Ethical Principles and Issues: Samsung Company’s Case

Introduction

In the corporate world, the essence of upholding ethical principles goes a long way in fostering the sustainability of the competitors. Failure to observe the issue has seen the emergence of multiple and different ethical issues in the business setting (Guitián, 2015). Therefore, engaging in processes that foster business ethics is crucial for the realization of a business atmosphere that takes into consideration the wellbeing of stakeholders. Additionally, ethical principles influence corporates to engage in corporate social responsibility (CSR) endeavours that portray their concern for the growth and development of their environments (Shaw & Barry, 2015).

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In 2014, Samsung, which is a leading competitor in the smartphones sector, accepted that the tin used to manufacture its products traces its roots from Bangka Island, Indonesia, where child labour flourishes. Notably, the Friends of the Earth (FoE) played a significant role in influencing Samsung to rethink its CSR strategy besides the reinforcement of ethical principles. Thus, this report seeks to assess the ethical principles and issues surrounding the case of Samsung. Furthermore, analyzing Samsung’s viewpoint regarding business ethics will the aim of this report before looking at CSR and the role leaders ought to play to support CSR.

Business Ethics

The business ethics concept implies different things to various individuals, but, in a general description, it deals with discerning what is right or wrong in the workplace setting. Thus, individuals that understand business ethics ought to do the right thing while executing their roles and responsibilities that influence products and services besides maintaining productive relationships with stakeholders (DesJardins & McCall, 2014). Therefore, business ethics provide leaders of a particular organization with a compass that shows the direction towards moral undertakings. In this light, assessing the importance of business is necessary.

Importance of Business Ethics

Business ethics play essential roles in the business setting, thereby controlling the decisions of employees and other stakeholders in various ways. Firstly, business ethics facilitates the establishment of a code of conduct that requires employees to realize that they are responsible for acting or not acting when unethical practices occur (Weiss, 2014). Therefore, by applying business ethics as the guiding principle, employees make sound decisions in a timely way resulting in the realization of greater efficacy. The integrity and honesty brought about by business ethics also benefit the organization.

Secondly, business ethics plays an integral role in influencing customers to acquire the goods and services offered by a particular company. In this respect, customers usually want to know if the providers source their labour and materials in ethically upright and responsible approaches (Melewar, Gambetti, & Martin, 2014). For this reason, customers and other concerned parties have continually questioned the strategies applied by companies to implement their ethical principles and CSR aspects.

Thirdly, business ethics assist potential investors in determining whether to inject their capital into a particular corporate player or not. Investors also assess the ethical statements underpinned by organizations besides their commitment to engaging in morally upright and responsible processes (Goldman & Bounds, 2015). Hence, business ethics allows investors to be at peace by understanding that their money is utilized in activities compatible with their moral beliefs.

Fourthly, a company that observes the essence of business ethics reduces its possibilities of being fined for immoral behaviour. Additionally, maintaining business ethics assists an organization in avoiding breaching one of the many legal provisions guiding business practices (Idowu, Capaldi, & Zu, 2013). Therefore, business ethics reinforce the essence of upholding the legal aspects of corporate operations.

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Key Ethical Principles Violated by Samsung

Ethical principles guide the actions of individuals and groups to take a particular course of action, in the morally upright way (Melewar et al., 2014). However, ethical issues arise when parties fail to uphold moral principles. On that note, Samsung violated a few ethical principles, including justice and non-maleficence or not engaging in harmful endeavours. Thus, looking at the ways in which Samsung violated the mentioned policies and the emergent ethical issues hold relevance.

The principle of justice in ethics requires the observance of fairness. Importantly, the justice principle seeks to maintain a balanced justice situation. The principle of justice bases its functionality on the aspects of reciprocity, equality, and impartiality (Martin, 2013). Nonetheless, Samsung’s supply chains reveal that it violates the ethical principle of justice by influencing the use of child labour in Bangka Island’s tin mines.

Thus, Samsung facilitated the development of child labour as a moral issue while sourcing the tin material that facilitates the soldering processes of manufacturing its products. Engaging children in labour infringes an array of their rights, thereby creating injustices (Martin, 2013). Apparently, encouraging child labour undermines an organization’s commitment to upholding business ethics. The issue raised concerns regarding the company’s approach to business ethics.

In ethics, the principle of non-maleficence underlines that individuals ought not to engage in activities that would harm or put the well-being of others at risk. Therefore, observing the principle requires an individual to avoid endangering or harming others (Carroll & Buchholtz, 2014). However, Samsung supported tin mining activities that endanger the lives of miners, thereby, contributing to at least 150 deaths annually besides degrading Bangka Island’s environment.

Therefore, environmental degradation forms another ethical issue influenced by Samsung’s supply chains. Organizations that facilitate the environment’s deterioration pose a significant threat to the sustainability of the world in a way that also violates the ethical principle of no harm (Chell, Spence, Perrini, & Harris, 2016). Thus, Samsung needs to address the environmental ethics issue in a way that shows its interest in the sustainability of humanity’s surroundings.

Samsung’s Perspective on Business Ethics

Organizations approach the concept of business ethics from varying angles, and thus, conduct their business activities differently in most cases. Today, organizations apply different models of business ethics based on the internal and external organizational influences and the enhancing or neutralizing factors (Jennings, 2014). The article reveals that Samsung approaches the aspect of ethical conduct in business from an interesting perspective that makes it surprised by the ethical issues arising from the Indonesian tin mines (Campbell, Eden, & Miller, 2012). Interestingly, Samsung uses the external organizational influences to shape up its ethical conduct. Therefore, the smartphones industry player assumes its responsibility regarding business ethics from the pressures emanating from outside the organization.

Responsibility for Ethical Conduct in Business

In business, several stakeholders have the responsibility of maintaining ethical behaviour in their operations. Primarily, the management and employees of an organization in a given setting have the responsibility of ensuring the observance of ethical conduct in their business endeavours. The managers and employees ought to be responsible for the CSR aspect of the business since it influences prospects, reward, and job security (By & Burnes, 2013). For this reason, Samsung decided to carry out investigations on its supply chain systems to unmask the factors that contribute to its lack of commitment towards CSR in the Bangka Island mines.

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However, Samsung perceived the mining companies or suppliers as accountable for the CSR aspects of tin mining. For this reason, Samsung did not take note of the child labour and environmental degradation issues raised by the FoE among other interested parties. Thus, CSR perspective embraced by Samsung covered a narrow scope, thereby, allowing the occurrence of business malpractices.

Key Actor in Business Ethics

Besides the government and society, the business sector is a key player in business ethics. Companies establish ethical frameworks that self-regulate their activities to ensure compliance with legal and social norms (Edward & Willmott, 2013). For this reason, business organizations unceasingly engage in corporate responsibility investments that aim at fostering sustainable development. In this regard, business organizations strive for mutually compelling labour relations, comprehensive transparency, and considerable social investment. Therefore, Samsung is among the key actors that ought to focus on maintaining business ethics, its supply chains undertakings.

CSR and Leadership Roles

Corporate social responsibility (CSR) infers to the voluntary commitments of an organization to ensure that it conducts its operations in social, economic, and environmentally sustainable way. CSR takes the forms of a self-regulation framework incorporated in a business model that underlines compliance with the relevant ethical standards, laws, and domestic and international norms. Additionally, organizations engage in CSR to promote the social good that transcends the firms’ interests besides the legal requirements. CSR influences organizations to take into consideration, the well-being of the stakeholders and surroundings in which it operates by ensuring that its current operations do not undermine the survival of future generations (McCann & Holt, 2013). Therefore, organizations that uphold CSR have the interest of sustainability at heart.

Components of CSR

Organizations construct their CSR models by considering the integration of key elements that facilitate the realization of the best goodness-of-fit. Some of the main components of CSR include human rights, labor security, and environmental protection (Epstein & Buhovac, 2014). In this respect, assessing the mentioned CSR components is essential to foster an understanding of Samsung’s approach to its supply chain.

The human rights component concentrates on the establishment of a business environment that is free from any forms of inequality or discrimination thereby, promoting creativity and positive learning experiences. Further, the human rights component of CSR facilitates the creation of decent codes of conduct that allow professionals and other stakeholders to uphold the essence of justice and equality. Notably, business processes have the capability of interfering with the dignity and rights of an organization’s labor force and the communities in which it operates (Servaes & Tamayo, 2013).

The labor security aspect of CSR focuses on the realization of a freedom of association and acknowledging collective bargaining rights, the removal of all forms of compulsory or forced labor, the practical eradication of child labor, and the abolition of employment and occupation discrimination (Asif, Searcy, Zutshi, & Fisscher, 2013). Job security seeks to uphold the rights of parties involved in labor aspect of production. The components also discourage the vice of child labor since it strips off minors their rights besides addressing the forms of discrimination encountered by employees.

Since environmental issues in the contemporary corporate world have raised an array of concerns, organizations now concentrate on establishing workable solutions for the natural resources besides the minimization of their detrimental implications on the environment. Interested parties including citizens, leadership companies, and environmental organizations are at the forefront in influencing corporate players to embrace environmental responsibility by applying a comprehensive approach to business processes, products, and facilities. Besides, the component focuses on the assessment of business, process, products, and the conservation of equilibrium between work and other life aspects (Ferrell & Fraedrich, 2015).

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Roles Played by Leaders and Mangers in Promoting CSR

The leadership aspect of corporate operations plays a central role in fostering CSR. Essentially, leaders influence followers to uphold CSR in various ways. Firstly, leadership aligns the employee goals with those of CSR by establishing mutually supporting structures. Further, leaders can leverage CSR strategies to influence the achievement of organizational goals, positively (McCann & Holt, 2013). Therefore, Samsung’s leadership could pursue the employees associated with supply chains to align their individual goals with the company’s CSR ambitions.

Secondly, managers communicate regularly regarding the organization’s CSR targets and initiatives. Efforts to make CSR part of the regular communication disseminated by leaders go a long way in promoting business ethics (Servaes & Tamayo, 2013). Thus, Samsung could apply the approach to underline the relevance of CSR when undertaking its supply chain processes.

Thirdly, leaders and managers play the role of facilitating extensive and continued research on issues regarding CSR concepts. In doing so, managers unearth new CSR developments that have great implications on their performance (Chin, Hambrick, & Treviño, 2013). Therefore, the leaders at Samsung should intensify R&D endeavors that would unceasingly unmask the CSR concepts that require addressing.

Conclusion

Business ethics is an integral aspect of operations in the corporate world. The article reveals that Samsung is responsible for ethical business conduct in its operations, thus, responsible for the child labor and environmental degradations issues. Moreover, the managers and leaders in the company need to assume their roles in promoting CSR in a way that reinforces the business ethics.

References

Asif, M., Searcy, C., Zutshi, A., & Fisscher, O. A. (2013). An integrated management systems approach to corporate social responsibility. Journal of Cleaner Production, 56, 7-17.

By, R. T., & Burnes, B. (2013). Organizational change, leadership and ethics: Leading organizations towards sustainability. New York, NY: Routledge.

Campbell, J. T., Eden, L., & Miller, S. R. (2012). Multinationals and corporate social responsibility in host countries: Does distance matter? Journal of International Business Studies, 43(1), 84-106.

Carroll, A. B., & Buchholtz, A. K. (2014). Business and society: Ethics, sustainability, and stakeholder management. Ontario, ON: Nelson Education.

Chell, E., Spence, J., Perrini, F., & Harris, J. (2016). Social entrepreneurship and business ethics: does social equal ethical? Journal of Business Ethics, 133(4), 619-625.

Chin, M. K., Hambrick, D. C., & Treviño, L. K. (2013). Political ideologies of CEOs the influence of executives’ values on corporate social responsibility. Administrative Science Quarterly, 58(2), 197-232.

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Idowu, S., Capaldi, N., & Zu, L. (2013). Encyclopedia of corporate social responsibility. Heidelberg, Berlin: Springer.

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Martin, D. (2013). The contained-rivalry requirement and a ‘triple feature’ program for business ethics. Journal of Business Ethics, 115(1), 167-182.

McCann, J., & Holt, R. A. (2013). Perceived leadership integrity in the manufacturing industry. Journal of Business Ethics, 115(3), 635-644.

Melewar, T. C., Gambetti, R. C., & Martin, K. D. (2014). Managing intangible ethical assets: enhancing corporate identity, corporate brand, and corporate reputation to fulfill the social contract. Business Ethics Quarterly, 24(02), 310-312.

Servaes, H., & Tamayo, A. (2013). The impact of corporate social responsibility on firm value: The role of customer awareness. Management Science, 59(5), 1045-1061.

Shaw, W., & Barry, V. (2015). Moral issues in business. Boston, MA: Cengage Learning.

Weiss, J. W. (2014). Business ethics: A stakeholder and issues management approach. San Francisco, CA: Berrett-Koehler Publishers.

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