Topic 9 Civil Society, Government, Regulation and Business Ethics

In topic 1 we looked at other stakeholders that influence the organization in some ways. They directly affect a particular organization but they are not part of the organization. Each dimension of the general environment embodies conditions and events that have the potential to influence the organization in important ways.

Civil society sector is another group that does influence organization to certain degrees also. Civil society organizations includes a whole lot of pressure groups, non-government organizations, charities, religious groups and other actors that are neither business nor government organizations, but which are involved in the promotion of certain interests, causes and or goals.

Some well-known international Civil Society organizations are the Red Cross, Greenpeace, and Amnesty International and many others. 

Characteristics of Civil Society Organizations (CSO)

Civil Society Organizations
Types	Structure	Focus	Activities	Scope
Community Group Campaign Group Research organization Business Association Religious Groups Trade Union Technical Body	Informal Formal Co-operative Professionals Entrepreneurial Network	Natural Environment Social Issues Development Poverty Alleviation Human Rights Animal Welfare	Academic Research Market Research Policy Research Information Provision Campaigning Protests & demonstrations Boycott co-ordination	Individuals Grass-roots Locals Regionals Nationals Transnational Global

 

Civil Organizations as Stakeholders

If you look at Civil Societies and the types of activities that they carry out, you will realized that one or another they do get involved with firms and corporations whether they are receiving donations, organizing protests or boycotts or even to some extreme, create disharmony within communities through other means.

Some good examples of civil society’s involvement with firms and corporations are protest against Exxon Mobil by environmentalist society, Greenpeace against many other corporations for damages to the environment etc. Transparency International speaking against corruptions against corporations is another good example of a CSO.

For individuals having CSO in their communities may be of benefits to them due to the fact that individuals raising a concern cannot be heard however, raising a concern through an established CSO gives it more weight and can be heard. 

Civil Society tend to fall into two Groups (Smith 1990:104-13)

Sectional Groups – Include trade unions, professional associations, student bodies, neighbourhood groupings, parents associations etc. This group is member-based and primarily seek to represent the interests of their members.

Promotional Groups – This type of CSO focuses on promoting specific causes or issues. Such groups are environmental groups, anti-smoking groups etc. These groups represent those with similar ideologies or shared attitudes about certain issues. 

Ethical Issues and CSOs

Given the growing importance of CSOs and its impact on business houses, it is important that ethical issues are also taken into considerations. Let us look at one important factor;

1.      Business or corporations have to make decisions based on whether the issues raised by CSO are genuine and for the benefit of the group or is it intended to gain attention for certain beneficiaries.  

Recognizing CSO Stakes

When it comes to corporations it can be easily identified of who is the stakeholders. Example you can easily work out who the stakeholders are; Consumers, Suppliers, Employees, Shareholders, and Competitors.  When issues arises among shareholders, corporations can deal with them directly but when dealing with CSOs and if there are many of them out there it would create some issues as to who is a legitimate stakeholder.

In PNG, we have Exxon Mobil LNG with diverse interests in the energy sector. How can Exxon Mobil determine who and who are legitimate stakeholders when it comes to land rights etc. Besides land issues, there are other environmental issues that firms are sometime challenged with by stakeholders. 

Civil Society Organizations Tactics

In PNG you may noticed that CSO are not passive actors. They are actually very active when it comes to promoting their causes and in seeking corporation recognitions, engagement and response. CSOs uses different tactics and these can be Indirect and Direct forms of actions.

·         Indirect Action – tend to involve research and communication about issues of relevance to the organization.

·         Direct Actions – is a far common approach (Demonstrations, Protests, Boycotts etc.) 

 

Globalization and Civil Society Organizations

With globalization, there have been significant changes to CSOs.

1.      Globalization has brought MNCs into confrontation with an extended community

2.      Emergences of new global issues for CSO to engage with

3.      CSOs have increase in term of scale and scope 

 

GOVERNMENT as A Stakeholder

In topic 2 I gave you the following abstract is the forward introduction taken from the publication; Business Ethics, A Manual for Managing A Responsible Business Enterprise in Emerging Market Economies; A Publication of the Good Governance Program.

“Government has an important role in the spread of freedom and democratic capitalism. It provides for the essential market-oriented legal framework and reliable dispute resolution processes that allow businesses to compete fairly on the quality, prices, and delivery of their goods and services alone. It enforces laws, regulations, and judgments to safeguard the social order its citizen’s value. It cannot, however, act alone. Businesses and civil society must also be involved in solutions to community problems. They can help in the fight against the corruption that saps national resources. They must reform the unethical business practices that breed cynicism and distrust in communities. Businesses are at the strategic centre of a civil society, and they have a stake in their communities. They depend on free markets and good public governance for their growth and success, but they are also authors of their own destiny”.

From the above abstract, we can see the important role the Government plays in business so here we will look at some important issues when it comes to business ethics.

 

Defining Government, Laws and Regulation

Government is involved in issuing laws regulating business practices. Within a government there are whole lot of different players that are involved such as institutions, processes, legislative bodies, executive arms of the government etc. 

Law and Business Ethics

When it comes to Law, it is concerned with the codification of what society deems are appropriate and inappropriate actions.

“Law serves as a codification into explicit rules of the social consensus about what a society regard as right and wrong.”

Regulation can be defined as rules that are issued by government actors and other delegated authorities to constraint, enable or encourage particular business behaviours.  Regulation includes rule definitions, law mechanisms, processes, sanctions and incentives. 

Basic Roles of Government as a Stakeholder

Two basic roles of the Government;

1.      Elected representatives of its citizens therefore its citizen’s interest is a priority for the government.

2.      Government also has its own interests. 

As an elected representative of it Citizens; the government ensures that business opportunities are available to its people and also ensures that laws are enacted to enable their participation. Besides enabling its citizens to participate in business, the government also enacts law to prohibit businesses to venture into certain areas.

Government has it own Interest; when considering a government interest, sometimes it is seen in their policy statement such as the interest in the economic growth of the country. The government can be judged by its citizens on how it has managed the economy. Sometimes the government’s interest is on how it has provided development at the electorate level. 

 

Corporate Citizenship and Regulation; Business as Key Player in the Regulatory Game

There are a number of reasons why new forms of regulations have emerged in recent years. According to van Calster and Deketelaere (2001), the main goals for those introducing new types of rulemaking in this area are;

·         Encouragement of a pro-active approach from industry – Industry as an addressee of the regulation and has to adapt to it. More proactive approach from the industry.  

·         Cost-Effectiveness – Another goal is to cut down on bureaucracy and cost by co-operating closer with businesses. 

·         Faster Achievement of Objectives – Time to adopt any new regulations may be shorter. 

 

Government as Regulators

Government bodies are the key players in regulations and in most economies this is widely practiced. Regulations may be implemented at the following levels;

·         Local/Regional levels

·         National Levels

·         International/Global Levels

 

Self-regulation by business

The roles of business and government have increasing become inseparable. The amount of regulations exclusively set by government is shrinking, as is the share of regulation that is exclusively set by business.

Students are encouraged to look at the different levels of governments and regulations set at the different levels to have a better understanding of these issues when it comes to regulations set or initiated by business houses. 

 

Regulation involving business, governmental actors, and CSOs

In most European countries, voluntary environmental agreements and other regulatory approaches between and government have become quite a common tool. Increasingly businesses are co-operating with CSOs.

At the national level some of these powerful CSOs are trade unions, which often take the key role in negotiating national pay conditions, initiate industrial actions etc.

At the global level, the main instruments of regulations for social, ethical and environmental impacts of business are Code of Conducts.

In an attempt to address the ethical problems linked to corporate activities on a global scale, in 2000 the UN launched an initiative called ‘The UN Global Compact which looks at working from the bottom up directly with Corporations. The Global Compact was based on 9 principles with the 10^th added in 2004. The 9 principles are;

 

Human Rights – Business is asked to;

1.      Support and respect the protection of international human rights within their sphere of influence.

2.      Make sure their own corporations are not complicit in human rights abuses. 

Labour – Business is asked to uphold;

3.      Freedom of association and the effective recognition of the right to collective bargaining.

4.      The elimination of all forms of forced and compulsory labour.

5.      The effective abolition of child labour.

6.      The elimination of discrimination in respect of employment and occupation. 

Environment – Business is asked to;

7.      Support a precautionary approach to environmental challenges.

8.      Undertake initiatives to promote greater environmental responsibility.

9.      Encourage the development and diffusion of environmentally friendly technologies.

 

Anti-Corruption – Business is asked to;

10.  Work against all forms of corruption, including extortion and bribery.

 

Governments, Business and Sustainability

When discussing sustainability, we are looking at the long term maintenance of systems according to environmental, economic, and social considerations. The central idea of sustainability is to prescribe and implement new usage of natural resources (renewable resources).

The critical issue is those so called non-renewable resources (Gold, Coal, Oil etc.) How do we utilize or safeguard such resources as per consequences of depletion of such resources.

Sustainability is important and is also a tough topic when it comes to scarcity of resources.

 

Sources:

Andrew Crane and Dirk Matten, 2007 Business Ethics Second Edition

Nickel, McHugh, McHugh, (2005) Understanding Business 7^th Edition, McGraw-Hill

Johnson, Abramov, Business Ethics 2004, “A Publication of the Good Governance Program” International Trade Administration Washington D.C. 2004