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2014年1月16日

Are Entrepreneurs Responsible for Taiwan’s Society?














Are Entrepreneurs Responsible for Taiwan’s Society?
Vivien Lai
National Central University




Author Note
Vivien Lai, Department of English, National Central University
Correspondence concerning this article should be addressed to Vivien Lai, Department of English, National Central University, No.300, Jhongda Rd., Jhongli City, Taoyuan County 32001, Taiwan (R.O.C.)
Contact: slorelockhart@gmail.com


Abstract

The concept of corporate social responsibility (CSR) has been more and more popular recently. Both approved side and against side have many essays published, and both have strong points to argue whether or not enterprises should take this responsibility. Although there are many researches around the world, this concept is seldom discussed in Taiwan. This paper tries to combine theories from both sides and analyze whether this concept is suitable for Taiwan’s society, and brings up the problems nowadays in Taiwan.
Keywords: corporate social responsibility, economic, legal, ethical, philanthropic, scandal, collusion


Are Entrepreneurs Responsible for Taiwan’s Society?
In Taiwan, students have learned the concept of Corporate Social Responsibility (CSR) since junior high school, but the notion is still very vague to us. The enterprises in Taiwan have more news about scandals than what they have contributed to the society. Apart from this, the collusion between government and enterprise in Taiwan is a serious problem, too. This article tries to clarify that Taiwan is not ready for CSR by addressing the opposed reasons through four levels of corporate social responsibility from Carroll A. B’s theory: economic responsibility, legal responsibility, ethical responsibility, and philanthropic responsibility.

Introduction to CSR

          CSR is the abbreviation of corporate social responsibility, and it is a form of corporate self-regulate combined into a business model. There are many versions of explanation of CSR, according to EU, the definition of CSR is the concept of combing entrepreneurs’ concern to the society and environment to their company’s commercial activities and the relationships with shareholders.

This essay is based on Carroll’s pyramid of corporate social responsibility, and he separate CSR into four levels: economic responsibility, legal responsibility, ethical responsibility, and philanthropic responsibility.
Economic responsibility asks enterprises to be profitable, which means entrepreneurs should make good and deliberate decisions in order to make profit for the company, thus able to provide investors with adequate and attractive returns on their investments.
Legal responsibility is required of business by society. It asks businessmen to obey the law and adhere to all regulations.
Ethical responsibility is expected of business by society. It asks entrepreneurs to be ethical. That is to say, to do what is right, fair and just.

The goal of philanthropic responsibility is to be a good corporate citizen. This responsibility is desired or expected of business by society. It asks entrepreneurs to give back, and engages in volunteerism in order to support the community to become a better place. The major distinction between ethical and philanthropic responsibility is that although communities desire or expect business to contribute its money, facilities, and employee time to the community, they do not regard firms as unethical if they didn’t provide these services.

Economic Responsibilities of CSR
Economic responsibility asks entrepreneurs to sell their products at fair price and provide investors with adequate and attractive returns on their investments.
The biggest problem in this responsibility is the concept of “fair price”.
First, the concept itself is vague. What is the definition of fair price? Is it the price that is a little higher than costs? The only explanation they mentioned is the price which can “represent the true value of the goods and services”.  However, the fairness of the price not only depends on the quality but also many other factors; besides, how the price fluctuates should base on free market mechanism. Government should avoid interference unless the country encounters serious problems.
Second, as I mentioned above, the price also reflect many factors other than product’s quality. For example, most people are willing to pay more money for famous brands. Because of this, businessmen often take the opportunity to drive up prices. After all, the popularity didn’t decrease on account of expansive price, and sometimes it happens that the higher the price, the more popular the price is. Why not raise the price?
Third, although the concept is vague, the price in Taiwan don’t even close to “fair price” at all! In figure 1, the blue line is Consumer Price Index (CPI), which can reflect the price changes of the product or services, and the red line is the average wage in Taiwan. We can see that from 1999 to 2007, the salary is higher, but the situation became opposite after 2007. And the gap became wider each year.

Figure 1. The change of Consumer Price Index and average wage in Taiwan from 1999 to 2009

Figure 2 is about the situation of Taiwan’s salary from 1998 to 2012. The red line is notional average salary and the blue line is the real wage. The difference between them is that the average salary only looks about how much we earned, but the real wage also consider about the inflation. By looking at the real wage, we can know the purchasing power of the consumers. From figure 2 we can see that although our salary has added six thousands and eighty dollars for the past 14 years, the growth rate of the price raise more than that.
Figure 2. The change of notional average salary and the real wage in Taiwan from 1999 to 2012

        From the statistics above, we can see that the price in Taiwan is far from fair price. Last year, Taiwan’s president Ma claimed that our salary is far less than Korea because our prices is lower. He emphasized that we should also consider about the real purchasing power, not just compare the salary. But this still can’t be the excuse of not raising salary.

Legal Responsibility of CSR
Legal responsibility is a fundamental and essential responsibility not only for entrepreneurs but for all the citizen in the world. But law is inadequate in many ways especially in Taiwan.
First, “the law cannot possibly address all the topics or issues that business may face.” (Business & Society, p.41) Legislative Procedures are inextricable and time-consuming; its clauses cannot contain all the possible circumstances all the time, but that doesn’t mean we can exploit legal loopholes. This situation happens almost every time when a new technology or a new condition bursts out and thus brings out the following problems that make law inadequate.
Second, “the law often lags behind more recent concepts of what is considered appropriate behavior” (Business & Society, p.41). People’s values change over time, but the distinct of law mentioned above restricts it to respond accordingly to the problems, thus leads to in appropriate judgments.
Third, “laws are made by lawmakers and may reflect the personal interests and political motivations of legislators rather than appropriate ethical justifications” (Business & Society, p.41). This is especially serious in Taiwan. “A sage once said: ‘Never go to see how sausages or laws are made.’ It may not be a pretty picture. Although we would like to believe that our lawmakers are focusing on ‘what is right,’ potential maneuvering often suggest otherwise”(Business & Society, p.41). The officials and businessmen stand on the same front and formed the mutually beneficial bond, so the law thence focuses on their profits instead of people’s goods.
The collusion between government and enterprise has been a not-so-amazed issue for Taiwanese people, not because our judiciary can handle this situation at ease, but we already feel numb and disheartened for the predictable outcome. The law, the legislators, and the government do not stand in our side, but supporters of entrepreneurs, then how could they back up the impotent people, whom stand on the opposite side from entrepreneurs?
Figure 3. The law’s long arm

Take Taiwan’s food scandal in 2011 for example, CFCT[1]brought up a lawsuit for the victims and sought compensation for 2400 million NT dollars, but the court eventually announced that Yu Shen Company and other companies should indemnify1200 thousand NT dollars, which is far less than the original request. The situation is entirely different for Uni-President Enterprises Corporation, it sought compensation for 8900 million NT dollars and the court sentenced Yu Shen Company to pay 1300 million NT dollars.
From the case above, we can reasonably refer that our judiciary is in fact the people’s enemy. The government, the judiciary, and the enterprise stand together as alliance. The people are left to stand on the other side alone. How can we expect enterprisers to fulfill their responsibility under this situation?
Last but not the least, people in Taiwan should change our attitude toward things entirely. The law gives us enough freedom to fight for our right, but we do not use it in an effective way. If we need the law, we have to fight for the law; if the law is harmful to us, we should fight against it. If we can’t depend on the powerful people, we have to unit and form the power by ourselves, not just endure and complain on the Internet.
Ethical Responsibilities of CSR
In ethical responsibilities, entrepreneurs are asked to be ethical, and have “obligation to do what is right, just, and fair”. But it seems very hard for Taiwan’s businessmen to follow this simple norm.
In 2011, an astonishing food scandal happened in Taiwan. It is found that some companies like Yu Shen Chemical Co. and Pin Han Perfumery Co. were using plasticizer DEHP in clouding agents the firms manufactured. This was used to substitute palm oil in clouding agents as a way to keep cost down and improve profits. The problem is that DEHP has been accuse of effecting the growth of reproductive system and the central nervous system, people who absorb too much may reinforce the chance of having cancers like prostate cancer and thyroid carcinoma.
Last year, Taiwan had a food scandal again! This time is about the cooking oil. Famous brands like Chang Chi Foodstuff Factory Co., Flavor Full Food Inc., and Wei Chuan Food Corp did not sell their products in a proper way. The Extra virgin olive oil in the bottle is not 100% olive oil but contain other cheaper kinds of oil in it, and was sold in the price of high level oil.
Same situations also happened around the world. What we see we have eaten is not the same as what we think. For example, the cheese we bought in the supermarket is actually processed cheese. The ingredients include whey, Cheddar cheese, milk protein concentrate, and other chemical ingredients. Another example is the bottled juice we bought from the store. Many people see this as natural juice and think it is healthy for us to drink it. However, it doesn’t have any juice in it. Take orange juice as example, the main ingredients in it is high-fructose corn syrup (HFCS) and less than 2% of fruit juice concentrate. Fruit juice concentrate, not like juice, has no nutrients in it. Drinking too much bottled juice absorb too much sugar and chemical ingredients.
From the examples above, we can see that businessmen are more and more unreliable these days. Although the main goal of enterprises is to be profitable, which was mentioned in the economic level, and they do indicate the ingredients on packing, the advertisements on TV and on the packing make consumers believe that the products they sell is natural, but the actual situation is totally reversed.
Apart from the quality of the products, ethical responsibility also concerns about how entrepreneurs treats their employees. In Taiwan, labors are always trying to fight against their low wage, but the growth rate each time is not very high. From figure 1 we can see that Korea’s hourly pay surpass Taiwan’s in 2007, and the growth rate each time is higher than Taiwan’s, too. From figure 2 we can see that Korea’s monthly salary is far ahead Taiwan’s. Added to this, last year when the Council of Labor Affairs, Executive Yuan decided to raise the hourly pay, they impose a restriction on the next conference, that is, only if the growth rate of CPI in Taiwan reach 3% will they convene the next conference. In other words, we don’t know when our salary will raise next time, and when the time comes, the economic in Taiwan must be bad. Compare to Korea, the government raise their salary every year, and the growth rate is respectable.
Figure 4. The comparison between Taiwan’s and Korea’s hourly pay

Figure 5. The comparison between Taiwan’s and Korea’s monthly salary
     But why our government always resolve on not to raise people’s salary? It is believed that our government share the same interest with entrepreneurs, so what they do is to protect businessmen’s interest, not people’s. I’ll talk further in the next part.

The concept of entrepreneurs should be ethical is good, undoubted. But Taiwan is still inadequate to apply this concept. “Ethics is the discipline that deals with what is good and bad and with moral duty and obligation.” The state of ego trip doesn't surpass the moral standard in our mind.

Philanthropic Responsibility of CSR
The dictionary defines philanthropy as “a desire to help mankind as indicated by acts of charity; love of mankind” (Business &Society, p.626). The philanthropic responsibility is desired of business by society, but when this desire become a pressure, a force, what will it be? Does our society turn out to promote hypocrisy?
In these days, entrepreneurs become more and more aware of public welfare. It’s not because businessmen finally learn that they’ve earned a lot of money plus brought much harm to society, but they have learned that the more they donate, the more they earn. Robert H. Lorsch, an entrepreneur in Los Angeles, admitted that every dollar he donates can turn into 1.01dollars to two dollars profit. Moreover, entrepreneurs build better corporate images through engaging in charitable activities which convinces consumers to believe that they are conscientious firms. Another shocking fact is that entrepreneurs can have tax credit by donating money. In Taiwan, if they give disaster relief to the government, they can have the deduction rate up to 100%!
Some people would say that although corporation does charity to promote their images not because they are kind-hearted, it still brings good effects for our society. After all, it’s better than nothing! But the problem is that the moment when they show their charitable moves to us, their firms still do things that will harm our society; this brings out two problems: one is they don’t really pay responsibility for their harm, but donating their money to those issues that are more noticeable and more appealing, which will gain public notice more effectively. The other is that through doing charity, corporations can blur the point that they are the origin of these problems. Because we often see their benevolent moves but the wicked behavior is left unsaid, publics will gradually have false notions that businessmen may have conscience: good corporations can help government build a better society.
For the company, the problem is that they have to pay extra expense to fulfill this responsibility. The profit is unclear but the expenses are real, especially for smaller companies.
Representative Paul Gillmor (R-Ohio) said that he introduced the disclosure bill, which was cosponsored by Representative Michael G. Oxley (R-Ohio) and Representative Thomas Manton (D-New York), because he had set on corporate boards and observed executives distributing corporate assets to their pet charities while ignoring shareholders.
Gillmor’s concern was shared by law professors such as Charles M. Elson of Stetson University, who argued that philanthropy often only serves to glorify corporate managers and that, unless the philanthropy clearly benefits the company, it represents a waste of corporate assets. (Business &Society, p.628)
Plus, the more you devote on social responsibility, the more the public want you to do.
Executives increasingly see themselves in a no-win situation, caught between critics demanding ever higher levels of ‘corporate social responsibility’ and investors applying relentless pressure to maximize short-term profits. Giving more does not satisfy the critics—the more companies donate, the more is expected of them.
All in all, philanthropic responsibility brings more disadvantages than benefits. To big corporations, it is the opportunities to promote the image but they have to take the risk of wasting money. To medium and small firms, it’s a big burden to fulfill this kind of responsibility. To the public, we only got facial benefits and their hypocrisy, but miss the chance to solve the basic problems.

Conclusion
So far as the situation in Taiwan, CSR is not suitable for Taiwan for the following reasons: first, entrepreneurs are not interested in doing what is required or expected by society, all they can see is money. Second, the government stands on the same side with entrepreneurs; they neglect people’s welfare and only think about personal interests. Last, people in Taiwan are too coward to against powerful people. If we can’t depend on the powerful people, then we should unit and form the power ourselves, not just endure and complain it on the Internet.


References

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1 CFCT is the abbreviation of Consumers' Foundation, Chinese Taipei. It’s the major non-profit organization which fights for consumer’s right in Taiwan.

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