Ethics and Human Resources Management

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Ethics and Human Resource Management Introduction Corporate social responsibility (CSR) is known as one of the areas that has drawn many attentions in the business environment over the last twenty years. Carroll (1991) argued that corporation should be addressed not only from economic and legal perspectives but also from ethical and philanthropic perspectives; the idea of CSR’s pyramid is then derived. Furthermore, the efficiency theory and the social responsibility theory have influenced the debate on corporate ethical and social responsibility. The efficiency theory represented by Milton Friedman (1970) portrayed the idea that business’s social responsibility is to use its resources to increase profits as long as it stays within the law and in an ethical manner which has the utilitarian and narrow view of shareholder value (Cooke & He, 2010). In contrast, the social responsibility perspective adopts a broader focus on stakeholder value and it argues that corporations should take into account the interests of different stakeholders (Cooke & He, 2010). This essay will focus on human resource management (HRM) side of corporations. Using stakeholder theory and its two principles, Kantian ethic perspective and utilitarianism perspective, this essay will look at Freeport Indonesia in its operations in West Papua and justify whether Freeport Indonesia can be said as an ethical company. “Hard” and “Soft” HRM Human resource management (HRM) has an important role for the business to maintain its enactment on CSR through the stakeholder approach. However, there are only few theorists who have applied ethical theory directly to HRM. There are two most widely adopted models of human resource management which are the “hard” and “soft” HRM approaches (Legge, 1995). Soft HRM or “developmental-humanism” (Legge, 1995, p.66-67) emphasizes on human and it focuses on

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