1. Linking Ethics, Corruption, and Responsible Behaviour
The Pyramid of Ethical Behaviour
(Cavusgil et. al, 2013)

2. Corporate Social Responsibility (CSR)
Dr Fariba Darabi
International Project Week
14th May 2014
Helsinki Metropolia University of Applied Science

3. Aims Understand the concept of Corporate Social Responsibility
Identifying and analysing the stakeholders
Understanding ethics and CRS in MNEs, SMEs, and NGOs
Discuss a sustainable CSR framework

4. What is CSR?
The idea that corporates should consider the social consequences of economic actions when making business decision (Hill and Hernandez- Requejo, 2013).
A proactive approach to ethical behavior aimed at maximizing profits and benefiting society and the environment (Cavusgil et al., 2012)
Typically focuses on social impacts of the corporation on both its internal and external stakeholders (Painter-Morland and Spence, 2010)

5. What is a Stakeholder? Definition: any group or individual who can affect or is affected by the achievement of the organization’s objectives (Freeman, 1984)

6. CSR for MNEs
(Peng and Meyer, 2011)

7. Stakeholders of Shell International (Mellahi et al, 2005)

9. Ethics and CSR in SMEs
Responsible behaviour in SMEs tends to focus on internal stakeholders
It is more difficult for them to communicate some of the ethical practice in which they are involved
They are not always aware of the appropriate legislation
Pressure from consumers is the main reason why SMEs in developed countries engage in CSR
SMEs tend to have lower bargaining power, and can't exert the same type of pressure on suppliers as MNEs

10. Non-Government Organisations (NGOs)
The number of NGOs are increasing because of the support from ethical consumers
Many of NGOs are global e.g. Green Peace, and Oxfam
Their growing effectiveness has been facilitated by globalisation particularly global communication through technology advancement
(Mellahi, Frynas, and Finlay, 2005)

11. The Business Case for Sustainable Development
Increase customer loyalty & market position
Promote innovation & new business opportunities
Enhance reputation
Strengthen stakeholder ties
Potential for new business
Protects right to operate
Shareholders
Customers
Cut costs and liabilities
Improve investor standing
Increase ability to attract & retain employees
Increase employee commitment & motivation
Society
Employees

12. Problem Solving Activity 1
Some argue that investing in emerging economies greatly increases the economic development and standard of living of the base of the global economic pyramid. Others contend that moving jobs to low-cost countries not only abandons CSR for domestic employees and communities in developed economies but also exploits the poor in these countries and destroys the environment. How would you participate in this debate if you were:
a) CEO of an MNE headquartered in a developed economy moving production to a low-cost country,
b) The leader of a labour union in the home country of the MNE that is losing lots of jobs or
c) The leader of an environmental NGO in the low-cost country in which the MNE invests?

13. Why should organisations practice a sustainable CSR
Global Corporate Sustainability Report 2013 reveals that:
"Businesses around the world are beginning to take sustainability more seriously..... A look at the actions taken by nearly 8,000 companies from 140 countries participating in the United Nations Global Compact tells a promising story"
Gain competitive advantage (Dunning, 1993; and Zhu, et al., 2007)
Cost savings through more efficient design and processes (Mefford, 2011)
Add value for stakeholders (Mefford, 2011)
Brand image (Faisal, 2010)
Comply with legislation (Vasileiou and Morris, 2006)
Providing efficient and effective goods and services (Beamon, 2008)

14. Levels of commitment to CSR
Inactive
Reactive
Active
Pro/interactive
Corporate self-responsibility
Corporate social responsiveness
Corporate social responsibility
Corporate societal responsibility
"Utilitarian" legal compliance
"Negative Duty"
"Positive duty" or virtue based
"Interactive duty"
Profit maximisation
Quarterly profits and market capitalisation
Long-term profitability
Medium- profitability and sustainability
Inside-in
Outside-in
Inside-out
In/outside-in/out
"Doing things right"
"Don't do things wrong"
"Doing the right things"
"Doing the right things right"
"Doing well"
"Doing well and doing good"
"Doing good"
"Doing well by doing good"
Narrow (internal) CSR
Scope
Broad (external) CSR
societal
Economic (wealth oriented)
Social
(welfare oriented)
Nature of responsibility
Dicken (2011) adopted from Van Tulder and Van der Zwart, (2006); Table 8.1; Van Tulder et al., 2009; Table 1

15. Do customers really care?
Do Nike Customers really care about labour conditions?
Do Apple customers really care about
conditions in Chinese factories?
Do Wal-Mart customers really care where the products they buy are sourced from?
Do Starbuck’s customers really care where the coffee is coming from?

16. How can organisations become more sustainable?
Ask students for their ideas at this point?

17. E.g LG mobile manufacturer offer:
A framework of Sustainable SCM: The Triple Bottom Line (Elkington, 1998 & 2004; Carter and Rogers, 2008 ; Krajewski et al., 2013)
E.g. Samsung in mobile sector pursuit the green supply chain with reducing GHG Emission and was successful in decreasing CO2 footprint and achieved ISO at 3 factories in Korea (Sustainability Report, 2012)
E.g LG mobile manufacturer offer:
- Education programmes, charity fund and scholarships to contribute to community benefits
- Creating good working conditions, training and support activities for the staff (Sustainable Report, 2012)
Key metrics for sustainability
- Energy consumption
- Water consumption
- Greenhouse gas emissions
- Waste generation
(Chopra and Meindl, 2013)
E.g. Mobile manufacturers outsource in low labour costs and abundant labour force and materials to emerging market to save production costs (Sustainability Report, 2012)

18. Examples of a sustainable CSR
- switching to more efficient light bulbs at its stores
- Using Skylights for natural light, and reducing energy costs
- Helping coffee growers to increase their production in a sustainable manner
- Evaluated the sustainable production of coffee by considering
- Product quality, economic accountability,
- Social responsibility (e.g. working conditions)
- Environmental leadership (e.g. suppliers
action on waste management, protect water quality, reduce agrochemical use
Helping emerging economies such as Brazil and India to wrestle with poverty, water scarcity, and climate changes
Module Design by IKEA allows the company to tightly pack its parts when they are shipped from the production location to its retail stored
Module Design by IKEA allows the company to simultaneously reduce emissions as well as its transportation costs

19. References
Carter, CR, Rogers, DS (2008) A framework of sustainable supply chain management, moving toward new theory, International Journal of Physical Distribution and Logistics Management, 38(5), pp
Cavusgil,ST, Knight, G and Riesenberger, JR (2012) International Business: The New Realities, 2nd edition. Pearson, New Jersey
Ciliberti, F, Pontrandolfo, P and Scozzi, B (2007) Investigating corporate social responsibility in supply chains: a SME perspective, Journal of Cleaner Production, 16(15)
Hill,CWL and Hernández-Requejo, W (2011) Global Business Today, 7th edition. McGraw-Hill, New York
Mellahi, K, Frynas, G. J., and Finlay, P. (2005). Global Strategic Managment. Oxford
Painter-Morland, M., and Spence, L. (2010). Business ethics in small and medium enterprises, Afr J Bus Ethics, Vol. 4,pp 1-6
Peng, M., and Meyer, K. (2011), International Business, Sengage Learning

20. Critical Discussion and Questions Activity
1- in your opinion, how should MNEs act when legal requirements on labour or environmental issues vary between the different countries in which they operate?
Should they remain politically neutral and adopt practices and laws of the host country, or should they stick to the rules that would apply to the same question back home?
2- You are the PR officer of a major MNE in the chemicals industry. A national environmental committee in your home country alleges that your company is covering up an environmental disaster caused by your subsidiary in India, in which several people died. How would you react?
3- Topics for the Group presentations on Thursday
Group 1) Identify ethical and unethical behaviours in 'Apparel' industry, and design a sustainable CSR framework for the industry
Group 2) Identify ethical and unethical behaviours in 'Mobile' industry, and design a sustainable CSR framework for the industry
Group 3) Identify ethical and unethical behaviours in 'Food' industry, and design a sustainable CSR framework for the industry