Educational affiliation
Abstract
Corporate Social Responsibility and Ethics
The paper analyses the role of the ethics and corporate state responsibility in the terms of the automotive industry. The study is to evaluate the role of the local ethics and the Corporate Social Responsibility in the process of the international development of the automotive industry. The key objectives are to evaluate the roles of these two concepts, find out the role of the customers’ awareness of the unethical behavior, and describe the patterns of change. The study validates why the car industry should focus on the ethical considerations and the CSR. This is evaluated by analyzing how ethical issues and CSR affected the purchasing patterns and the demand for products of the automotive industry. In additions, the report analyzes and determines to what extent ethical considerations are important in the sphere of the automotive industry.
Keywords: automotive industry, car industry, ethics, Corporate Social Responsibility
Corporate Social Responsibility and Ethics
Introduction 4
Background 4
Aims and Objectives 4
Statement and Questions 5
Main Body 6
Methodology 6
Literature Review 6
Data Analysis 9
Conclusion 12
Results 12
Recommendations 12
Bibliography 13
CORPORATE SOCIAL RESPONSIBILITY AND ETHICS
Introduction
Background
Since the dawn of our human civilization, people have been trying to improve the technological side of their existence. The revolution in mechanisms started from the very first appearance of the wheel up to the invention of the steam engine (Hills, 1989). One of the most significant steps in this evolution was the extreme turn from the power of the living creatures to the natural powers, such as steam or oil. As a result, nowadays the automobiles do not require any particular physical effort, which makes this kind of transportation the most convenient. The 18th century has become the most important period in the history of the automotive industry. Since the beginning of the 19th century, the automobiles with the internal combustion engine entered humans’ mundane routine, as well as the world’s trade market (Wick, 1997). The nice of the automotive industry is also supported by the business of the oil and gasoline trade.
Since the last decade of the 19th century, this niche has obtained the considerably important place in the system of the automotive business. Finally, the invention of the electric cars recently, in the 21st century, led the automotive industry into the world of the global resource system (Westbrook, 2001). Finally, the whole history of the automotive industry demonstrates the close connection of this sector with all the other fields of the human trade.
The perspective of the automotive industry’s development offers different directions of the change in the world’s trade culture (Schubert et al., 2001). The currently discussed topics of the modern society challenge the automotive industry to take some vital turns. For example, the high concern about the environmental protection encourage the modern transportation machines to find the alternative kind of the sources. The electric cars are the most tangible proof of the significant attempts to make the automotive industry environmentally friendly. All the things considered, the future of the automotive industry is closely connected to the direction of the society’s development, as well as the tendencies of the trade market.
The modern automotive industry appears to be the chief engine of the modern global economy (Donaldson, 1989). The evolution of the car industry in the limited locations, such as Africa (especially the South parts), as well as on the global scale makes it the index of the developing economy. This is proved by the fact that the developed countries with the most powerful economies show the significant results in the automotive industry. Such countries are China, the United States, and Germany (Frederick, 1995). As a result, the car industry is considerably dependent on the local features, such as law strategy (Hartman, 2002). Taking into account such a background, the question of the local laws and the corporate ethics appears to be a considerably important issue.
Aims and Objectives
Taking into account the fact that the automotive industry meets the sky-rocketing success, its pace of development requires the local expansion. The progressive direction for the car industry moves to the South Africa and Nigeria, joining the traditional vector China – Japan - the USA (Lantos, 2001). Therefore, the development of the industry, accompanied by the considerable local expansion on the global scale, highlights the question of the ethics.
The national laws, as well as the business cultures of different countries, are the significant variations, which forces the automotive industry lack unity. In almost all the states, which are involved in the car industry, the manner of decision making and the requirements for the negotiation culture are unique. As a result, the complex connection between several countries becomes hard to establish. The lack of the common scheme and the issues of globalization require the car industry to be extremely attentive in the questions of ethics.
The issue of the Corporate Social Responsibility (CSR) is quite important in the context of the international development too. According to the fact that international conventions fail to guarantee the global cooperation, the corporations and companies appear to be the key stakeholders. Therefore, the issues of the ethical differences are placed on the same level with the questions of the Corporate Social Responsibility, which is closer to the economic sphere. The appearance of the CSR concept in the evolution of the car industry is a crucial point, which can influence the business sphere and its development.
The concept of ethics in the context of the business, it influences the organizational culture in the way of making it more complex. Alongside developing the corporate culture by implementing some ethical consideration, the car industry meets the requirements of the evolution by improving CSR (Smith, 2003). Besides, the involvement of the CSR as a factor of the corporate culture appears to be a key part of the business strategy (Bouten et al., 2011). Therefore, both ethical considerations and the issues of the Corporate Social Responsibility are equally important in developing the automotive industry all over the world.
The aim of this study is to evaluate the role of the local ethics and the Corporate Social Responsibility in the process of the development of the automotive industry. Therefore, the chief objective of the study is to analyze both of these concepts in the context of the car industry. This objective is extremely important because of the deep analysis in the detail, which can reflect the special features of both the concepts separately.
Secondly, the objective is to trace the patterns of the customers’ behavior according to the fact of their awareness of the ethical facets of the industry’s operation. In other words, the study is going to answer the question whether the perceptions of the consumers change, depending on their knowledge about the ethical or unethical actions in the scale of the automotive industry. Besides, the amount of the social responsibility or its lack in the minds of the customers can influence the tendencies in the trade market. The paper ought to address both of the issues in order to define the role of the customers in the role of the ethical and responsible controllers.
Thirdly, one of the objectives is to examine the results of the changes in the business strategy, connected to the ethical sector and Corporate Social Responsibility. The patterns in purchasing and consuming the production or services reflect the considerable features of the company’s operation in all the fields of the automotive industry.
Statement and Questions
According to the aim of the study and its objectives, the statement is that the ethical sector and the Corporate Social Responsibility are the crucial points in the process of the automotive industry’s development. Discussing the statement more precisely, the thesis of the study, which ought to be proved, is the importance of both ethics and CSR in establishing the international connections of the car industry. On the global scale of the industry’s evolution, such concepts as ethics and CSR are of vital importance.
Additionally, in accordance with the three main objectives, there are the questions, which ought to be answered. The questions focus on the concepts of the ethics and the CSR and its impact. Besides, the key pattern is the connection between the customers’ activity and the ethical or corporate processes, which are the crucial points of the business strategy. As a result, the most important question of the whole study is the relevance of the ethics and the CSR in the development of the automotive industry.
Main Body
Methodology
The key method is the secondary research of the academic sources, which include all kinds of articles and books relevant to the topic of the study. According to the chosen method, the research is the descriptive qualitative one. The goal of the study is to evaluate the role of the local ethics and the Corporate Social Responsibility in the process of the international development of the automotive industry.
The research is a descriptive one because it uses the materials from the previously conducted studies of the different authors in connection to each other and under the terms of their mutual pattern. Such a way of analyzing the secondary sources in order to conduct the qualitative study is extremely reasonable in order to establish a complex system of causes and results. This research aims to analyze and apply the data of the high quality in order to make the result of the research relevant and effective. Taking into account that the study is descriptive, the chief source of the material is the already conducted research, which is relevant in the context of the ethical sector and social responsibility in the car industry. The relevance of the used studies was defined by its ability to answer the questions of the study or create the complete background for the issues to be examined.
The analysis technique, which is used in this research to examine the data and make conclusions is the framework data analyzing technique. Such a way of arranging the materials allows to examine and describe all integral concepts of the study separately and evaluate their particular role in shaping the way of car industry’s development (Schader, 1992). Besides, the framework technique of data analysis gives the proper arrangement of the general pattern, as well as all of the components.
Except for the answers to the three chief objectives, which are the three integral directions of the research, the study includes some particular components of the ethical sector and the corporate social responsibility. For example, the violations of the ethical side are represented by such procedures as scams and paying offs. Discussing these concepts more precisely, warranty scams, paying off the trade-in loans, dealer preparation fees scams, and financing or refinancing scams are to illustrate the issue of the unethical processes in the automotive industry (Fraser, Watanabe, and Hvolby, 2013).
Besides, the study focuses on the differences between the ethical sector and the corporate social responsibility. These two concepts appear to be equally influential but in some of the cases, the unethical behavior is more frequent than the social irresponsibility (Ferrell, Fraedrich, and Ferrell, 2005). However, taking into account that both these kinds of violations appear in the process of production and distribution, as well as in the ready products or services, both these patterns are the vital components of the study.
Literature Review
In order to complete the full analysis of the issues in detail, it is crucial to divide the themes into the categories. Such a way of dealing with the issue can provide with a complete list of the relevant literature pieces. As a result, all the sources are grouped by their key topics, which makes the literature review look more comprehensive. Therefore, the ethical category is represented by the issues of justice, fairness, trustfulness, respect for autonomy, and beneficence. All these concepts in the context of the ethical sector in the automotive industry are the integral component of the successful development.
The idea to divide the ethical sector into such categories appears in the work of Epstein (1999). According to his point of view, such a number of variations refer to different points in the business strategy and can create the precise difference between the theories or ideas. Therefore, such a way of defining different chief features can make the concept of the ethical sector in the context of the automotive industry more comprehensive, as well as create a specific structure for the whole literature review. Besides, these subdivisions are closely connected to the moral and social approach, which makes all the literature sources relevant to the topic of the Corporate Social Responsibility.
The first vector in the literature, which is the base of the research, is the utilitarian theory. In the context of this theory, the ethical approach is evaluated by its relevance and effectiveness in the context of the common satisfaction (Pyle, 1998). Analyzing the pattern in detail, it appears to be obvious that the utility is observed as the index of beneficence.
One of the brightest representatives of the topic is Rescher and his “Distributive justice” (Rescher, 1969). This work describes the general principles of the utilitarian theory, analyzing the concept of utility as the level of individual’s happiness or suffering in the context of the distribution culture. As a result, this work is extremely important as it highlights the practical implication of the philosophical theory in the context of the business strategies. As one of the most developed industries of the contemporary world, the car industry obtains all the features to apply the utilitarian theory.
The idea of the utility in business in the literature review is also developed in the work of Cannon (1994). The utilitarian theory shapes the definition of utility with the index of happiness and the index of suffering. Therefore, if the general level of happiness is higher than the level of suffering, the thing is considered to be useful.
Therefore, the difference between the individuals’ positive and negative reaction to the product or service can define this object or service as the beneficial one. In the context of the automotive industry, such an approach towards defining the utility of the distributed product creates a considerable index of the production’s quality. If the quality of the product encourages its consumers to feel happy more than dissatisfied, the utility was reached and everything was ethical.
However, even though in the context of the ethical sector the utilitarian theory appears to be quite a convenient index of quality, the automotive industry ignores the ethical side. In the literature basis of this study, Bloom and Gundlach (2001) analyze the ethical responsibility of the modern automotive industry. In their study, the key stakeholders of the automotive industry are more attentive to the social issues rather than ethical ones. In the work, the utilitarian theory appears to be the ignored by the car industry as an unimportant component. Therefore, the attempt to satisfy the social requirements is highlighted by the unimportance of the ethical ones.
Another theory, which is relevant to the specifics of the automotive industry, but is the opposite of the utilitarian theory, is Kantian theory. In the literature review of this study, Bowie (1999) introduces the concept of ethics as the moral principle. The distinctive feature of the Kantian theory is that the ethical side is judged by its ability to correspond with the moral rules. In this context, the fairness and truthfulness are the most important facets of the process, which is considered to be ethical. In the context of the car industry, fairness and truthfulness can define the ethical side, as well as the utility of the production. Therefore, the idea of Kantian ethics in the context of the automotive industry appear to be equal to the utilitarian one.
In order to find out the exact relevance of the Kantian theory of ethics, the literature review of this study includes the work of Rawls. According to one of his books, Kantian Constructivism in Moral Theory, the concept of ethics is directly connected to the idea of the sound mind (Rawls, 1980). Analyzing the approach in detail, it appears to be obvious that the reasonable motivation should come from the sound mind, which ought to be ruled by the good intentions. In some context, such intentions need to be embodied in the individuals’ instincts.
Therefore, the impact of the moral rules and laws of the goodness are visible in the way of decision making. Talking about the described approach towards the ethics, Rawls displays the Kantian theory as the one, which judges the process to be ethical if it ruled by the morals. However, the pattern does not include the evaluation of the result, which is not necessarily ethical. In the context of the car industry, the process of production and distribution needs to be ruled by the moral norms in order for the industry to be ethical.
The already mentioned work of Bloom and Gundlach (2001) also highlights the embodiment of the Kantian theory in the automotive industry as well. According to their statements, the car industry is frequently involved in the actions, which do not follow the moral rules of the worlds’ society. As a result, in the terms of the Kantian theory, the automotive industry is rather unethical.
However, the Corporate Social Responsibility does not meet the same attitude. The moral connotations do not enter the field of the car industry, while the social responsibilities appear to be extremely important. Therefore, the ethical conditions create the background for the social responsibility to rule the processes of the industry’s development. Such a way of distributing priorities discourages the customers from choosing the production, which is involved in the unethical actions.
Another way of defining the ethical approach in the business is the deontological theory (Darwall, 2003). The deontology has a lot in common with the Kantian theory but it is stricter. According to Waller (2008), the process is ethical only if it corresponds with all the rules. In this context, the crucial point about the ethics is following the duty by maintaining all the legal requirements. The deontology is a stricter form of the Kantian theory because it is limited by the list of the legal norms, which are more precise than the morals. In fact, deontologists put the responsibility in the center of the ethical concept, which defines ethics amid the other theories.
The practical implementation of the deontological theory in the sphere of the car industry appears in the works of Preuss. According to him, the car industry of the USA faces the considerable issues of the ethical norms, which do not strictly follow the established rules (Preuss, 2016). As a result, the actions of the industry neither moral nor ethical.
The source of the violations is in the car industry are the attempts to raise the revenue and engage in the higher pace of turnover. Therefore, the unethical practices enter the sphere of the automotive industry (Koplin, Seuring, and Mesterharm, 2007). In the context of the evaluation of ethics and Corporate Social Responsibility, the related business is considered to be unaware of the ethical issues. Nevertheless, the extreme attention is paid to the social responsibility, which gets more representation in the business, when examining the system of the automotive industry.
In the terms of ethics and CSR in the boundaries of the car industry, the contract theory appears to be equally important. In the work of Robin and Reidenbach (1987), the negotiations and agreement are the vital components of the business strategy, which makes these processes extremely dependent on the questions of ethics and CSR. In fact, the development of the car industry in the context of the local expansion is closely connected to the process of making alliances and signing contracts. Therefore, the contract theory can establish the proper index of the ethical limits of negotiations.
Another piece of literature, which is the base for this study in the questions of ethical and responsible agreements is the work of Solomon (1992). In his point of view, the rational agreement meets to key requirement. On one hand, it ought to be a reasonable agreement, which will correspond with all the rules of the business diplomacy.
On the other hand, it is vitally important to apply the results of the agreement into the society (Gelfand and Brett, 2004). Therefore, the ethical side of signing contracts is concerned about the process of negotiation, as well as implementing the consequences of the contract. Such a theory provides with the most complex way of understanding the ethics and following the morals in establishing the business partnership.
The practical side of the contract theory can evaluate the place of ethics in the negotiations and the contract business strategy, as well as present the role of the corporate social responsibility. In his article on the chief features of the contract theory, Lyons analyses the Japanese car industry and their contract culture (Lyons, 1996). The way of establishing business connections in Japan has a direct connection with the country’s culture and the mentality of its people. Still, as the representative of one of the most considerable powers in the automotive industry, the Japanese car business faces the same ethical issues.
In order to sign a reasonable contract, it is sometimes necessary to contradict with the society’s moral or social norms. Nevertheless, such violations are permissible in the context of the contract theory (Kahane, 1995). The agreement of the sides of the negotiations appears to be the center of the theory’s attention, which defines its attitude towards the issues of moral or social responsibility in the terms of the automotive industry.
Analyzing all the existing pieces of literature on the topic of the ethical sector and the corporate social responsibility in the context of the automotive industry, there appear four chief directions. The first one is the utilitarian theory, which focuses on the results of the actions and requires the production or services, which are distributed, to encourage happiness rather than dissatisfaction (Scarre, 2002).
The Kantian theory and the deontology highlight the importance of the moral norms and the rules and duties to define the ethical approach in the processes of the automotive industry (Rivera, 2006). The contract theory, in turn, focuses on the one specific process of the car industry’s development, which is making agreements (Smith, 2004). However, only the last theory focuses on the respect for autonomy, which can acquit some of the actions of the automotive industry, which are not ethical in the context of the society but are required by the rules of the reasonable agreement.
In the literature works, which are the base for this study, it is stated that the modern car industry appears to be unaware of the moral rules and ignorant to its duties. As a result, in the terms of all four theories, the automotive industry develops the social responsibility amid underestimating the ethical sector. As a result, both the process of production and distributing the products and services of the car industry are not ethical. The implementation of some of the corporate social responsibility’s rules appears as a result of its role in generating the revenue.
Data Analysis
Еhe chief objective of the study was to analyze both ethical sector and the corporate social responsibility in the context of the automotive industry. The ethical considerations in business define the separate discipline in the business world, which is corporate ethics (Snoeyenbos, Almeder, and Humber, 2001). In the conditions of the business, ethics is the applied list of rules or patterns, which appear in the professional sphere. In the context of the corporate behavior, ethics is relevant to all the fields of business.
Business ethics is not a strict list of rules, which usually varies from company to company. Besides, the corporate ethics frequently depend on the cultural aspect of the particular country (George, 1994). Taking into account the wide local expansion of the automotive industry, the differences between the traditions in the business strategy are provoked by the variations of the cultural mentality. In fact, different approaches towards the aspects of the industry create the gap between the companies of different origins.
The states with the most developed economies, such as Japan, China, or the USA, represent polar parts of the globe, which leads to the total contrast in their manner of arranging business (Whitcomb, Erdener, and Li, 2016). Additionally, the developing countries are gaining the considerable part in the automotive industry, which starts to be centered in the South Africa. As a result, the contradiction between the local specifics of the cultures is supported by the opposition in the methods of conducting economic actions. Therefore, the global ethics do not appear as the most crucial index of their operation.
The corporate social responsibility, in turn, appears to be more valuable in the context of the automotive industry (Sabikova, 2015). CSR is the concept of the company’s action, which concerns the sphere of the social impact (Carroll, 2008). In the terms of this concept, the organizations take into account the interests of the community and become responsible for the influence of their company on different spheres of the social life.
As in the case with the ethical sector, there exists no precise definition of the exact norms or rules, which are included in the corporate social responsibility. Taking into account the economic side of the concept, there appear two different approaches. On the one hand, the corporations gain an advantage, embodied in the opportunity to work for the long-term business development rather than short-term income (Ramachandran, 2010). Such an approach proves the CSR to be an important concept, which has a direct impact on the development of the automotive industry.
On the other hand, the corporate social responsibility alienates the true intentions of the business sector, making it focus on the social approach rather than the economic advantage. Finally, the social responsibility distracts the key stakeholders from implementing the proper business strategy, which would guarantee the higher revenue (Sen and Bhattacharya, 2001). In this context, the CSR appears as an unimportant concept, which does not face any particular attention from the automotive industry.
However, one of the crucial aspects of the corporate social responsibility is its similarity with the government’s role in regulating the economy (Horrigan, 2010). Taking into account that local expansion of the automotive industry meets the differences between the laws and policies of different states. In these terms, the standards of the corporate social responsibility are the connecting links between the international corporations, working together to develop the automotive industry.
The reasons to violate the ethical norms or the corporate social responsibility are quite simple to understand but comparably difficult to resolve with the legal actions (Farberman, 1975). The first source of the immoral actions is the attempt to get more income. The second one is to do it without following the legal norms. In fact, violating the laws is the easiest way to get the biggest amount of money in the shortest period of time (Jeanneau and Pichant, 2000). Thus, even though such actions are immoral and they violate the unwritten norms of humanity, they are extremely efficient in the context of beating the competitors by the highest revenue.
Customers usually become the most commonly tricked audience (Leonard and Weber, 1970). The security of the consumers’ finance is not complex, it includes the gaps and loopholes for the dishonest industry representatives to deceive them. Starting from the least immoral action, such as violating fairness and establishing the unjustifiably high prices, the automotive industry becomes involved in a considerable number of economic and social affairs. Most of such actions, in fact, contradict both the ethical considerations and the corporate social responsibility.
One of the most common ways to deceive the customers and gain the financial advantage is the warranty scam. Warranty is considerably important for the car owners because it is an obligatory component of the standard list of documents. Therefore, warranty scams can target any group of the car owners. Moreover, not all the drivers are aware of the terms of their warranty and trick them by informing about the expiring warranty is one of the most efficient ways. The Federal Trade Commission create a report, which presents the number of the annual warranty scams in the sphere of the automotive industry (Giorgianni, 2016). As a result, such type of illegal actions contradicts both the concept of ethics and the definition of Corporate Social Responsibility.
Pay off loans is another aspect of the automotive industry, which is a dangerous sphere for the customers to be involved into. Wanting to pay off their loans, consumers start searching for the most convenient way not to lose money but to get an advantage (Sturgeon and Van Biesebroeck, 2009). Therefore, manipulations with traders and dealers about the loans can involve the customer into the illegal affair, provoked by the representatives of the automotive industry. The possibility of such consequences usually distract the most reasonable consumers from cooperating with the automotive industry representatives. Therefore, this type of the unethical behavior represents the way customers are discouraged by the awareness of the illegal behavior.
The violation of the ethical considerations and the Corporate Social Responsibility is also reflected in the dealer preparation scams (Scam Detector, 2016). This type of unethical behavior is also the representation of the violation in the context of fairness, truthfulness, and the respect for autonomy. When buying a vehicle, the dealer can offer you a dealer preparation fee as a part of the standard expenses. In fact, most of the actions, which lie under the category of dealer preparation fee, cost less than one hundred dollars, while in check this number can reach even one thousand dollars. Such a way of deceiving the customers makes the automotive industry lose the authority in the community.
Another type of scams, which are frequent in the automotive industry, is the financing and refinancing scams. Such scams are connected to the mortgages and commonly target people with the financial problems (Costa, 2016). Therefore, the companies can offer to refinance with the lower interest but ask for a specific fee before the services or products provided. This action is the indicator of the unethical behavior, which results in the decreasing level of the customers’ trust. As a result, financing and refinancing scams attack both the ethical sector and the Corporate Social Responsibility.
The second objective was to trace the patterns of the customers’ behavior according to the fact of their awareness of the ethical facets of the industry’s operation. According to the previously described types of the scams in the automotive industry, customers tend to stop cooperating with the companies, which are involved in the unethical affairs. In this context, the concepts of ethics and Corporate Social Responsibility appear to be the equal indexes in the people’s minds. Taking into account that the violations in the sphere of social responsibility lead to the fall of the status in the society (Aupperle, Carroll, and Hatfield, 1985). As a result, the awareness of the unethical behavior or of the scams in the social sector, distract the customers from the long-time cooperation.
The third objective was to examine the results of the changes in the business strategy, connected to the ethical sector and Corporate Social Responsibility. The sector of Corporate Social Responsibility requires numerous change to be done, as well as the ethics. In the context of the automotive manufacturers, the implementation of the social responsibility standards leads the industry towards the dynamic and harmonic development (Vogel, 2005). Customers are the focus of any industry and deceiving them may cause the falling pace of the business progress.
The ethics and the CSR of the 21st century in the car industry has extremely evolved, demonstrating the significant change in the attitude. The most successful corporations of the contemporary automotive industry demonstrate the careful attitude towards the ethical considerations and the norms of CSR (Snider, Hill, and Martin, 2003). These examples are the most tangible proof of the CSR’s importance and its equality with the ethical sector.
Conclusion
Results
The study proved that the ethical sector and the Corporate Social Responsibility are the extremely important concepts, which define the pace of progress of the automotive industry. The literature review of the research introduced four different approaches towards identifying the concept of ethics and the impact of the CSR. Almost all of the sources in these terms claimed the automotive industry to be dramatically unethical. The further research proved that the local development of the car industry requires the norms of the ethics and the CSR to be followed. The customers’ awareness of the unethical behavior decreases the level of the consumers’ trust, which, in turn, discredits the company and harms the reputation of the whole automotive industry.
Recommendations
The most successful corporations in the sphere of the automotive industry have already implemented the strict standards of the ethics and the CSR. As a result, their companies faced the sky-rocketing progress of the social sector and encouraged the further development. As a result, the key recommendation is to establish the laws of the ethics and the CSR for all the facilities in the automotive industry.
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