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Hampshire: Palgrave Macmillan. Council on Health Research for Development (COHRED). Data were collected from SMEs operating in MENA region (Lebanon and Egypt). PubMed Strong leadership is vital. Why Corporate Social Responsibility: A New Concept in the 21st Century. Ynetim ve Ekonomi 16.2 (2009): 63-72. Moral psychology and the intuition that pharmaceutical companies have a special obligation to society. While business ethics certainly play an important role in the business environment, it is possible for governments and individuals to demand too much social responsibility from companies. 3, pp. Stakeholder theory, on the other hand, debates that other parties are included such as employees, clients, vendors, societies, governmental entities, associations, unions, etc. OECD (2015), G20/OECD Principles of Corporate Governance, OECD, Ankara. This requires three distinct characteristics in a company: accountability, responsibility and transparency. As we've noted, when it comes to CSR, greenwash won't cut any ice; customers and investors alike want to see honest evaluations of achievements, with candid reporting on goals and progress. Hence, the innovative capabilities of SMEs in developing and emerging economies could be enhanced through corporate ethical practices which guide management for more CSR engagement through good CG. 1, pp. In. and Edwards, J.R. (1998), A general approach for representing constructs in organizational research, Organizational Research Methods, Vol. Alongside this, products the Bank has become a leading entity in Qatar and the Middle East for environmental advocacy through numerous CSR initiatives including Eco-schooling and Green Run. 923-934. (2015). Companies still concentrate on their economic gains. 2.1. Harlow: Pearson Education Limited. This essay "Relationship between Business Ethics and Social Responsibility" was written and submitted by your fellow This can result in lower business profits and the inability to pay for future, more reasonable and responsible social items. Business ethics (7th ed.). Business ethics and social responsibility have been topics of heated debates since the middle of the 20th century. The target population of the study is SMEs (non-public) in developing countries in the MENA region. And they need to lead from the front when it comes to measuring and reporting on CSR progress, being frank about disappointments and honest about drivers, objectives and challenges. (2016), Impact of the revised Malaysian code on corporate governance on audit committee attributes and firm performance, Turkish Economic Review, Vol. The style and level of dialogue involve all who are interested in business ethics the business community, universities, government agencies and consumer groups. Beyond medical Mission to impact-driven short-term experiences in Global Health (STEGHs): Ethical principles to optimize community benefit and learner experience. (2015) studied the effects of ethical practices on CG in developing countries. Comprehensive and systematic debate on the matter started after the World War II. Eisenhardt, K.M. 188-200. They need to support champions throughout the business who can disseminate the corporate social responsibility message. Defined by Archie B. Carroll in the latter part of the 20th century, the pyramid of corporate social responsibility contended that companies had obligations in four key areas: profitability,. Studies show that corporate governance (CG) and corporate social responsibility (CSR) are driven by ethical practices. Composite scores are used to reduce the number of observed variables in the model (Aluja and Blanch, 2004). 2004 Springer 3, pp. The Journal of Business Ethics publishes original articles from a wide variety of methodological and disciplinary perspectives concerning ethical issues related to business. Standards for global ethics should be established because as long as there is a country that can be exploited, the multinational corporation will have separate corporate social responsibilities for every country. 1. Cambridge texts in the history of philosophy. Zurich: RepRisk AG. The methodology and the results are presented and discussed below. The Ottawa Charter for Health Promotion. Boelen, C., & Heck, J. A., Kwong, J. C., Streiner, D. L., Baddour, R. E., Waddell, A. E., & Johnson, I. L. (2002). Kallamu, B.S. In the The results were analyzed using structural equation modeling. The present study aims at further understanding the relationships between Corporate Social Responsibility (CSR) and Stakeholder Dialogue (SD) by exploring whether and how corporate motives for CSR affect the engagement into SD under institutional voids. 5 Nos 1/2, pp. Global health in medical education: A call for more training and opportunities. The third factor, ETHF3, included items ETH11, ETH12 and ETH13 with extraction sums of squared loadings of 78.703 percent. Although it was valid to look at SMEs as they are expected to have a lower CG mechanism than larger companies, yet those companies (large enterprises) are expected to have higher social responsibility engagement. CrossRef In some cases, the potential breadth of issues covered under CSR and the lack of tangible ways to measure CSR efforts have meant that companies' corporate social responsibility initiatives have failed to achieve their potential. This governance creates the framework of policies, procedures, and guidelines for all individuals financially invested in a company. 1, pp. ), Encyclopedia of sustainability in higher education. (Thornton, 2019) Ethical thinking is concerned with the application of values (Fawcett, 1991 ), in particular, using values to inform how we make decisions and what decisions we make. SMEs participated in this study were selected through personal contacts. The right software can transform your companys ESG program. Dont miss the biggest, most exciting governance, risk and compliance event of the year. Social responsibility disclosure in the international gambling industry: A research note. Business ethics sets major rules or even directions that are employed when organizations develop their strategic plans and shape their behaviors. First, it can be effective to consider certain historical perspectives to better understand the concepts. Defining and measuring the social accountability of medical schools. Gallego-Alvarez et al. 2, pp. The Hong Kong Polytechnic University, Kowloon, Hong Kong, China, The Chinese University of Hong Kong, New Territories, Hong Kong, China. The notion of social responsibility and ethics has been widely examined in a range of different industries. Luo, X. and Du, S. (2015), Exploring the relationship between corporate social responsibility and firm innovation, Marketing Letters, Vol. Dardour, H. (2015), Investigating the relationship between directors profile, board interlocks and corporate social responsibility, Management Decision., Vol. 23-61. What is business without competition? The work described in this chapter was partially supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project Reference No. Choudhry, S., Choudhry, N. K., & Brown, A. D. (2004). El-Kassar et al. If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. Thus, the analysis is conducted based on the entire sample. Gebba, T.R. While many different types of ethics exist, the common good approach most closely connects business ethics and social responsibility. In addition, the board of directors and the owners of an entity have moral and ethical obligations toward their stakeholders, the presence of CG will further dwell upon these behaviors and increase actions enhancing the decision-making process. Boston: Cengage Learning. 1, pp. Upper Saddle River: Pearson Education. This motivated me to take a closer look at a sample of the management and business ethics literature for an explanation of their confusion. New York: Oxford University Press. The remaining MENA region countries do share similar cultural and economic characteristics as Lebanon and Egypt. Print. For example, Habbash (2016) tackled the effect of CG regulations in the Kingdom of Saudi Arabia, and the analysis caused significant positive correlations between government ownership, family ownership, firm size and age and CSR disclosure. American Lebanese Chamber of Commerce (AmCham Lebanon) (2009), Online newsletter, available at: www.amcham.org.lb. The board of directors performs both a monitoring and advisory role. (2012), Corporate social responsibility, ethics, and corporate governance, Social Responsibility Journal, Vol. As stated, implementing CG may not be as easy as it appears, especially when it comes to the corporate realm, but researchers have agreed on the importance of CG in enforcing CSR and ethical principles with in an entity. The database is updated daily, so anyone can easily find a relevant essay example. Health and Human Rights, 19(1), 1. Tumay, Meltem. It is necessary to add that business ethics is mainly concerned with morality and ethics. PwC. Khalil, S., Saffar, W. and Trabelsi, S. (2015), Disclosure standards, auditing infrastructure, and bribery mitigation, Journal of Business Ethics, Vol. 7-23. The resulting four scores (BORD, ADTC, OWNR and TRSP) were used to transform the CG construct into a first-order latent variable. Academic Medicine, 92(3), 299307. Thus, business ethics is a set of moral regulations and values. G4 sustainability reporting guidelines. However, adoption and awareness improved significantly over the past decade with stakeholders realizing the importance of CSR. Boumil, S. J., Nariani, A., Boumil, M. M., & Berman, H. A. CG and CSR were also linked to innovation (Rexhepi et al., 2013; Bocquet et al., 2013; Cantista and Tylecote, 2008; Luo and Du, 2015). The 13 items measuring ethical practices were factor analyzed resulting in three factors: ETHF1, ETHF2 and ETHF3. CG must be examined from an ethical and moral stance. (2018). Print. Improving your board's diversity is therefore not just the 'right' thing to do; it can help improve your business performance. Finally the three items of CSR were used to measure CSR engagement. Overlaying all of this is the growing practice of organizations being givenESG ratingsby third parties. (2003), The evolution of corporate governance and its impact on modern corporate America, Management Decision, Vol. CrossRef In order to satisfy stakeholders and gain a positive image, firms have adopted CSR in their agenda and embedded it into their strategies; the concept of CSR developed beyond economic responsibilities as building and maintaining an ethical identity became prominent, especially when stakeholder became more interested in the overall well-being of the society. According to Mahmood (2008), any code of CG must at least include the following fundamental keys: board of directors, corporate financial reporting, independent external audit and internal audit. The three have subtle differences that boards will want to understand and bear in mind when deciding on the focus of theirsocially and environmentally focused activity. CSR is often erroneously used interchangeably withESG (environmental, social and governance), a term that describes a more tightly defined set of criteria around which businesses build their ethical strategies. Adams, C., & Narayanan, V. (2007). Melby, M. K., Loh, L. C., Evert, J., Prater, C., Lin, H., & Khan, O. d. a component of social responsibility. It requires doing the work to understand issues clearly before making decisions or taking actions that are ethical'. According to him, the constitutive view sees CSR as the governance model on the basis of which a company pursues [] the joint interest and mutual advantage of all its relevant corporate stakeholders (Sacconi, 2012, p. 13). The United Nations. Ageing & Society, 36, 400419. Visit emeraldpublishing.com/platformupdate to discover the latest news and updates, Answers to the most commonly asked questions here. Bonazzi and Islam (2007) considered that the monitoring of CEO by the board will improve the CEOs performance and steer the firm away from probable conflict of interests and agency problems. Gamal El Din, A. Through philanthropy, Lebanese banks such as Bank Audi, Byblos Bank and Bank of Beirut started their CSR activities while other companies have declared their ethical codes of conduct. 28 No. While many interrelate CG with ethics and morals (Trong, 2012), it is crucial to have an internationally acceptable guidelines and ethical behaviors upon building up a CG system. (2008), Corporate governance and the external monitoring of banks in Lebanon, Corporate Governance: The International Journal of Business in Society, Vol. In addition, the value of the average variance extracted for each variable was well above 0.5 threshold. Nheri, O. Understand the principal philosophies of ethics, including utilitarianism, duty-based ethics, and virtue ethics. Social Responsibility and Ethics in Health Care. IvyPanda. With the presence of high corruption indices and political instability in the MENA region in general, as much as CG is highly demanded in these days, its application will be further postponed until economies and situation settles down a bit. Hence, it is possible to state that business ethics can be regarded as the basis of social responsibility as it provides a certain kind of paradigm used by businesses. (2019, June 24). Hassan, M. (2013), The introduction of corporate governance codes in a transitional economy and its impact on compliance with mandatory disclosure: the case of Egypt, International Journal of Research in Business and Social Science, Vol. While this ethical approach can apply to different regions or nations, a basic set of ethical traits include honesty, integrity, transparency, and accountability. Osmand Vitez Last Modified Date: April 09, 2023 Business ethics and social responsibility are two concepts many individuals believe go hand in hand for companies in the business environment. Anyone you share the following link with will be able to read this content: Sorry, a shareable link is not currently available for this article. Ethos, 33, 4670. Retrieved from http://www.who.int/healthpromotion/conferences/previous/ottawa/en/. 4, pp. Fitting the inner model was accomplished primarily through path analysis with latent variables. This is a key reason why companies engage in corporate social responsibility. Despite this, the concepts of corporate social responsibility and ethics are not always fully understood by businesses. For example, the financial crisis of 2008 reinforced how CG failures can not only ruin corporations, but also adversely disrupt whole economies (Claessens and Yurtoglu, 2013). The proposed relationships are empirically tested using survey data targeting corporations operating in two MENA region countries, Egypt and Lebanon. The study also revealed a concentered management and control in the hands of family members who dominate the shareholders. 55 No. Attraction or distraction? Journal of Business Ethics, 91(4), 567586. "Relationship between Business Ethics and Social Responsibility." It is well known that CG has various definitions since it is tackled from opposing viewpoints; however, it is universally agreed upon that CG plays a fundamental role in distributing responsibilities and resources in a firm in order to affect strategic choices and create value within the respective entity and across countries (Aguilera Florackis and Kim, 2016). Also, the reason behind this failure goes back to socio-economic issues as Samaha et al. Legal and ethical issues for health professionals (3rd ed.). For OECD, CG continues to be a major issue since its establishment of the CG principles in 1999. With their flexible structures, small to medium enterprises are capable of meeting various demands in diverse markets and even create economic activities. Procedia Social and Behavioral Sciences, Business ethics and corporate governance in Africa, Corporate social responsibility and corporate governance, Corporate governance in MENA countries. What is the Importance of Ethics When it Comes to Governance? (2017). Every animal uses resources, so why should we be forced to quit using them. 33, pp. 16 No. Mahmood, S. (2008), Corporate governance and business ethics for SMEs in developing countries: challenges and way forward, International Society of Business, Economics, and Ethics World Congress, July, pp. 691-718. Building on this, the country is offering some valid opportunities to elevate the CSR dimensional construct in its realm. Figure 1 depicts the theorized relationships between ethics and CSR, with CG being a mediator. There is subtle and implicit relationship between morality and responsibility. These companies have to change their operations and the way they provide the policy of social responsibility to adjust those policies to the existing business ethics. (2011), The second corporate governance wave in the Middle East and North Africa, OECD Journal: Financial Market Trends, Vol. 1 Introduction Corporate governance (CG) and corporate social responsibility (CSR) have been important research issues for decades. Want to save up to 30% on your monthly bills? One such component is the ownership structure which mainly focuses on the board of directors practices and its established committees. Limitations, suggestions for future studies and conclusions are presented in Sections 5 and 6. In conclusion, it is possible to note that the concepts of business ethics and social responsibility are closely connected. Arnold, D., Beauchamp, T. L., & Bowie, N. E. (2014). 4, pp. CSRS for corporate social responsibility score. The study contributes to corporate ethics, CG and CSR literature by providing evidence from a significant region, with both developing and emerging economies, on the mediating role of CG on the relationship between ethics and CSR. to Friedman, M. (2007), there is an overlapping relationship between social responsibility a nd business ethics, which appeared in late seventies of the last century, when the focus on the 57-74. Oxford: Oxford University Press. The agency theory (Eisenhardt, 1989) defines the relationship between one individual (agent) who acts on behalf of another (principal) in an organization, where he or she is supposed to progress the goals of the latter. Pillemer, K., & Moore, D. W. (1990). and MacCallum, R.C. 21-37. The number of projects that potentially fall under the CSR banner can make it difficult to manage or quantify in terms of value. Join us in Orlando, FL, September 13-15, 2023. And since ethical practices are concerned with the general welfare of all stakeholders, equally and fairly, the presence and the practice of good CG will further enhance these ethical behaviors and increase the weight of their associated results and benefits. Modern consumers do not expect high-quality products only. (2007), Why do countries matter so much for corporate governance?, Journal of Financial Economics, Vol. Mahmood (2008) examined the challenges of CG and business ethics for SMEs in developing countries. Leung, T. C. H. (2019a). Recent research studies have examined corporate ethical practices, CG and CSR independently, as well as the association among these factors (Hojo on direction of association between CG and CSR). Digging deeper, the banking and financial services sectors play a pivotal in the implementation of the mentioned CG performs as they provide the primary means of business financing. PubMed Central In the industrial society, companies focused on production and sales, but the digital world has brought significant changes. 235-259. Business ethics are the rules and principles that define how an individual or a group of individuals within a firm behaves; ethical issues are vital for professionals in their everyday lives; for this reason business ethics must be strongly enforced in the field of profit-seeking establishments. The topic of corporate governance (CG) has attracted multidisciplinary researchers from fields such as law, political sciences, accounting, finance, economics and even philosophy. We have, then, three related but distinct terms: ethics, CSR and ESG. A meta-analysis allows the comparison of the relations of different types of CSR on several different outcomes, for example to learn what type of CSR is most . It is not enough to produce some goods of certain quality and at certain prices. 576-590. and McConnell, J.J. (2003), International corporate governance, Journal of Financial and Quantitative Analysis, Vol. (2016). Kim, J. Y. How should boards approach the two, and what are the crucial steps on the path to operationalizing your CSR and ethics strategy? Therefore, due to the rising significance of the stakeholder and agency theory in CSR literature, we examine the causal relations and impacts present between CG, CE and CSR. Carroll, Archie B. and Kareem M. Shabana. After reading this chapter, you should be able to do the following: Define ethics and explain the importance of good ethics for business people and business organizations. The principal-agent issue is highlighted when the agent is hired to perform tasks or services with a decision-making authority but the actions of the agent do not meet the goals of the principal. Clearly, there are various universal paradigms, but sometimes business ethics can be biased. The importance of corporate social responsibility (CSR) has undoubtedly grown over the last decade. Relationship between Business Ethics and Social Responsibility. By practicing corporate social responsibility, also referred to simply as social responsibility, companies can be conscious of the kind of impact they are having on all aspects . https://ivypanda.com/essays/relationship-between-business-ethics-and-social-responsibility/, IvyPanda. This is significantly true in Lebanese and Egyptian SMEs and FOEs. (2011), Corporate social responsibility and innovation: a resource-based theory, Management Decision, Vol. Piesse, J., Strange, R. and Toonsi, F. (2012), Is there a distinctive MENA model of corporate governance?, Journal of Management & Governance, Vol. 4, pp. 126144). In other words, it is not only about doing wrong or doing right, it is about doing right and contributing to the social development through attention to the four aspects mentioned above. 1-36. Carroll posited that CSR and business are not mutually exclusive, but companies must address their commercial obligations before seeking ethical or philanthropic ones. Compliance and Assurance. Adding to this, the well-being of employees is also integrated in good CG systems, which directly links CG with the broad concept of CSR. They are impelled at an individual level to exert discretion toward socially responsible results within every domain of CSR (Wood, 1991). 3,000 new books annually, covering a wide range of subjects including biomedicine and the life sciences, clinical medicine, Primary Care Revisited pp 225240Cite as, 1 Firms in developing nations, such as MENA countries, believe that it is non-beneficial to spend time on CG and it is better to leave the rights of the minority shareholders be identified at a country level instead of at a company level (Doidge et al., 2007). "Relationship between Business Ethics and Social Responsibility." Hershey: IGI Global. > Volume 28 Issue 1 > Leadership, Ethics and Corporate Social Responsibility Access English Franais Abstract Leadership styles and ethical issues Leadership, ethical behaviours, and employee voice References Leadership, Ethics and Corporate Social Responsibility Published online by Cambridge University Press: 24 March 2022 Oluremi B. Ayoko Article While there are cases of exploitation of people and resources, most companies do not outsource with the intent to destroy natural capital as you call it. (2019, June 24). As a result, Denis and McConnell (2003) characterized governance mechanisms to the firm as either internal or external. Noronha, C., Leung, T. C. H., & Lei, O. L. (2015). Ng, A. W., Ben, Y. F., & Leung, T. C. H. (2018a). The instrumental theory assumes that an organization is an instrument for capital and wealth formation, which utilizes CSR as a tool to promote economic objectives, whereas the normative theory defines moral commitments toward stakeholders, concentrating on ethical requirements that build the relationship between business and society (Jamali, 2008). This along with the fact that the direct effect did not show a direct significant impact between ethics and CSR indicate that CG fully mediates the relationship between ethics and CSR. Gbadamosi, G. (2004), Academic ethics: what has morality, culture and administration got to do with its measurement?, Management Decision, Vol. 94-106. Request Permissions. Universal health coverage in Latin America 2: Overcoming social segregation in health care in Latin America. 1, pp. ), Encyclopaedia of sustainability in higher education. Bocquet, R., Le Bas, C., Mothe, C. and Poussing, N. (2013), Are firms with different CSR profiles equally innovative? The Organization for Economic Co-operation and Development (OECD) is one of oldest and highly active organization concerned in setting and promoting policies along with solutions for better economic and social well-being of people; it includes a membership of 35 countries. Introduction In recent year, there is a growing trend toward the value of Ethical Business and Corporate Social Responsibility to a business. Habbash, M (2016), Corporate governance and corporate social responsibility disclosure: evidence from Saudi Arabia, Journal of Economic and Social Development, Vol. As Prezly state, there's undoubtedly a 'complex relationship between corporate social responsibility and PR.' British Medical Journal, 324, 886891. 8 No. Ethics and Morality. Journal of Business Ethics, 145(3), 637658. This ethical responsibility along with other societal, legal and environmental obligations have widened and diversified the extent of which a firm can play its ethical role and thus be an active player at a CSR level. Once again, the markets at work. In Dubai for examples, the regional institute for CG was established in 2006 in Dubai, to better advance CG reforms. In light with many scandals and fraud actions, financial reporting and disclosure became among the basics of a healthy CG system. What is Corporate Social Responsibility in Business Ethics? and Lee, S. (2014), Audit committees, corporate governance, and shareholder wealth: evidence from Korea, Journal of Accounting and Public Policy, Vol. 645-681. It is necessary to note that many approaches to defining the two notions exist (Godiwalla 1383). The existence of CG governs the relationships between the management and the firms stakeholders (Gebba, 2015). 19 No. At present, business ethics and social responsibility are associated with such concepts as corporate citizenship, sustainable development, corporate reputation and others (Madrakhimova 114). The purpose of this paper is to examine the mediating role of CG on the relationship between ethics and CSR. Numerous studies have examined the relationship between ethical practices on CG and identified the need for an internationally acceptable guidelines and ethical behaviors upon building up a CG system. Factoring Corporate Governance Combined with Sustainability Efforts. Unlike others, the focus of Deloitte is on education and skills for underserved youth, they also are committed to humanitarian causes and to creating a sustainable future. in Carroll and Shabana 87). 46 No. Strategies for social and environmental accounting: The case of multinational gambling companies. Introduction The relationship between ethics and social responsibility in customer-brand relationships is important in understanding brand attitudes (Kumar & Reinartz, 2016). 4. Yet few non-governmental organizations such as the Lebanese Transparency Association established specific guidelines and principles for financial disclosure and reporting for SMEs and FOEs (Koldertsova, 2011). The sample size was relatively small while a larger one may expose a more accurate significance. When it comes to social responsibility, it is also concerned with doing right and doing wrong. However, in the developing countries, CSR activities are not enough advanced. Corporate governance structure and firm performance in developing economies: evidence from Nigeria, Corporate social responsibility supporting SMEs: lessons learned from Egypt, Working Paper No. Usually studied is the relationship between the mother and . relationship between ethical leadership and corporate social responsibility is supported. Improving transparency and disclosure, The Lebanese Transparency Association, Beirut, p. 81, Board of directors effects on financial distress evidence of family owned businesses in Lebanon, International Entrepreneurship and Management Journal, The extent of corporate governance disclosure and its determinants in a developing market: the case of Egypt, Financial, governance and environmental determinants of corporate social responsible disclosure, Corporate social responsibility, ethics, and corporate governance, Company disclosure in Indonesia: Corporate governance practice, ownership structure, competition and total assets, Corporate governance in the public sector, Using PLS path modeling for assessing hierarchical construct models: guidelines and empirical illustration, Corporate social responsibility and employee organizational citizenship behavior: the pivotal roles of ethical leadership and organizational justice. Kim et al. 2023 Springer Nature Switzerland AG. (1984), Strategic Management: A Stakeholder Approach, Pitman/Ballinger (Harper Collins), Boston. 1-33. 642-654. The first factor, BRDF1, included items BRD2, BRD3, BRD4 and BRD5 with extraction sums of squared loadings of 73.6 percent. Correspondence to 19 No. CSR's impact on a brand's image has been evident in recent years, with numerous examples of a company's supply chain, employment practices and environmental performance having the potential to derail its reputation. When looking at why corporate social responsibility is increasingly important, the impact of CSR on all elements of corporate life should be considered. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. Barnea and Rubin (2010) observe the relationship between firms CSR ratings and their ownership/capital structures, and argue that insiders tend to overinvest in CSR. 1-39. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Ethics can mean many things to different individuals and businesses. 3, pp. 2.2. 172-180. 703-714. Rotterdam: KPMG. Prior to defining the concepts, it is also important to identify major peculiarities of the modern business world as the transition from industrial to information world resulted in peoples focus on ethics and social responsibility (Dimitriades). CrossRef The selection of Lebanon and Egypt is due to the fact that countries such as UAE and KSA were excluded as they are more developed and similar to western countries. Characteristics of first-year students in Canadian medical schools. 2019. Who cares about the business case for CSR? Journal of Business Ethics In Lebanon, CSR is limited to specific sectors and multinational corporations, and there is no tangible differentiation in the approaches adopted. Nowadays, global companies have been involved in a spate of corporate scandals, such as product safety, labour exploitation, and data security issues. Ethical issues are important to individuals and professionals in everyday life whether in businesses, academia or elsewhere (Gbadamosi, 2004). 9, pp. 8 No. Students coming into a third-year business ethics course I teach are often confused about the use and meaning of the terms social responsibility and ethics. (2014) detected a need to improve CG structures in developing countries in general and Lebanon in particular. (2012) predicted that it will take the Egyptian firms some time to envision the long-term benefits of high levels of CG disclosure. Health Research: Essential link to equity in development. However, their actions and decisions made are shaped by the public opinion and profitability of an organization depends on the degree of its responsibility. Journal of Business Ethics, 145(3), 637658. (2017), Corporate social responsibility and employee organizational citizenship behavior: the pivotal roles of ethical leadership and organizational justice, Management Decision, Vol. Pittsburgh: Duquesne University. In J. Unerman, J. Bebbington, & B. ODwyer (Eds. The second factor, ADTCF2, included items ADTC7, ADTC8 and ADTC9 with extraction sums of squared loadings of 75.154 percent. 88-99. d. a component of social responsibility. You can also search for this author in (2005), Using parcels to convert path analysis models into latent variable models, Multivariate Behavioral Research, Vol. For example, based on the agency theory, Barnea and Rubin (2010) suggest that if CSR initiatives do not exploit organizational value, such initiatives waste resources and a potentially value-destroying proposition. Corporate Social Responsibility and Business Ethics. Ehikioya, B.I. Wood, D.J. We will write a custom Essay on Relationship between Business Ethics and Social Responsibility specifically for you for only 9.35/page. However, businesses still had quite a specific understanding of the concepts. Otherwise, they will become less competitive and will have to abandon the market, which will lead to reduction of their economic gains. One of the most popular definitions of CG introduced by the Cadbury Committee (1992) is that it is the system by which companies are directed and controlled. For Shleifer and Vishny (1997), this CG system deals with the ways in which suppliers of finance to corporations assure of getting a return on their investment, whereas the mechanisms of CG are the legal and economic institutions that can be changed through political process (Shleifer and Vishny, 1997). Dacso, M., Chandra, A., & Friedman, H. (2013). Increasingly, third-party rating and reporting organizations are providing these ratings as part of their assessment of businesses' investment potentialgiving companies another business-related imperative for improving their ethical performance, specifically around environmental and social factors. The management of agency relationship plays vital role in both CG and CSR, as they both can be viewed from a principal-agent relationship perspective, reflecting how crucial it is to explain paused relations between various groups and the choices made for the right strategies to manage the agency problems risen (Germanova, 2008). Retrieved from https://ivypanda.com/essays/relationship-between-business-ethics-and-social-responsibility/. Upper Saddle River: Prentice Hall. Also, the results supported the mediating effect of CG on the relationship between ethics and CSR. physics, engineering, mathematics, computer sciences, and economics. The proposed model depicted in Figure 1 and the established hypotheses are tested, and the model goodness-of-fit is reported. Because at the end of the day, firms are nothing but a group of people planning and implementing decisions, the ethics of these people are translated into the firms ethics. Confirmatory factor analysis was also conducted for ethics. Freemans proposed study traced a path that buoys up the consideration of new stakeholders, beyond the traditional pool, including employees, clients and vendors, signifying in turn novel methods of managerial understandings. Moreover, CSR awareness is being spread through networks like CSR Middle East, whose members are companies, agencies and organizations interested in communication social responsibility and corporate citizenship initiatives in the Middle East. This paper identifies the different ways the relationship between social responsibility and ethics has been represented, the various uses of these two terms, and the contrasting views regarding the connection between morality and ethics. Comprehensive and systematic debate on the matter started after the World War II. They are committed to contribute to the development of the community and the entire humanity. In W. L. Filho (Ed. New York: Columbia University Press. Doidge, C., Karolyi, G.A. Geneva: WHO. (2015), Corporate governance mechanisms adopted by UAE national commercial banks, Journal of Applied Finance and Banking, Vol. While some considered CSR as an antecedent to CG (Trong, 2012), Jo and Harjoto (2012) studied the direction of causation between CG and CSR and found that CG has a positive effect on CSR. This need for honesty dovetails neatly with an ever-growing spotlight on business transparency which is supremely important when it comes to ethics and CSR. CAS The order of events is perhaps the most important aspect here: While CSR provides an excellent story for corporates seeking positive publicity, the story should be secondary to a genuine concern for ethics and a desire to fulfill their social responsibility. Canadian Medical Association Journal, 170, 19151919. Ethics refers to a set of rules and principles that guide humans' conduct (Johnstone and Crock, 2012).Ethical behavior could be simply defined as a strong connection between the concepts of right, proper, and fair (Hosmer, 1987).On the other hand, a community's ethical behavior is generally shaped by each country's legal and regulatory systems (Harrison, 1988). For CG, confirmatory factor analysis was conducted on each of the four CG components: audit committee, board of directors, ownership structure and transparency. 40 No. Wadie, R. (2011), Corporate governance in the public sector, Middle East Point of View, No. Redefining global health-care delivery. Claessens, S. and Yurtoglu, B.B. (1991), Corporate Social Performance, Academy of Management Review, Vol. The reminder of this paper is organized as follows. Corporate social responsibility in healthcare and care services 2015: Developing sustainable healthcare & care services in Scandinavia. The majority of businesses practice this to gain a short-term competitive edge without thinking about the long-term effects of their actions on future generations. In the Middle East and North Africa (MENA) region, 85 percent of business entities are small to medium-sized enterprises (SMEs) and family-owned enterprises (FOEs) (Sadi, 2004), where CG practices have yet not reached a saturated level, and are still challenged by both external and internal factors. This proves that the model presented is of high reliability and consists of reflective factors. Thus, CSR has been considered as a model of CG with a focus on stakeholders rather than shareholders. Kellermanns, F.W., Eddleston, K.A., Sarathy, R. and Murphy, F. (2012), Innovativeness in family firms: a family influence perspective, Small Business Economics, Vol. 2, pp. Her expertise in equipping governance, risk, audit, compliance and ESG professionals with key insights into sustainability, cybersecurity and the regulatory landscape helps them stay ahead of an increasingly challenging business environment. This is an example of the free market at work. (2017). 44 No. As a result, it is obvious that effective CG needs both internal and external supporting factors. Social responsibility and ethics Ethics refers to a set of moral principles that govern a company's or person's behavior. Thus, business ethics must be strongly enforced in a world where greed and profit seeking blind out the minds oftentimes. https://doi.org/10.1007/978-3-319-63951-2_272-1. Similarly, some researchers argue that CSR is a very broad domain, and VD of IC should be considered as a social responsibility action (Chan et al., 2014). 15 No. Stages of corporate citizenship: A developmental framework. El-Kassar, A.N., Messarra, L.C. This implies that more than 50 percent of the variance was explained by the constructs. Moreover, sound CG practices have a direct effect on the economy; they are capable of attracting investment to the MENA region, given that they improve efficiency of management in companies and decrease risk. 132 No. 52 No. As accounting is the language of business, the need for a clear and fair representation of the firms standing becomes a must. It is much more important to understand customers needs and respond to them in the most efficient way (to be more competitive than others). Empirical analysis with survey data, European Management Journal, Vol. KPMG international survey of corporate social reporting 2017. Trong, T.L. Ghafran and OSullivan (2013) stated that financial statements attain a higher quality, when audit committees are more independent and reveal good expertise in finance/accounting. As we noted above, transparency is recognized as one of the core principles of corporate social responsibility. It is worth noting that it is common that respondents from family business and SMEs are very unlikely to report their financial and nonfinancial information often because the firms are not publicly traded (Kellermanns et al., 2012). Social responsibility is organizations responsibility to make choices and undertake actions that will contribute to the social development of communities at different levels (Tumay 64). Leung, T. C. H., & Ng, A. W. (2018). 1, pp. The four components of CG (transparency, audit committee, board of directors and ownership structure), corporate ethics and CSR were all measured using a five-point Likert scale (ranging from Strongly Agree to Strongly Disagree). Consumer understanding of calorie amounts and serving size: Implications for nutritional labelling. 95-127. The relationships between corporate ethics, CG and CSR have been heavily studied indicating significant associations. In each case, a score was calculated to represent the corresponding factor. Oxon: Routledge. A theory of justice. El Kayaly, D. (2014), Corporate social responsibility supporting SMEs: lessons learned from Egypt, Working Paper No. They expect that companies that make profit will share and will contribute to the development of the community. Freeman, R.E. 9, pp. 1, pp. This is IvyPanda's free database of academic paper samples. (2008), Industrial innovation, corporate governance and supplier-customer relationships, Journal of Manufacturing Technology Management, Vol. 532-541. Effective CG prevents overinvestment, thus predicting an inverse relationship between CSR and CG. Print. Purpose. Practicing corporate social responsibility can make an organization more aware of its impact on society. According to authors Andre and Velasquez, ethics has two parts. IvyPanda. 3, pp. It focuses on stakeholders needs and economic gains are not primary. MacIntyre, A. The idea of a moral code extends beyond the individual . 2 No. It is noteworthy that the discussion of issues associated with ethics and social responsibility occurred in the first part of the 20th century but it was quite sporadic in nature (Carroll and Shabana 86). 3, pp. (2014), Economic reforms, corporate governance and privatization method as determinants in performance changes of new privatized firms: the case of MENA countries, Journal of Management & Governance, Vol. (2010). The sustainable development Agenda. Rossouw, G.J. (2009), Corporate governance structure and firm performance in developing economies: evidence from Nigeria, Corporate Governance: The International Journal of Business in Society, Vol. 29K views, 1.4K likes, 222 loves, 1.8K comments, 525 shares, Facebook Watch Videos from Onua TV: Onua Maakye with Captain Smart ||25-05-2023 #OnuaTV These organizations have a well-established culture. While there are always questionable motives behind CSR engagement by firms, it seems that regardless of these motives, firms and their stakeholders are more realizing the socially responsible role and the contribution that a firm must undertake and is expected to do by its community. The innovative capabilities of SMEs in developing and emerging economies could be enhanced through corporate ethical practices which guide management for more CSR engagement through good CG. 2, pp. Building an ethical identity for businesses became essential, especially with the increasing awareness of customers and general well-being of communities. Ethical (trustworthy) companies are better able to attract and keep customers, talented employees, and capital. 213-231. Is there a distinctive MENA model of corporate governance? Under CG practices, there lie several categories and components which usually indicate the level of CG in a company. People now strive for development of the society and organizations that have significant resources are seen as potent agents in this process. The study moves on to discuss the relationship between CG and CSR. In Egypt, a study by El Kayaly (2014) showed that Egyptian firms lack any CSR direction and implement CSR practices for marketing purposes only, while also some private banks and companies started their CSR activities including QNB Al Ahli Bank and Procter and Gamble Egypt. Ethics and its role in corporate governance, Note: TRSP, transparency of financial data, Analysis of ownership structure and control privileges, Note: OWNR, analysis of ownership structure and control privileges, Structure of board of directors and management, Note: BORD, structure of board of directors and management, Analysis of auditing committee and elements, Note: ADTC, analysis of auditing committee and elements, Note: CSR, corporate social responsibility, Discriminant validity of variables construct, p-Values of structural model results direct and indirect effects. 75 No. 273-291. https://doi.org/10.1108/MD-03-2017-0287, Copyright 2018, Maheshwaran Gopalakrishnan, Published by Emerald Publishing Limited. PubMed Accordingly, the following hypotheses are posited: Ethical practices have a positive impact on CG. TheTelegraph reportsthat in 2019, while 59% of consumers expected companies to take a stand on climate and environmental issues, only 16% of business leaders cited CSR as their top three business concerns. Examining the mediating effects of CG on the relationship between ethical practices and CSR, the indirect results showed a significant indirect effect (path coefficient=0.250, p-value=0.001) supporting H4. Geneva: World Health Organization. (2012), The causal effect of corporate governance on corporate social responsibility, Journal of Business Ethics, Vol. El-Kassar, A.N., Elgammal, W. and Bayoud, M.M. Packaging and Labeling (Healthcare) Service Market Global Industry Analysis, Size, Share, Growth, Trends and Forecast 20152023. At that, such concepts as corporate philanthropy and management of stakeholders were central to the understanding of social responsibility and business ethics (Madrakhimova 114). : UGC/IDS24/18). 2020 Springer Nature Singapore Pte Ltd. Leung, T.C.H., Ho, J.C.K. 2, pp. A Malaysian study by Kallamu (2016) examined the impact on audit committee attributes and firm performance as a result of the code of CG being revised, to find that these attributes were significantly improved. (2012) found a significantly low level of disclosure and transparency compared to Anglo-American countries. This ethical responsibility along with other societal, legal and environmental obligations have widened the extent where a firm can play its ethical role and thus be an active player at a CSR level. What Is the Relationship between Business Ethics and Profits? (1984). Moreover, Freeman explains that managers need to comprehend the rationale or organizational process put in place to deal with the respective stakeholders. Social justice: The moral foundations of public health and health policy. Sometimes, this interplay between commercial and ethical imperatives is referred to as the 'triple bottom line,' an accounting framework that considers three aspectssocial, environmental (or ecological) and financialto give organizations a fully rounded view of their performance. Study moves on to discuss the relationship between business ethics is mainly concerned with doing right and doing wrong Aluja!, 2015 ), a general approach for representing constructs in organizational Research,. 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