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Home arrow Management arrow Corporate Fraud and Corruption: A Holistic Approach to Preventing Financial Crises

Conclusions

The preceding discussion provides a few key points about ethical behavior in business. The prevention of fraud and corruption and a belief in SR can perhaps best be achieved by targeting people’s conscience, their ethics, and decision making. First, in educating future business leaders, it is important to systematically teach the need for moral reasoning based on such principles as integrity and respect for the rights of others. This can be achieved by stressing the importance of such heart values as honesty and caring for others rather than emphasizing the importance of getting ahead in life and taking pride in one’s performance. Second, educators can positively impact young people by encouraging them to stop and think about ethics and the decisions they are making.

As provided in the UN Guide to Corporate Sustainability, principled business and the right tone at the top must be the defining feature of a corporation’s culture; in other words, to have a comprehensive strategy and to operate with integrity, it is necessary to respect fundamental responsibilities in the areas of human rights, labor, environment, and anticorruption. This is not an easy goal for a company to achieve and especially for MNEs because there are indications that company employees are in practice influenced more by the prevailing morality of the society in which a company is operating rather than their company’s ethical code.

While CSR has been adequately defined by the European Commission and the UNGuide to Corporate Sustainability, the concern is with the types of organizations that are not addressed. Fortunately, ISO 26000 talks about SR and is applicable to all types of organizations, both in the public and private sector. It would seem, however, that for SR to become an integral part of an organization’s DNA, it must be mandated by law as is the case in a few countries already.

Critics of CSR have argued that it is not a unified concept. However, evidence against the critics is (a) the phenomenal growth of CSR and (b) the fact that empirical studies indicate the alleged vagueness and ambiguity of the CSR concept are more characteristic of academic theorists writing on CSR than opinion leaders as CEOs and governance authorities using it. CSR has been well canvased in the EU and especially by the 2014 directive, which affects a large number of companies across the EU. The combined effect of ISO 26000, the EU directive, and the UN Guide on Corporate Sustainability means that SR is now part of the mission of a significant number of organizations in both the private sector and the public and semipublic sector worldwide.

Encouraging firms to grasp the opportunity offered by the financial crisis to transform the CSR function, Manubens (2009) made several recommendations for business and CSR leaders, namely to (a) realign CSR strategies and priorities with the new realities; (b) accept and live with the fact that a crisis means disruption within the organization; and (c) concentrate on several critical areas to make the CSR function and its global team members more effective, moving forward and raising their CSR programs to a new high level. Advocating a unified sustainability blueprint and crossindustry CSR collaboration in order to achieve a greater impact as far as sustainability and CSR are concerned, McDermott (2009) proposed “Corporate Agenda 21,” comprising leading reputable corporations worldwide. The aim is to have an association that would offer increased cross-industry collaboration through a collective plan of action in the field. For his part, Baraka (2010) concluded that in the pre-engagement phase, corporations and third-sector (i.e., nonprofit nongovernmental) organizations may be able to better predict the likelihood of success before they enter into a partnership.

While not ignoring the fact that, understandably, there are different approaches to CSR in different parts of the world, it is encouraging to know that CSR positively impacts ethical standards within companies generally. In evaluating a company’s SR performance, a number of different ethical indices can be used, but their limitations need to be borne in mind. Finally, the concepts of business ethics, CSR, and governance have been converging, and in fact, they can be said to have been merged in the notion of corporate sustainability for the private sector. Coupled with ISO 26000, which encompasses all types of organizations, this synthesis of hitherto overlapping concepts means that SR can be taught, implemented, and evaluated as a unitary paradigm. With this in mind, the next chapter focuses on governance, a vital concept in any effort to prevent corruption and corporate fraud.

 
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