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GMUL5063 LAW, ETHICS, AND CORPORATE SOCIAL RESPONSIBILITY

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TITLE:
INDIVIDUAL ASSIGNMENT
LAW, ETHICS AND CORPORATE SOCIAL RESPONSIBILITY
(TOPICS COVERED 1-6)

PREPARED BY:
SHAJARATULMUTTAQIN BINTI AZIZAN
829469

PREPARED FOR:
ASSOCIATE PROF. DR. ALIAS BIN AZHAR
DATE OF SUBMISSION: 27 FEBRUARY 2022
 Table of Contents

1.0 Introduction………………………………………………………………………………….2

2.0 Definition of terms……………………………………..……………………………………3

2.1 Code of Ethics……………………………………………………………………….3

2.2 Corporate Social Responsibility……………………………………………………5

3.0 Opinion and Recommendations………………..…………………………………………...7

3.1 Are companies obligated to be socially responsible? ……………………………..7

3.2 What will happen if there is no code of ethics in an organization?..……………..8

3.3 Recommendation……………………………………..……………………………..9

4.0 Conclusion...………………………………………………………………………………...10

5.0 References…………………………………………………………………………………...11

6.0 Turnitin report...……………………………………………………………………………14

1
1.0 Introduction
The field of corporate social responsibility (CSR) has evolved at a rapid pace in the last decade,
and it is progressively becoming a growing issue, leading to an increase in CSR research both
nationally and in Malaysia. CSR has become a popular trend in a culture where organizing a
program related to social projects is an important component in every organization. Malaysian
consumers ought to be more knowledgeable than businesses now bear more obligations to social
and environmental issues in order to achieve their strategic goals. Better education and the
increased influence of the media have raised awareness. Corporate entities now genuinely think
that the extent to which they participate in corporate social responsibility (CSR) has an effect on
consumer purchase decisions. Likewise, corporations have emphasized the importance of CSR
practices in ensuring their long-term competitiveness in the commercial environment, which are
focused on the surroundings, cultural component sustainability, economic opportunity,
stakeholder behavior patterns, and society's ethical evolvement. As a result, Strategies will
improve if organizations and societies strive to attain a sustainable income.
Furthermore, there is indeed a growing recognition that strong integrity can have a
positive effect on the economy on an operating value. Many studies support the idea that in the
current industry, ethics, values, integrity, and responsibility are essential. Ethical principles, when
properly implemented, can provide a strategic advantage and have a significant positive impact
on a company's financial performance and all other performance measures. Every company
should consider the distinction between corporate social responsibility (CSR). While ethics and
social responsibility may take various forms based on the organization, they each have a spot in
every company or organization. To ensure efficient corporate ethics and social responsibility,
many businesses produce an ethical management program that aligns with their goals, vision,
and principles. Every organization's ethical approach is unique, with the goal of teaching
employees the principles and policies that govern how people behave at work and in the
community. The stakes for good business ethics and corporate social responsibility are higher
than ever before. It's important to evaluate the objectives to ensure that they align with the
company's mission and vision in order to ensure that the company's efforts are perceived as
genuine. As a result, when business ethics and corporate social responsibility are emphasized,
everyone stands to benefit.

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2.0 Definition of terms
2.1 Code of Ethics
Ethics is established on the good morality that dictates what homo sapiens ought to do,
usually throughout accordance with the rights, responsibilities, benefits to society,
fairness, or special characteristics. Velasquez (as cited in Joyner & Payne, 2002), defined
ethics as “being concerned with moral decision-making judgments, normative judgments
that say or imply that something is good or terrible, right or wrong”. “The word ‘ethic’
comes from the Greek word ethos, which means the character, custom or a set of moral
behavior that is accepted extensively” (Jalil et al., 2010). It is the adaptation of morality
to daily business operations, actions, and policy proposals. According to Paliwal (as
stated by Grigoropoulos, 2019), “Ethics is a principle that applies to everyone who works
for the company, regardless of their position, amount of responsibility, or scope of tasks”.
Hence, integrity as a procedure has an influence not only on the managerial decisions but
also on the company's culture overall.
A code of ethics refers to a set of philosophies aimed at assisting experts in
business operations in an ethical and responsible way, where the objective and values of a
company or institution, as well as the professional's approach to challenges, codes of
conduct depending on the business's values and principles, and the eligibility
requirements to which the employees belong, may be highlighted in a code of ethics
memorandum. “As a result, a code of ethics is concerned with what is good and bad, right
and wrong in the organization's decision-making, and it frequently reflects senior
management's attempts to shape the organization's culture” (McNutt & Batho, 2005).
This is supported by Singh & Prasad (2017) stating that “An ethics code in an institution
is a collection of guidelines that instruct the company's initiatives, regulations, and
business decisions”. Ethics codes are created to direct behavior, and any ultimate
assessment of a code's impact must take into account how well it affects behavior. “The
code of ethics must be thoroughly communicated throughout the business in both formal
and informal, while also ensuring that guidance and assistance are available in the event
of ethical challenges or insecurities” (Grigoropoulos, 2019). In contrast, a code of ethics
demonstrates aspirations, moral values, and professional ethics to that which practitioners
strive as well as against which their practice can be determined by measuring.

3
 Business executives should indeed act with honesty incorporate for the advantage
of society involved, along with stakeholders, interested parties, workers, customers, and
the society. Operations should not cause violence, brands, or assistance, and they should
help the company maintain its track record. “In a business setting, being ethical means
applying principles of honesty and fairness to relationships with coworkers and
customers” (Singh & Prasad, 2017). According to Ferrell et al. (2018), “In a normative
perspective, business ethics refers to principles, values, and norms for organizational
decisions; in a descriptive perspective, it refers to codes, standards of conduct,
compliance systems, and decisions that can be judged right or wrong by customers”.
Ethical behavior is critical as there is a strong indication that immoral practices can harm
a professional image, affect its stock price, and reduce demand. Ethical decision-making
is frequently related to the internal organizational decisions about acceptable behavior
made by an individual or social entities that affect both different stakeholders. Thus,
businesses must recognize the presence of society and the growing need for more socially
acceptable business practices.

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2.2 Corporate social responsibility (CSR)
Corporate social responsibility (CSR) involves the methods used by organizations as part
of its business governance to guarantee that their operations would both be socially
responsible and economically beneficial. According to Rahim et al. (2011), “CSR is a
concept in which businesses consider the interests of society by accepting responsibility
for their actions' impact on stakeholders and the environment”. Tsoutsoura (as stated in
Abdulrazak & Ahmad, 2014), defined CSR as “a comprehensive set of policies, practices,
and programs that are integrated into all aspects of a company's operations, supply
chains, and decision-making processes, and typically cover topics such as business ethics,
community investment, environmental concerns, governance, human rights, the
marketplace, and the workplace”. This participation is regarded as going over and above
the statutory obligation to comply with the regulations, with organizations making extra
efforts to raise the standard of living of their employees and their families, as well as the
wider population and society in general. “Under the umbrella of CSR, the firm is
expected to fulfill its responsibility not only towards the shareholders but also towards
other affected stakeholders” (Amran et al., 2013). Thus, corporate social responsibility
initiatives will undoubtedly benefit both the community and businesses.
Organizations are now required to evaluate their responsibility to society in their
business operations instead of concentrating exclusively on increasing profits, as CSR is
becoming an important key to business agencies. This is supported by Carrol (as cited in
Lim et al., 2008), “Organisations have moral obligations that include adhering to a
variety of social and economic norms or standards, in addition to the economic and legal
responsibilities of being financially beneficial and adhering to the principles that regulate
their ability to meet the economic needs”. Organizations that participate in CSR activities
will be seen as more full citizens by global and regional investors. Moreover, Carrol
(cited by Nasir et al., 2015), “The proposed general accepted definition of CSR illustrated
in a pyramid of four CSR dimensions which social responsibility of business
encompasses the economic, legal, ethical and philanthropic responsibilities”. Society
demands the company to carry on all of these responsibilities after it is established. As a
result, the hierarchy is designed in such a manner that each component must be
completed before moving on to the next.

5
 Economic responsibility relates to the organization's profitability. “To satisfy
economic responsibility towards society, corporations should provide goods and services
that society wants at reasonable prices” (Rahim et al., 2011). Lim et al. (2008) stated that
“Economic responsibility is to be profitable for principals by delivering high-quality
goods to customers at a reasonable price”. Thus, The economic component is the
foundation of humanity's obligation for industries since it tends to focus on the
productive capacity and the procedures of marketing them for earnings. Besides, legal
responsibility refers to the organization's compliance with laws and regulations. Based on
(Rahim et al., 2011), “Companies are required to carry out their fiduciary obligations
within the structure of policies and guidelines as a partial requirement of the "social
contract" between corporate entities and community”. Every business must operate
within the boundaries established by numerous commissions and agencies at all levels of
government. Carrol (from Nasir et al., 2015) concludes that “A good company needs to
bear the law and assimilate it into operation and management”. Therefore, legal
responsibilities involve adhering to the law and following the game rules.
Business ethics comprise a company's behavior patterns that are expected by the
community but not systematized in legislation, such as environmentalism. According to
Rahim et al. (2011), “Although economic and legal responsibilities indicate ethical
principles of fairness and justice, ethical responsibility comprises those practices that
society expects and which go beyond legal responsibilities”. On top of that, Companies
have a responsibility to be good that goes beyond complying with the law or acting in an
acceptable manner. “Companies need to consider ethical aspects, compliances with the
law and economic success to be regarded as good corporate citizens” (Nasir et al., 2015).
As a result, the institutions' activities should go above the legislation to be able to do the
right thing in reasonable and just ways. Meanwhile, philanthropic responsibility refers to
charitable giving and societal service. Rahim et al. (2011) stated that “Philanthropic
responsibility is a corporate action taken in response to expectations of society of
corporate citizens, with the aim of boosting the image of companies, notably those with a
high public profile, as well as rising loyalty and improving customer experience.
Therefore, Organizations determined by philanthropic responsibility often contribute a
portion of profits in addition to being ethically and environmentally friendlier.

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3.0 Opinion and Recommendation
3.1 Are companies obligated to be socially responsible?
CSR entails going above and beyond the requirements in terms of climate change
and economic well-being. Although there is no specific legislation governing corporate
social responsibility, it is widely recognized as a precondition of corporate industry.
“Some businesses go to great lengths to do the exact opposite, donating to charities,
supporting community events, treating their employees and customers fairly, abiding by
the law, and maintaining high standards of honesty and integrity.” (Campbell, 2007).
Malaysian organizations' corporate social reporting has improved over time and is now
among the best in ASEAN. According to Mamun et al. (2017), “Several companies in
Malaysia formally established corporate social responsibility in the 1970s”. There is no
clear legislature for CSR reporting in several countries around the world, especially in the
Asia province. Concerns about the scope and quality of disclosures, on the other hand,
have created a demand for obligatory reporting standards. Therefore, while publicly
traded companies in Malaysia are required to disclose at least a declaration about the
CSR efforts, nothing had been done to remedy CSR activity reporting on other types of
company holdings, such as small and medium enterprises.
Some argue that businesses have no obligations to society other than to make as
much money as possible within the law. But those who support Corporate Social
Responsibility agree that corporations should pursue a bigger purpose beyond simply
maximizing revenue. In my opinion, companies are not required to be socially
responsible to the community, but it is strongly encouraged because there are several
benefits to doing so and vice versa. CSR is advised to be an active element of the
business plan in order to avoid future difficulties. Because many consumers criticize
corporations that ignore social responsibility and establish an unethical reputation, this is
the case. Furthermore, businesses with this reputation are more likely to face legal issues,
which might lead to their downfall. In summary, in this digital age, consumers are
significantly more skillful at using social media as a potent instrument for disseminating
news, both good and bad. Furthermore, the company's reputation in the community is one
of the elements that influence employee engagement and can be used to recruit new
employees.

7
3.2 What will happen if there is no code of ethics in an organization?
A company's code of ethics is important because it clearly lays out the rules of
conduct and lays the framework for a future crisis. According to Balkin (as cited in
Askew et al., 2015), “Business ethics differ from legislation in that it may not be criminal
to engage in unethical action in some instances”. Ethical principles foster a favorable
culture and strengthen a professional image. It has an effect on cash flows and aids in the
recruitment of candidates. Strong Ethical principles should provide an inspiring statement
on why the code exists and what the purpose of the company is, as well as the ability to
enforce the code. Its language should be basic and simple, with a focus on explicitly
stating requirements rather than using ineffective phrases. A code is only useful if it is
generally understood and followed; thus, instead of being learned only once in the
interview process, it should be referred to on a frequent basis to become incorporated in
organizational culture. Thus, this is the bigger reason why it will have a big impact if
there is no code of conduct implemented in the organizations.
A lack of ethics, in my opinion, will have a negative impact on job satisfaction.
Employees can be so concerned with getting ahead and making an extra income that they
neglect processes and policies. Workers who believe that trying to operate ethically and
abiding by the rules will not enable them to move ahead in the business may be
unmotivated. Furthermore, when a manager or corporate leader engages in unethical
behavior, the risk of losing employees' respect is high which results in difficulty to run a
successful business. As a result, an immoral workplace attitude can indicate a lack of
trust and mutual understanding, which is bad for a company that thrives on teamwork and
a community spirit. Furthermore, if a business's lack of morals becomes publicly known,
the company will lose credibility and trust not only from customers but also from
stakeholders. Even if a company rebounds from current events about its lack of integrity,
it tends to take time and a lot of money to rebuild its image and consumer trust in
customer satisfaction. As a result, customers who abandon a company because they are
troubled by illegal behavior will seek out other products that meet their requirements, and
those purchasers are tough to win back after the ethical lapses have been corrected. To
summarize, the code of ethics is particularly beneficial to businesses because it provides
numerous benefits once properly implemented by both the employer and the employee.

8
3.3 Recommendation
To ensure best practices and governance in the business organization, it is critical
for business organizations to adopt universal business ethical principles as well as a
healthy culture within the organization. “A pleasant and healthy corporate culture boosts
staff morale, which can lead to increased productivity and employee retention, as well as
lead to financial benefits for the company” (Singh & Prasad, 2017). It is also known as
internal and the voluntary execution of business principles in business entities. However,
the best way to put business ethics into practise is for the organization to introduce a set
of ethical standards in collaboration with corporate organizations and then require them
to put those morally acceptable principles into practise efficiently and thoroughly.
According to Jalil et al. (2010), “The government should establish a monitoring branch to
oversee the implementation of ethical principles in business organizations and to pursue
legal action against those who do not comply with business ethics”. As a result, the
participation of many parties, including employers and employees, as well as the
government, is critical in ensuring that every corporation follows business ethics.
Aside from that, organizations can choose qualified ethics officers to organize
training sessions on the ethical code's execution. “A successful code of ethics depends on
the apportionment of obligation amongst, and acceptance by, all employees” (McNutt &
Batho, 2005). For example, an ethics training session might be held twice a year, and
managers should check on a regular basis to see if all employees, from the top to the
bottom of the organizational hierarchy, are following the code of ethics. Singh & Prasad
(2017) mentioned, "In order to do this successfully, an organization must have a vision
for why it exists, which should be shared by everyone associated with the enterprise".
Besides, while dealing with ethical dilemmas in a cross-cultural context, it may be
required to identify specific ethical issues that are possibly different among ethnic groups,
such as the Indians' inability to eat beef or Muslims' objection to consuming "non-halal"
meat. Rashid & Ho (2003) stated that “This can be a difficult task because many
Malaysians have a high level of tolerance when it comes to supporting ethical or
unethical topics”. Thus, culture is a significant aspect in a multicultural country like
Malaysia, and it should not be overlooked when establishing a business reputation.

9
 For CSR, managers must establish successful marketing communications that
show how their companies have engaged in corporate social responsibility efforts that
have a significant impact on consumer behavior, which should ideally be based on
economic, philanthropic, ethical, and legal responsibility. Furthermore, because CSR
components have a substantial association with customers' buying behavior, elected
authorities should support the engagement and disclosure of CSR activities among all
sorts of organizational enterprises. This is supported by Hizam et al. (2019),
“Government authorities could also assist businesses in engaging in CSR initiatives and
afterward disclosing them to gain good feedback from stakeholders and other institutional
investors”. Likewise, authorities are urged to establish standard requirements for
corporate CSR compliance, whether regulated or voluntary. “Even if they harm the
financial performance of a company by rising costs, it is almost impossible to sustain a
business by ignoring them” (Taysir & Pazarcik, 2013). As a result, businesses may
receive the benefits of customer engagement, which can boost their reputation and brand
image.

4.0 Conclusion
It is essential to give importance to the society's socio-cultural environment and act in
accordance with the corporate structure. Once it does, it will make a healthy work environment
that inspires good values in its staff members, as well as the rewards that come with it, such as
increased productivity and creativity. Simple steps toward improving social well-being include
revisiting safe working practices and managerial distribution networks in an ethical manner to
prevent mistreatment. “Established corporate reputations are critically important to ensuring
customer loyalty and retention, which contributes to competitive advantage” (Abdullah & Aziz,
2013). Companies that work correctly and demonstrate awareness should be supported by the
society they wish to create. Businesses bear responsibility for the wider implications that
decisions today will have on future generations, so in the majority of cases, applying smart
business principles is a vital element in a good plan. Thus, this practice should be emphasized
among companies in developing countries since it has the potential to help not just the business,
but also the country's economic prospects, particularly in Malaysia.

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Abdulrazak, S.R., & Ahmad, F. S. (2014). The Basis for Corporate Social Responsibility in

Malaysia. Global Business and Management Research: An International Journal, 6(3).

Amran, A., Zain, M. M., Sulaiman, M., Sarker, T., & Ooi, S. K. (2013). EMPOWERING

SOCIETY FOR BETTER CORPORATE SOCIAL RESPONSIBILITY (CSR): THE

CASE OF MALAYSIA. Kajian Malaysia, 31(1), 57–78.

Askew, O. A., Beisler, J. M., & Keel, J. (2015). Current Trends Of Unethical Behavior Within

Organizations. International Journal of Management & Information Systems –, 19(3).

Campbell, J. L. (2007). WHY WOULD CORPORATIONS BEHAVE IN SOCIALLY

RESPONSIBLE WAYS? AN INSTITUTIONAL THEORY OF CORPORATE SOCIAL

RESPONSIBILITY. Academy of Management Review, 32(3), 946–967.

Ferrell, O.C., Harrison, D. E., Ferrell, L., & Hair, J. F. (2018, July 24). Business ethics, corporate

social responsibility, and brand attitudes: An exploratory study. Journal of Business

Research. https://doi.org/10.1016/j.jbusres.2018.07.039

Grigoropoulos, J. E. (2019). The Role of Ethics in 21st Century Organizations. International

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Hizam, S. M., Othman, Z. S., Amin, M., Zainudin, Z., & Fattah, M. F. (2019, June 11). Corporate

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doi:10.5430/ijfr.v10n5p381

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Finance, 1(1).

Mamun, M. A., Shaikh, J. M., & Easmin, R. (2017). CORPORATE SOCIAL

RESPONSIBILITY DISCLOSURE IN MALAYSIAN BUSINESS. Academy of Strategic

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McNutt, P. A., & Batho, C. A. (2005). Code of ethics and employee governance. International

Journal of Social Economics, 32(8), 656-666. DOI 10.1108/03068290510608183

Nasir, N. E., Halim, N. A., Sallem, N. R., Jasni, N. S., & Aziz, N. F. (2015). Corporate Social

Responsibility: An Overview from Malaysia. Journal of Applied Environmental and

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Rahim, R. A., Jalaludin, F. W., & Tajuddin, K. (2011, January). THE IMPORTANCE OF

CORPORATE SOCIAL RESPONSIBILITY ON CONSUMER BEHAVIOUR IN

MALAYSIA. Asian Academy of Management Journal, 16(1), 119–139.

Rashid, M. Z. A., & Ho, J. A. (2003). Perceptions of Business Ethics in a Multicultural

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Taysir, E. E., & Pazarcik, Y. (2013). Business ethics, social responsibility and corporate

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and Behavioral Sciences, 99, 294 – 303.

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 Individual assignment
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