Ethical and Socially Responsible Decisions

To behave in an ethically and socially responsible way should be the hallmark of every business person’s behavior, domestic or international. Most of us know innately the socially responsible or ethically correct response to questions about knowingly breaking the law, harming the environment, denying someone his or her rights, taking unfair advantage or behaving in a manner that would being bodily harm or damage. Unfortunately, the difficult issues are not the obvious and simple right or wrong ones. In many countries the international marketer faces the dilemma of responding to sundry situations where local law does not exist, where local practices appear to condone a certain behavior or where the company willing to do what is necessary is favored over the company that refuses to engage in certain practices. In short, being socially responsible and ethically correct are not simple tasks for the international marketer operating in countries whose cultural and social values and / or economic needs are different from those of the marketer.

In normal business operations, difficulties arise in making decisions, establishing policies and engaging in business operations in five broad areas: (1) employment practices and policies, (2) consumer protection, (3) environmental protection (4) political payments and involvement in political affairs of the country and (5) basic human rights and fundamental freedoms. In many countries laws may help define the borders of minimum ethical or social responsibility but the law is only the floor above which one’s social and personal morality is tested. The statement that there is no controlling legal authority may mean that the behavior is not illegal but it does not mean that the behavior is morally correct or ethical. Ethical business conduct should normally exist at a level well above the minimum required by law or the controlling legal authority. In fact, laws are the markers of past behaviors that society has deemed unethical or socially irresponsible.

Perhaps the best guide to good business ethics is the examples set by ethical business leaders. However, three ethical principles also provide a framework to help the marketer distinguish between right and wrong, determine what ought to be done and properly justify his or her actions. Simply stated they are as follows:

1) Utilitarian ethics — Does the action optimize the common good or benefits of all constituencies? And who are the pertinent constituencies?
2) Rights of the parties – Does the action respect the rights of the individuals involved?
3) Justice or fairness – Does the action respect the canons of justice or fairness to all parties involved?

Answer to these questions can help the marketer ascertain the degree to which decisions are beneficial or harmful, right or wrong or whether the consequences of actions are ethical or socially responsible. Perhaps the best framework to work within is defined by asking: Is it legal? Is it right? Can it withstand disclosure to stockholders, to company officials to the public?

While United States has clearly led the campaign against international bribery, European firms and institutions are apparently putting effort and money into the promotion of what they are calling “corporate social responsibility”. For example, the watchdog group CSR (Corporate Social Responsibility) Europe in cooperation with the INSTEAD (European Institute of Administrative Affairs) business school outside Paris is studying the relationship between investment attractiveness and positive corporate behaviors on several dimensions. Their studies find a strong link between forms social responsibility and European institutional investors’ choices for equity investments. All this is not to say that European firms do not still have their own corporate misbehaviors. However, we expect more efforts in the future to focus on measuring and monitoring corporate social responsibility around the world.