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photo credit Nasa / Goddard Space Flight Center / Reto Stöckli
Ethics and Corporate Social Responsibility
Join Fair Labor Association (FLA)

Regular Audits and monitoring

Assign expat staff for monitoring

Hire host country monitors

Send regular parent country monitors
Foxconn Scandal
United States
Ethics and Corporate Social Responsibility
Why is Ethics and Social Responsibility
Important for IHRM
Apple Inc.
APPLE in China
Implications for IHRM & ER
Questions ?
2006 – Chinese local press reported on excessively long working hours and discrimination.
2010 – Media reveals several suicides
May 2010 – Explosion in the factory
January 2012 – Mass suicide protest
Group Presentation
Week 10
Ethics and Corporate Social Responsibility
Aaron Howell
Amra Halilovic
Berit Cathrine Dysjaland
Julie Hanna
Maike Schulz
Corporate Social Responsibility (CSR) and Ethics: Literature Review
Corporate Social Responsibility (CSR) is the process by which businesses negotiate their role in society.

In the business world Ethics is the study of morally acceptable behaviours and decisions; examining: “how and what should be done”.

Though linked; CSR is no guarantee of ethical behaviour.
(Caroll, 1991; Rainborn & Payne, 1990; De George, 1999; Joyner & Payne, 2001; Robins, 2005; Fray, 2007; Valentine and Fleischman, 2008; Tran, 2010)
CSR is exercised through:

- Corporate citizenship
- Governance
- Community investments
- Moral behaviours
CSR activities are important to and even expected by the public
CSR activities help organizations hire and retain the people they want
CSR activities contribute to business performance
(Fray, 2007; Adeboye & Olawale, 2012; Maguad & Krone, 2009)
Ethical behaviours:
- No child Labour
- Fair treatment
- Information disclosure
- No discrimination
- No corruption

The cultural context influences organizational ethics
Top managers also influence ethics
The combined influence of culture and top management
(Fray, 2007; Maguad & Krone, 2009)
Ethical conduct is needed in an increasingly interdependent world—everyone in the same game

Create a cohesive ethical program that meets multiple and sometimes conflicting demands.

Various ways for companies to integrate ethics.

Fundamental honesty and adherence to the law
(Beatty, Ewing & Tharp, 2003; Tran, 2010)
Corporate Social Responsibility (CSR) and Business Ethics (BE) are interrelated concepts representing effective business tool. Being socially responsible means that organisations and people behave ethically and are sensitive toward economic, social, cultural and environmental issues.
People should be treated as ends in themselves not merely as means to an end.
(BBC News, 2006; The Telegraph, 2012; Torres, Garcia-French,Hordijk,, Nguyen, & Olup, 2012)
Have to understand;
Different labour laws and environmental regulations
Different customs and religions
Education levels
Role of social organisations, values and attitudes
Lack of supplier compliance & law enforcement

Ethical approach
“There is nothing either good or bad, but thinking makes it so.“
(from Hamlet , Wm. Shakespeare; Act II, scene ii)

Portrayed as global abuser by Media
Connected to irrelevant stories

Award winning organisation
Hugely financially successful
Globally recognised brand
Loyal customers
Ex CEO, Steve Jobs praised as a role model
Apple praised for creating US Jobs
Ethical relativism - Theory that there are no universal or international rights and wrongs, it all depends on a particular culture’s values and beliefs. (when in Rome, do as the Romans do).

Ethical absolutism – Theory that that when in a foreign country, one should do what one would do at home, regardless of what the locals do. This view of ethics gives primacy to one’s own cultural values.

Ethical universalism – Theory that there are fundamental principles of right and wrong which transcend cultural boundaries and multinationals must adhere to these fundamental principles or global values
Ethics and CSR
When conducting business internationally issues of ethics and CSR become complex, especially when multinational enterprises operate in host countries that;

Have different standards of business practice
Are economically impoverished
Have inadequate legal infrastructure
Have corrupt Governments, and
Where human rights are habitually violated

Questions arise in context of different parent and host country practices.
Foxconn factory workers commit suicide (October 19th, 2012) Retrieved February 15th, 2013 from http: //www.youtube.com/watch?v=MKnx2JWfNSM
The Truth of the Apple ipad Behind Foxconn´s Lies. (June 6th, 2011) Retrieved February 15th, 2013 from http:/ /www.youtube.com/watch?v=V3YFGixp9Jw
“ Workers everywhere should have the right to safe and ethical working conditions. They should also have access to educational opportunities to improve their lives. Through a continual cycle of inspections, improvement plans, and verification, we work with our suppliers to make sure they comply with our Code of Conduct and live up to these ideals.”
Empower workers

Protect workers’ rights

Safeguard workers’ health and well-being

Reduce their environmental impact
What does Apple do to….
Apple is the first technology company to open its supply chain to the Fair Labor Association (FLA)

In February 2012, the FLA assessed working conditions and the treatment of workers at three Chinese factories manufacturing Apple products

In March 2012, FLA published detailed reports on each of the three factories along with recommendations for improving conditions for workers

Remediation plan over 15 months , outlined 360 remedial actions
How does Apple hold themselves and their suppliers accountable?
Long term competitive advantage
Respect for environment and stakeholders
Global corporate reputation and brand
Impact on organisational goals and employee motivation and retention
Abide by legal regulations
(SAGE Publications, 2013)
Continue to improve business practices with the aim of meeting financial stakeholder expectations, employee satisfaction and public approval
Company Facts
Implications for IHRM and ER
Apple Inc., (2013)
Apple is an American Multinational Corporation
Apple designs, develops, and sells

It’s Best known hardware products are ????

Apple Facts
(Apple Inc., 2013)
Apple is an American Multinational Corporation
Apple designs, develops, and sells

It’s Best known hardware products are ????

Apple Facts
Apple Inc., (2013)
Its software includes:
OSX and iOS operating systems
iTunes media browser
Safari web browser
iLife and iWork creativity & production suites
2nd largest IT company by revenue
3rd largest mobile phone maker
2nd largest publicly traded corporation in the world by market capitalization
Apple Facts
(Apple Inc., 2013)
Its software includes:
OSX and iOS operating systems
iTunes media browser
Safari web browser
iLife and iWork creativity & production suites
2nd largest IT company by revenue
3rd largest mobile phone maker
2nd largest publicly traded corporation in the world by market capitalization
Apple Facts
(Apple Inc., 2013)
Sept 2012
72,800 permanent full time employees
3,300 temporary full time employees worldwide

Nov 2012
Apple maintains 394 retail stores in 14 countries

Worldwide annual revenue $156 billion
Apple Facts
(Foxconn, 2013)
Taiwanese Multinational Manufacturer

Largest electronic contract manufacturer measured by revenues

Has factories in Asia, Europe, south America

Assemble around 40% of all customer electronic products sold

13 factories in nine Chinese cities
Foxconn Facts
(Foxconn, 2013)

Foxconn’s largest factory worldwide:
Covers up to 3 sq km
1.2 million workers employed by Foxconn China

Foxconn continues to expand with more factories planned in other provinces
Founder of Foxconn estimated net worth
$5.7 billion
Foxconn Facts
(Rose, 2007)
(Apple Inc, 2013)
(Apple Inc, 2013; Fair Labour Association , 2013)
(Apple Inc, 2013)
HR role in leadership is critical in leading and educating the organization on the importance of CSR and the best way to implement strategic policies and programmes relating to CSR both domestically and abroad.
Corporate ethical values can be influenced by corporate culture and numerous accountability mechanisms are utilised to provide adherence to ethical behaviours. These include, disciplinary systems, performance evaluations, pay for performance, performance monitoring, employee handbooks, code of conduct. All of which are the domain of HRM.
(Buckley,2001 ; Sharma, Sharma, & Devi, 2011)
(Fair Labour Association , 2013)
(Adeboye & Olawale, 2012)
Managing image difficult as Foxconn is external supplier.
HR responsible for;
Equal opportunities
Labour standards
Diversity management

(Harzing & Pinnington 2011)
Full transcript