Ethics & Corporate Responsibility at the workplace and the World
All companies big or small have a responsibility towards its stakeholders for ethical execution of its operations so as not to hurt their interests or trust in the company. These responsibilities exceed beyond the workplace and must focus on improving the working and living conditions of its workers and other stakeholders. This paper is an attempt towards addressing the issues in Ethics and CSR with reference to a pharmaceutical company, PharmaCare with its Head Office at New Jersey. It is reputed to produce life saving and life improving drugs and is ethically inclined towards poorer sections of society to which it sells drugs at discounted price. However, its manufacturing facilities in Coliberia, a place in Africa have appears to be violating ethical norms and the elements of Corporate responsibility. The local population employed by it works in deplorable conditions and it exploits the local healers by learning the use of local herbs from them without compensating them. The paper discusses these ethical aberrations and failure to execute corporate responsibility with respect to stakeholder framework and suggests steps to comply with ethical norms towards the population of Coliberia employed by it. Although it is a fictitious company it can be compared to real world examples of corporate that have been in trouble because of failure to comply with ethical norms.
Characteristics of a Stakeholder
A stakeholder is identified as an individual or a body that has an interest in a business. The interest may be monetary as in the case of owners, employees and investors, regulatory as Government, social organizations and activists or business like suppliers, distributors and customers. In each case, the company has a responsibility towards them because in some way it uses the resources provided by the stakeholder directly or indirectly to perform its business operations.
(Clarkson, 1995) has presented a relationship between Corporate Social responsibility and Stakeholder as an effective measure of its corporate social performance and has defined the term as person or groups that have a claim, ownership, rights and interest in the activities of the company past present and future. The author claims that stakeholder dissatisfaction can cause sufficient damage to a company and is a measure of its performance.
Characteristics of a stakeholder. From the scholarly literature on the subject the key characteristics of stakeholders can be identified as having a claim on the resources of the organization (Lee, 2007). Investors and creditors are such type of stakeholders who have lent money in hope of profitable returns and have a legal right to confiscate the property of a company to repay its financial debts. Thus an investor like a bank may take an active interest in its performance.
Stakeholders have the ability to influence the operations of a business. Regulatory bodies come under this category. Other Stakeholders that influence operations are customers and competitors.
Stakeholders have a right to know about the activities and future plans for expansion. The shareholders expect to be kept informed about the company’s performance, activities and future growth plans. The organization is accountable to its stakeholders.
Stakeholders have an active or passive interest in the functioning of the company as good results may benefit the stakeholder and vice versa.
Stakeholders tend to be affected by the activities of the organization. The community and the environment in which an organization operates are affected by it. A good image of the organization encourages the stakeholder to remain associated with it while a bad reputation may induce him to withdraw support to the organization.
Other attributes identified by scholars such as (Mitchell, Agle & Wood, 1997) are power, legitimacy, salience and urgency which dictate the priority in which their interests are served by corporate managers.
On the basis of the above attributes the stakeholders of PharmaCare are its owners, shareholders, investors, employees, community members, customers, business associates and legal authorities.
Human Rights issues associated with treatment of Coliberia population
Corporate Social Responsibility principles direct that business organizations should be inclined towards improving the survival conditions of the local population employed by it. For a pharmaceutical company that proclaims to care about the health of the people as its mission, overlooking the pitiable working conditions of its local workers deprived of basic facilities is a serious human rights violation especially when the expatriates from the company have access to all modern amenities.
According to Human Rights Commission, every human being has a right to the basic amenities like food, electricity, water, sanitation etc. PharmsCare, although enjoys the reputation of being a caring and ethical organization has turned a blind eye towards the poor conditions of living of the natives working under it. It has not even arranged transport facilities for the local workers who walk long distance carrying heavy loads.
Also, PharmaCare should duly compensate the local healers for getting patents for local cures using indigenous herbs which it has failed to acknowledge. Also the wages paid to its workers do not adequately compensate the strenuous working conditions of local labor. It shows a deliberate ignorance of ethical norms to exploit the poverty stricken indigenous population. Pfizer has faced lawsuit for similar offence of drug trials without consent in Nigeria taking advantage of the poor natives (Kelleher, 2004).
Destroying the natural habitat of the local tribes by indiscriminate depletion of natural medicinal plants and for building luxurious facilities for expatriates living in Coliberia is another serious offence against indigenous population and critical human rights issue that must be addressed urgently.
Suggestions for ethical compliance by PharmaCare. PharmaCare must formulate a CSR policy to address the serious human rights issues posed by its irresponsible exploitation of human as well as natural resources. The policy must direct the provision of humane and safe working conditions for the local labor as employees are primary stakeholders without whose support organizations would fail to survive. It could begin by improving working conditions by providing transportation facilities to the workers and increase their wages that ensure a decent living for them.
The second initiative PharmaCare may take consistent with its image of being a caring company is providing the basic amenities to its workers like housing, electricity, sanitation and running water. It can build residential quarters for the local workers with a better standard of living.
As a measure to compensate for the depletion of natural resources in the area and destruction of natural habitats, it must undertake environmental conscious drives like building national parks to protect local species, tree plantation and maintenance of proper industrial waste disposal systems.
Other steps include voluntary contributions from the executives for educating the local residents, building dispensaries and free medicinal facilities and schools for the local children and adequately compensate the local healers for sharing indigenous cures.
Evaluation of Environmental Initiatives of PharmaCare
PharmaCare has shown its commitment towards building a greener environment by implementing recycling of waste and using biodegradable material for packaging. Although its operations in Coliberia point towards a callous attitude, its pledge to protect the environment is praiseworthy and it is justified in claiming tax exemption for executing corporate responsibility. Coliberia is the only area in which PharmaCare seems to have neglected ethical norms but its reputation of being a caring and ethical corporate gives it the right to an extension of the superfund tax.
PharmaCare Practices in Coliberia with respect to Ethical theories
An attempt has been made to analyze PharmaCare’s practices in Coliberia in light of the Ethical theories of Utilitarianism theory, deontology, virtue ethics and ethics of care.
Utilitarianism. As per this theory, individuals and groups must consider the ethical impact of their activities before indulging in them according to this theory ethically a person must undertake such actions that benefit all stakeholders. Although PharmaCare has given employment to the poor population of Coliberia, its compensation is not adequate to raise the standards of living of the people. Therefore the theory of Utilitarianism is not applicable here.
Deontology. This theory indicates that individuals must be guided by their obligations and duties when making decisions related to ethics. PharmaCare has not taken the deontologist approach while making decisions regarding ethical discharge of its duties towards its local employees. As an employer this approach would dictate that it should have made decisions that improved the standard of living of the local people working for the company. Although the company accorded a luxurious life to its executives, it did nothing to improve the status of the deprived natives in Coliberia.
Virtue ethics theory. According to this theory the unethical behavior may be attributed to an abnormal deviation in behavior which is otherwise ethical. PharmaCare’s reputation has been of a caring and ethical company which offered discounted drugs to poor sections of society. Therefore this theory may be used to explain the unethical behavior of the company in Coliberia which has otherwise displayed a moral conscience.
Ethics of care. According to this theory individuals or groups must attend to the needs of people dependent on them (Held, 2006). Adopting this approach, PharmaCare’s behavior is considered to be highly unethical in Coliberia. The local population employed by the firm is considered its responsibility and it should have taken care of the basic needs of this population. Instead the company showed a marked indifference to the poor living and working standards of the employees and did nothing to improve them. Even the compensation offered was extremely low and seemed to be taking advantage of the poor employees. The great economic gap visible in the standard of living of the executives and the local labor further strengthens the notion that PharmaCare failed to execute its Ethical responsibility towards the latter in Coliberia.
Our own ethical compass. Every individual is endowed with a moral conscience that helps him differentiating between the right and wrong. Although many activities receive official sanctions and cannot be challenged legally they can still be ethically wrong if they harm the interests of others. Even if the impact is not intentional, our ethical compass recommends that such activities must be abandoned that affect the community negatively. PharmCare’s activities are destroying the natural habitats of many species which must be restrained. If it cannot be avoided, it must at least compensate by building alternative habitats like national parks etc. Our own ethical compass dictates that PharmaCare must make conscious effort to improve the living and working standards as well as provide the local with at least the basic amenities. Also it should adequately compensate the local healers for sharing the traditional healing natural herbs. The Coliberia operation shows that the firm has failed to follow its own ethical compass.
References
Clarkson, M. E. (1995). A stakeholder framework for analyzing and evaluating corporate social performance. Academy of management review, 20(1), 92-117.
Held, V. (2006). The ethics of care: Personal, political, and global. Oxford University Press on Demand.
Kelleher, F. (2004). The pharmaceutical industry's responsibility for protecting human subjects of clinical trials in developing nations. Colum. JL & Soc. Probs., 38, 67.
Lee, K. (2007). Who Are the Stakeholders?. Journal of Technology Studies, 33(1), 2-8.
Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of management review, 22(4), 853-886.
