TABLE OF CONTENT 1) EXECUTIVE SUMMARY.. 2 2) INTRODUCTION 3 3) QUESTION.

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A. MULTINATIONAL CORPORATIONS AND HUMAN RIGHTS

4) CORPORATE SOCIAL RESPONSIBILITY 5 5) BUSINESS IN SOCIETY.. 11 6) CORPORATE SUSTAINABILITY 13 a. CORRUPTION 7) NGOs, MNCs AND ETHICAL BALANCE. 15 8) CREATING AND SUSTAINING ETHICAL CAPABILITY 16 9) Arguments for Corporate Social Responsibility 17 10) Three Perspectives on Business Ethics.20 11) CONCLUSION 21 12) REFERENCES.. 22

EXECUTIVE SUMMARY:

Corporate social responsibility (CSR) is also known as corporate responsibility, responsible business, corporate citizenship, sustainable responsible business (SRB). The rapid growth of CSR and accreditation programmes is becoming a new age for all the businesses, the responsibility of the company has increased, now a days companies not only look for their profit but also looks after rewards of the company in which they operate. The corporate social responsibility is related to business ethics but it is not identical to it, because CSR encompasses on the economic, legal, ethical and discretionary responsibilities of the organization, whereas business ethics mainly focus on the moral judgments and behavior of individuals and groups within a organization. Therefore business ethics is regarded as one of the component of corporate social responsibility. The term CSR came into common use in the early 1970s.

INTRODUCTION:

I have chosen the topic of ethics and corporate social responsibility. A lot of businesses have been implementing CSR activities around the world. No business can exist in the isolation; every business has got some level of responsibility over their customers, employees, suppliers and local community because they are affected by the operations of the business activities. The concept of corporate social responsibility means that organizations have moral, ethical and discretionary responsibilities in addition to their responsibilities to earn a fair return for investors and to comply with the law. As we can see, that the global Multi National Companies including the likes of IBM, Vodafone, Google, etc have been considering the conduction of ethical business as its top most priority in the industry. As a result of the same, the potential customers perception of the organization is deemed in a positive manner. The report considers the rationale behind the conduction of activities in a sustainable manner from an ethical perspective. The report takes into account different theories pertaining to the conduction of business in an ethical manner and analyses the application of these concepts from a multinational corporations point of view. This takes into account, primarily Googles CSR activities whilst taking into consideration ethical business practices of the organization, human rights, corruption, sustainability, etc. It also takes into account the arguments for CSR. Google was chosen primarily since the theoretical aspects regarding conduction of ethical businesses are performed at Google in a worldwide scale.

QUESTION:

Discuss the impact of ethics and social responsibility within the Multi-National Corporation? Why are MNCs concerned about the impacts of Ethics and Social Responsibility and their implications? What are some of the arguments for and against CSR?

MULTINATIONAL CORPORATIONS AND HUMAN RIGHTS

The protection of human rights is not traditionally considered as a responsibility of corporations as there are no certain rules exist to protect the human rights. The domestic laws of many states fail to impose adequate human rights duties on corporations, while it is unlikely that there are any direct duties imposed by international law. The multinational corporations are the very powerful entities in the current world and their impact on the wellbeing of communities and individuals, including in terms of human rights, is evident wherever they operate. While there is significant possibility for that impact to be positive, corporate activity is often perceived to have had, and has had, a negative impact on human right protection.

There are lots of MNC abuses occur in the world, including for example participating in the brutality of host states. Police and military, the use of forced and child labour, suppression of rights to freedom of association and speech, violations of rights to cultural and religious practice, infringement of rights to property (including intellectual property), and gross infringements of

environmental rights.. The legal duties of MNCs within the various domestic laws of states can be readily clarified in most instances may arise for example in the context of criminal laws, civil rights laws, and consumer protection laws. However, the legislative sources of human rights pressure may be on occasion surprising. For example, trade practices laws prohibiting misleading and deceptive conduct can perhaps be used to restrain a company from portraying itself as an ethical entity when the contrary is true. (Ref: David Kinley, Sarah Joseph, Multinational Corporations and Human rights, vol. 27, No. 1, February . 2002)

CORPORATE SOCIAL RESPONSIBILITY:

According to the Lord Holme and Richard Watts, corporate social responsibility is the continuing commitment by business to behave

ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society as large.

According to Richard, Luthans and Jonathan, from the book international management, sixth edition, Corporate Social Responsibility is the actions of a firm to benefits society beyond the requirements of the law and the direct interests of the firm. Author in this section discusses that their had been a lot of pressure for the attention of CSR, that has emanated from the range of stakeholders that includes civil society and from non government organization (NGOs). These groups have urged that MNCs should be more responsive to the range of social needs in the developing countries, that includes the concerns about the working

conditions in the factories or the service centre and what would be the impacts of these to the environment from these activities. Ref: Book: international management, culture, strategy and behavior, 6th edition. Corporate social responsibility (CSR), is also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business (SRB), or corporate social performance, it is a form of corporate self-regulation integrated into a model. It can be defined as

the actions of a firm of benefit society beyond the requirements of the law and the direct interests of the firm. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its support to law, ethical standards, and international norms. Consequently, business would embrace responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: People, Planet, and Profit. (Ref: Zynia L. Rionda, MPA, What is Corporate Social Responsibility, July 2002, Page:1)

I would like to take the example of Google CSR activities; Organizations like Google which have better reputation enjoy competitive advantage over those with lower or inadequate reputations. One of the major sources of this discussion, from a strategic management perspective, is the work of R. Edward Freeman (1984; 1988) who popularized the concept of stakeholder identification and participation as being central to strategic management. The reporting on CSR must be able to manage the mutual expectations of Google and the

stakeholders. The major benefit of communication with stakeholders on CSR activities is that it could assist the organization in identification of possible risks and liabilities and also in coordinating programs throughout Google. As an example Google could take into consideration the reporting framework as postulated by GRI.

CSR activities must be communicated to Googles high priority stakeholders as suggested by the examples elucidated as under: Shareholders: They could be informed through the CSR Report which takes into account the statements of the CEO and major impacts of the activities in a strategic manner. The report should delver on governance and the sustainability-related policies and procedures.

Users: The users of Google, being computer literate could be informed through blogs of Google as is performed presently.

Advocacy groups could be informed through press releases which are performed after a detailed analysis of the long term benefits of Googles decisions.

Governments, however require a higher degree of tact and flexibility and these could be performed through conferences, negotiation meetings and such.

Google, being one of the worlds most admired companies has performed this as a result of being perceived as a company with high value. For Google to be perceived as of high value in the long run, Googles CSR activities must be in consistence with the guidelines of 1SO 26000 which are a specific set of guidelines related to Social responsibility. Having values and ethics which are specified by ISO 26000 would have a positive impact on Googles stakeholders.

The basic idea of corporate social responsibility is straightforward. Firms are social entities, and they have to play a major role in the social issues of the day. They have to take things seriously their obligations to society and actively try to fulfill them. (Ref: R. Edward Freeman, Corporate Social Responsibility, 1988, page: 89)

As per my understanding of theories, CSR is a social responsibility as making socially responsible products, engaging in socially responsible employee relations and making a commitment to the community around it.

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Acc to me, CSR is just like a commitment to the society where corporate houses contribute to the society by providing quality of life by giving education to their families.

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This is the diagram showing how the CSR operates in the business. This shows that the companies need to answer the two aspects of their business,That is 1) the quality of management- both in terms of people or process that is the inner circle, 2) The nature of and quality of their impact on society in different areas. http://www.mallenbaker.net/csr/definition.php

CORPORATE SUSTAINABILITY:

Corporate sustainability is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments. It is the development that meets humanitys needs without harming future generations. Corporate sustainability is an evolution on more traditional phrases describing ethical corporate practice. Phrases such as corporate social responsibility (CSR) or corporate citizenship continue to be used but are increasingly superseded by the broader term, corporate sustainability. Unlike the other phrases that focus on added-on policies, corporate sustainability describes business practices built around social and environmental considerations. Business practices bringing the least harm to the environment and the most benefit to society have evolved into an organizational priority. (Ref: Esra Nemli, status of Corporate Sustainability in Turkish Companies, page: 6-

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CORRUPTION Considering the risk management approach of Google in China, Google had the protection of the brand value as primary concern and this was evident from the manner in which they addressed the stakeholders. A loss in reputation in terms of technology would be hazardous to Google and this could be attributed as the reason behind Google starting operations in China as google.cn. Upon Google.com being blocked by the firewalls of China, Google had to maintain its reputation as being a technically proficient and the only way out was operation of Google. Not taking into account of cultural aspects could be disastrous for an organization as evinced by McDonalds operation in India. McDonalds failed to take into account that sections of Indian community considered the cow to be a sacred animal and McDonalds, which had beef on its menu and less vegetarian oriented meals resulted in McDonald being perceived as a low value company. The ethical code of conducts operating in some countries is different from that employed in China. For example, there are countries wherein bribery and kickbacks are common business practices, however in some countries like China, its illegal and penalized heavily, thus reducing the company value. However for USA there exists the Foreign Corrupt Practices Act which could be employed by U.S. businesses operating in markets where bribery is an acknowledged trade practices (Woof et al, 2005).

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(Ref: Hamilton J, Knouse J, Hill V. (2008). Google in China: A Manager-Friendly Heuristic Model for Resolving Cross-Cultural Ethical Conflicts. Journal of Business Ethics. 86 (3), pp 143157)

NGOs, MNCs AND ETHICAL BALANCE

The emergence of organized civil society and NGOs has dramatically altered the business environment globally and the role of MNCs within it. Non-governmental organization (NGO) is a legally constituted, non-governmental organization created by natural or legal persons with no participation or representation of any government. NGOs are funded totally or partially by governments, the NGO maintains its non-governmental status by excluding government representatives from membership in the organization. Unlike the term "intergovernmental organization", "non-governmental organization" is a term in general use but is not a legal definition. In many jurisdictions, these types of organization are defined as "civil society organizations" or referred to by other names. I believe that the governments can be corrupt. NGOs on the other hand, often run on budgets that are given directly by people who believe, that there must be some more accountable force willing to help humanity than can be found in the short term designs that many governments employ. Due to that NGOs must live 15

to a higher standard of accountability, as they are entrusted to do. The emergence of NGOs that seek to promote ethical and socially responsible business practices is beginning to generate substantial changes in corporate management, strategy, and governance. (Ref: Article 71 of Chapter 10 of the United Nations Charter, 1945) CREATING AND SUSTAINING ETHICAL CAPABILITY IN THE MULTI-NATIONAL CORPORATION

Multinational corporations are continually seeking sources of competitive advantage. In addition to strategic, technological, financial, and organizational capabilities as sources of competitive advantage, this paper argues that ethical capability also can be an important source of sustainable advantage. The paper presents the challenges of ethics in an international context, discusses the resource-based view of competitive advantage, and describes how a multinational company can develop and sustain ethical capability through the related processes of transformational leadership, organizational learning, and human resource management. (Ref: Paul F. Buller and Glenn M. McEvoy,Creating and sustaining ethical capability in the Multi-national corporation,Journal of world Business, Volume 34, Issue 4, Pages 326-343, 27 Dec 1999)

For example, Google had employed excellent strategies rendering Google responsible to Employers, Customers and Society, however with regards to the environment; Googles activities are not very energy efficient. As a search

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engine, Google has a huge database which is operated from different parts of the world and this causes consumption of energy and emissions of greenhouse gases as a result of retrieving this information from Googles database towards the users side. Considering the fact that Google operates majorly from US, Europe, Japan and China and when a user in the Middle East searches on something in Google this search request is handled by all the servers in US, Europe, Japan and China (Leake et al, 2009). Googles infrastructure is designed such that they operate in a time-efficient mannerism and not an environmentally efficient manner. Considering IBM which operates primarily in the Hardware industry, IBM has an environmentally conscious program which focuses onprograms which are innovate with regards to the environment and this involves product recycling technologies and product ecological metrics (Johnson et al, 2004).

Arguments for Corporate Social Responsibility:

Businesses are any how attire with the social issues because a business is a part of problems and solution. Issues like unemployment, inflation and pollution are directly related to the companys practices. Businesses have the responsibility to handle the complex societal problem, especially private business sectors play important role in handling problems. Moreover a better society will lead to a better environment to deal with business which is helpful in long run of bussiness

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operations. Also corporate social actions prevent government intervention.

An iron law of social responsibility states that the businesses which do not take the responsibility for the betterment of the society always lose their business and power as well. Now I would like to explain this with the example of Bharat Petroleum (BP). BP is the world largest petroleum company, In 2005 BP made in onto the 100 list of the most sustainable companies in the world. They undertook CSR for society and environmental obligation, but they had issues with these, they did not undertook this very seriously and therefore because of the oil spill 11 workers were killed in the deep water horizon blow out. And they paid 20 billion dollars fine to America. Ref: http://businessethicsblog.com/2010/09/01/bp-and-csr/

To what extent should multinational corporations doing business in developing countries contribute to improving social conditions? Many multinational corporations operate in countries characterized by extreme poverty and inequality, inadequate or dysfunctional institutions, and

undemocratic political systems. At the same time, multinational corporations are in a powerful position to promote change in developing countries, individually and/or collectively. Google, which is predominantly a technology based company, has been ranked 4 on the worlds most admirable companies list owing majorly to the innovations it churns out. For example, Google premiered a feature which

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offered e-mail accounts with goggles that prevented users from sending drunken messages. Not only that, considering Googles case in China wherein soon after the earthquake in Sichuan (China), Google worked with the government to obtain new satellite images to help with the recovery efforts. Google created a lost loved one search which was based on the Custom Search Engine (CSE) of Googles. Similarly Google employees created community sites, map-based information pages and such to improve on the recovery efforts. With regards to corporate charity work, Google donated monetarily to the victims of the earthquake and also created donation pages which were directly linked to the Red Cross society of China, Mercy corps, Tsingshua foundations, etc. (Ref: An Owner's Manual" for Google's Shareholders. (2010).. Last accessed 6 September 8, 2010)

The question of corporate responsibility in poor and undemocratic countries, has been addressed by a CMI strategic institute programme (SIP) entitled Business ethics for multinational corporations in developing countries (Kolstad Ivar, Bergen: Chr. Michelsen Institute (CMI Brief) Volume 6, 4 page, January 2007). The programme, which has run from 2004 to 2006, has resulted in several international publications, and garnered significant media attention. This brief relates the major results of the programme.

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Three Perspectives on Business Ethics

The programme distinguishes between three different perspectives on business ethics: The normative perspective asks what corporations ought to do, what responsibilities do corporations have and to whom The instrumental perspective studies what responsibilities are profitable and in the interest of firms to pursue, and how firms can be given incentives to fulfil

their other responsibilities The descriptive perspective asks what firms actually do in the area of business ethics. Nobel Prize laureate Milton Friedman is credited with the statement The social responsibility of business is to increase its profits (Kolstad Ivar, Bergen: Chr. Michelsen Institute (CMI Brief) Volume 6, 4 pages, January 2007). The shareholder position on business ethics, as reflected in this statement, is that corporations ought only to pursue shareholder interests. The shareholder position entails strict special duties towards shareholders, which cannot be defended by any reasonable ethical theory. Corporations do in fact have responsibilities to others than their shareholders. (Ref: Kolstad Ivar, Bergen: Chr. Michelsen Institute (CMI Brief) Volume 6, No.2, 4 pages, January 2007)

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CONCLUSION :

An analysis of the CSR activities performed by Multi National Companies in the global context illustrates the importance of conducting ethical businesses from different perspectives including human rights, corruption, business practices, etc. This was implied by the sustainable growth of business of Google in a global context, wherein Google is recognized as an admirable company. Moreover, considering the fact that there is an increased customer awareness on the sustainability efforts of a multinational corporation, the MNCs around the world have to account for the conduction of business in an ethical mannerism. By employing different schemes so as to be beneficial to stakeholders of the MNC, a company operating in a multinational context has to employ different CSR activities for a sustainable competitive advantage.

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REFERENCES: 1) International Management, 6th edition; Richard M Hodgetts,Fred Luthans and Jonathan P.Doh. 2) Kolstad Ivar, Bergen: Chr. Michelsen Institute (CMI Brief) Volume 6, No.2 4 pages, January 2007 http://www.cmi.no/publications/file/?2575=corporate-social-responsibility-ofmultinational. 3) CMI Research: Business ethics for multinational corporations www .cmi.no/.../project/?680...ethics...multinational-corporations 4) Cornelius B. Pratt, Multinational Corporate Social Policy Process for ethical responsibility, Journal of Business Ethics, July 1991, Volume 10, pages: 527-541 http://www.scu.edu/ethics/practicing/focusareas/business/conference/presentatio ns/business-ethics-history.html 5) An Owner's Manual" for Google's Shareholders. (2010),6 accessed on 6 September 2010. 6) Hamilton J, Knouse J, Hill V. (2008). Google in China: A Manager-Friendly Heuristic Model for Resolving Cross-Cultural Ethical Conflicts. Journal of Business Ethics. 86 (3), pp 143157 7) Journal of Academic and Business Ethics http://www.springerlink.com/content/u1845h58532j0271/

8) Iraj mahdavi, International Business ethics, Journal of Academic and Business Ethics, published 1990, page: 567-577 22

http://www.aabri.com/manuscripts/09279.pdf 9) Zynia L. Rionda, MPA, What is Corporate Social Responsibility, July 2002 http://www.rhcatalyst.org/site/DocServer/CSRQ_A.pdf?docID=103 http://www.bsdglobal.com/issues/sr.asp 10) David Kinley, Sarah Joseph, Multinational Corporations and Human rights, vol. 27, No. 1, February . 2002Article by the Castan Centre for Human Rights Law, Monash University, in conjunction with its Industry Partners, Reputation Qest and Premier Oil (UK),) www.law.monash.edu.au/castancentre/projects/arc_kinley.pdf

11) Bansal, Pratima. 2002. The Corporate Challenges Of Sustainable Development, Academy of Management Executive 16: 122132. 12) Esra Nemli, status of Corporate Sustainability in Turkish Companies, page: 6-6 http://opim.wharton.upenn.edu/gc/philadelphia/abstract/Nemli.pdf

13) Paul F. Buller and Glenn M. McEvoy, Creating and sustaining ethical capability in the Multi-national corporation,Journal of world Business, Volume 34, Issue 4, Pages 326-343, 27 Dec 1999 http://www.sciencedirect.com/science 14) Corporate Governance and Ethics Stilpon Nestor, International efforts to improve corporate governance, Page 1-3, Year 2001 http://www.oecd.org/dataoecd/61/1/1932028.pdf

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15) Ranjana Kumar, Government of India Central Vigilance Commission, circular No.38, pages 2-4, 29 oct 2007) http://www.biecco.gov.in/Circular/CVC_CIRCULAR_CORP_GOVERNANCE.pdf 16) International Assistance www.un.org/millenniumgoals/.../MDG%20Gap%20Task%20Force%20Report %202008.pdf 17) R. Edward Freeman, Corporate Social Responsibility, 1988, page:89 http://www.instituteforpr.org/essential_knowledge/detail/corporate_social_respon sibility_three_rs/

18) Matea, Toyota: An Example Of Good Corporate Governance, 05/10/08, pages 8 http://www.oppapers.com/essays/Toyota-Example-Good-CorporateGovernance/148535 19) BP company, http://businessethicsblog.com/2010/09/01/bp-and-csr/,

accessed on 8 September 2010. 20) CSR diagram, http://www.mallenbaker.net/csr/definition.php, accessed on 8 September 2010

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