Globalization is a dynamic set of social processes that is transforming our present social condition of nationality into one of globality, characterised by tight global economic, political, cultural, and environmental interconnections that make most of the currently existing borders and boundaries irrelevant.
The economic dimension of globalisation is highly significant in shaping contemporary societies and organisations through the intensification and stretching of economic interrelations worldwide. Its key components include the deregulation of interest rates, the removal of credit controls, and the privatisation of government-owned banks and financial institutions. Globalisation of financial trading allows for increased mobility among different segments of the financial industry, with fewer restrictions and greater investment opportunities.
The enhanced role of international economic institutions such as the International Monetary Fund (IMF), World Bank, and World Trade Organisation (WTO) enjoy the privilege position of making and enforcing the rules of the global economy. In return for supplying much-needed loans to developing countries these institutions implemented the structural adjustment programs, mainly directed at countries with large foreign debts. It can be observed the impacts that trade liberalisation policies have on industries in the third world.
But globalisation is a multidimensional concept that is not easily reduced to just the economic dimension. The intensification of global economic interconnections is set into motion by a series of political decisions. The political dimension of globalisation refers to the intensification and expansion of political interrelations across the globe. Recent economic developments such as trade liberalisation and deregulation have significantly constrained the set of political options open to states. Thus, global markets frequently undermine the capacity of governments to set independent national policy restrictions.
However, the worldwide intensification of economic and political interaction does not consider in sufficient detail the cultural feasibility of global democracy, which makes the possibility of resistance and opposition just as real as the mutual accommodation and tolerance of differences.
The cultural dimension of globalisation refers to the intensification and expansion of cultural flows across the globe facilitated by the Internet and global media empires that rely on powerful communication technologies to spread their message, giving rise of an increasingly homogenised popular culture underwritten by western culture industry.
Corporate social responsibility (CSR) of business activity is strongly influenced by globalisation, particularly through the change and erosion of national political power. CSR has four kinds of social responsibilities, economic, legal, ethical, and philanthropic. These four components of CSR might be represented as a pyramid with economic responsibilities ‒ and profit motive as the primary incentive ‒ underpinning all other business responsibilities.
Business organisations have also to comply with laws and regulations as the ground rules under which they must operate. These legal responsibilities establish the ground of fair operations and are represented as the next layer on the pyramid. In this way, organisations are expected to perform in a consistent manner with the government and law expectations.
However, society also expects from organisations other activities and practices that are not codified into law. These ethical responsibilities embrace those norms that reflect a concern for what consumers, employees, shareholders and community regard as right, just, and fair (i.e. moral rights), and are represented as the next layer of the CSR pyramid. Thus, corporate behaviour goes beyond mere compliance with laws and regulations.
Globalization, as defined in terms of the deterritorialisation of economic activities, is particularly affecting business ethics in three main areas – culture, law, and accountability.
Within the cultural issues, it could be seen how corporations increasingly engage in overseas markets, suddenly finding themselves confronted with new and diverse ethical demands.
Moral values, which were taken for granted in the home market, may get questioned as soon as corporations enter foreign markets.
The legal issues are closely linked with ethics and law. As soon as a company leaves its home territory the legal framework becomes very different. Consequently, managers can no longer simply rely on the legal framework when deciding on the right or wrong of certain business practices.
Finally, globalization leads to a growing demand for corporate accountability where business ethics can respond to the various stakeholders’ claims.
Writing CRS strategies is an important step but implementing them can be a different story as the good intentions do not always come into practice as planned.