhoisgoodattheirfield,similarlyinCSR

partnerwithanorganizationwhichunderstandthesociety’sneedsandisableto

deliverittothem.AndPayneargueshissuggestionwithaseriesofexamplesof

differentcompaniesindifferentcountriesliketheAmericantobaccopartneredwith

4NGO’stoprotectBioDiversity.Donotlookatthebadethicscaseswherethe

companieshavegotintotroublebutinsteadlookatthose,whichhave,given

companiesprofitbecauseofexcellentCSR.

-Corporatesocialresponsibilityandsustainabledevelopment– A.Payne(JournalofPublicAffairs

Aug-Nov2006)

.



JasonLunday ,thrumanyexamplestriestoexplainusthatsustainabilityandprofit

cometoyouwhenyoudelivergooddeedstosociety.Ifthesocietyandthe

environmentinwhichthecompanyisworkingishappyandprosperingthecompany

willalsodefinitelyprosper,liketheexampleofLevisStrauss.Co.,duetoits

employmentrelationsitcameacrossitsmostradicalproductofDOCKERSandintuff

timesforthecompany,theworkersandtheemployeesreadilyacceptedpaycuts

ratherthanprotestinglikeintheothercompanies.Anothersuchexampleisthatof

3M,investinginsavingtheenvironmentandpreventingpollutionultimatelyled3M

intoprofitsofmorethat500million$.WithsuchexamplesLundayconveysthe

messagethatdeliverwhatthesocietywantandthesocietywillgivewhatthe

companywants(Profits).

- ProfitableEthicalPrograms- JasonLunday



Miltonhereexplainsustherelationbetweenathesocialresponsibilityofabusiness

andofanindividual,likeanindividualserveshisresponsibilityofmeetinghissocial

obligationsliketakingcareofitsfamily,doingcharity,forsomemaybeservingthe

nationsimilarlyBusinessisnotonlyaboutmakingprofitthruthebusinessactivities

butitalsohasasocialresponsibilitytowardssocietyofdeliveringwhatthesociety

wants,afterallitisthesocietythatservesthebusiness.

Apersonoperatingabusinessmustsometimeskeepasidehisbusinessmotivesand

fullfillthesocialobligationthebusinessowes,likenotincreasingthepriceintimes

ofinflationevenifitisnotitthecompaniesbestinterests,likeincurringmore

expendituretopreventpollutionevenifitsisnotprofitableforthecompany.Italso

acompany’sdutythatnottogetintounduegovernmentpracticessuchasbribing

foritsownbenefit,ornottouseitsCSRamerewaytopreventtaxes,Acompany

shouldfulfillitssocialobligationinfullfaithlikeanIndividualfulfillhis.

-TheSocialResponsibilityOfBusinessistoIncreaseitsProfits–MiltonFriedman



Deckafterexaminingover70corporationshascometosomeconclusionssuchas

theSTAKEHOLDERSTheory,inwhichheexplainsthatmostofthesuccessful

companiesnownolongerconsidersshareholderasthemostimportantstake

holdersinthecompany,nowthecustomers,employeesandsuppliersarealso

equallyimportant.Asfarasethicsinworkplaceisconsidered,Deck,afteraresearch

inmorethan200corporateunderstoodthatitistheexplicitandtheimplicitfactors

thatdeterminetheworkethicsoracompany.Explicitelementsconsistofthethings,

whichanorganizationbelievesinanditrevolvesaroundthecorporatecode.This

corporatecodeservesavarietyofpurposesuchasimageenhancing,doingtheright

thing.

Analysisofthesecorporatecodesmadeitclearthattherearethreetypesofcodes,

‘Codeofethics’,‘Codeofconduct’,and‘Codeofpractice’.

Codeofethicsdefinesthepurposeofthecompany,itsstatementsofvaluesand

purpose.

CodeofPracticeistheillustrationthataffectsthedecisionmakerandtheworkingof

acompany.

AndCodeofConductstatesthatwhatanindividualmustormustnotdointhe

company.

-CorporateCodeandEthicsPrograms–MichaelC.Deck



Methodology

TakinginconsiderationhowCoca-colaIndia,afterbeingcriticizedsomuchforitsunethicalpracticesin2006andtheproductbeingcondemnedbythepeople,howit

cameupagaintobeoneofthemostethicalcompaniesinIndiaandreceivingthe

goldenpeacockawardforCorporateSocialresponsibilityin2008.Itdidsomany

thingsaroundIndiatohelpthepeopleandpreserveitsnaturalresourceofwater.

ThisshowsthatacompanycanbecomeprofitableandsustaininamarketthruCSR,

itisnotonlytheproductwhichmattertothepublicbuttheoverallimpactofthe

product.

KeepinginmindhowCSRcanhelptosustainandmakeprofitsandgathering

informationandliteraturebydifferentauthorswiththehelpofEbscoand

PerspectiveinBusinessEthicsbyLauraPHartmanandtheirviewonthesimilar

topic.Thevariousliteraturesshowvariouswaystobesociallyresponsiblein

countriesandstillbeingprofitableandabletosustainthebusiness

TherearedifferentframeworkssuchastheInternalandExternaldriversbyWAYNE ,

thenthePedersen’sCongruencepyramidshowshowbigorganizationsshouldwork

withthesmallone.PedersenalsotellaboutthedifferentstagesofaPSDprogram.

ThepaperalsoincludestheframeworktoeradicatepovertythruFDIbyWinters.



Conclusion

CokewasseverelycriticizedbyNGO’sandpeopleinIndiaforitsWastageofwater,anddestroyingthelandthrudischargingofchemicals,andusingpesticidesinits

drinks.Butcokecameclearofmostoftheallegationsandtodayitworkingwiththe

societyandrunningasuccessfulbusinessinthecountry.CokealsopromisedIndia

thatitwouldmaintainazerowaterbalancethatisitwillgivethecountryallthe

waterituses,anditisdoingitthroughrestoringmanywells,rechargingrainwater,

rainwaterharvesting,itisalsoeducatingthepoorchildren’sthruopeningschoolsin

theruralareandalsoeducatingpeopleabouttheuseofwateranditsimportance.

Todaycokehaswonmanyawardsforitscontributiontothesocietyandthe

companyintermsofprofitisdoingtremendouslywell.

Thisshowsthathowcriticizedyouarehowbadnamepeoplecangetyoubutyou

worktowardsthesocietycanmakeupallforit.

Therearemanywaystobesociallyresponsibleindevelopingcountries,likeWayne

withthehelpofdriversthataretheinternalandexternaldriversexplainshowwe

havetousethisdriversandworkwiththemtohelpthesociety.Pedersenshowhow

thebigcompaniesandorganizationshouldpartnerandworkincongruencewiththe

smallonestohelpthesocietyandasimilarargumentingivenbyPayne,Withthe

helpof JenkinsliteratureweunderstandhowFDIcanweusedasatooltopromote

socialactivities.

AlltheframeworksexplainedarewaytosustainthebusinesswithbeingSocially

Responsible.



Bibliography

- CorporateSocialResponsibilityInDevelopingCountries–WayneVisser

- TheRoleofDevelopmentAgenciesinDrivingCorporateCitizenship-EsbenRahbek

Pedersen

- CorporateSocialResponsibilityinEmergingEconomies–JedrzejGeorgeFrynas(Greenleaf

Publishing,Winter2006)

- Globalization,CorporateSocialResponsibilityandpoverty-RhysJenkins(International

Affairs81,2005)

- Corporatesocialresponsibilityandsustainabledevelopment– A.Payne(JournalofPublic

AffairsAug-Nov2006)

- PerspectivesInBusinessEthics- pg.246,ThirdEdition,LauraP.Hartman,McGrawHill,

Singapore


Singapore


Singapore

- CocaColaIndia’sCorporateSocialResponsibilityStrategy –HadiyaFaheem

Ethics - Aashish Maloo

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