Business Ethics and Corporate Social Responsibility

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BusinessEthics and Corporate Social Responsibility

Forany business to have a head start and thrive in modern times, issuesof ethics and corporate social responsibility (CSR) should be centralin its strategic plan. This is because of greater awareness of thepopulace on their rights as stakeholders, the presence of an everpresent media that thrives on exposes and the need for organizationsto build mutually beneficial relationships with all stakeholders andgovernment regulatory agencies. Ethics can be defined as guidingprinciples that steer individuals, organizations and professions.Faced with ethical dilemmas in its day to day activities, ethics comeinto play by offering directions on what is right to do at any givensituation to an organization (Goel &amp Ramanathan, 2014). Ethicsalso provide codes of conduct which must be adhered to. Important tonote is that ethical values are sourced from a society’s norms inwhich a business entity operates (Munoz, Encinar &amp Caninbano,2012). On the other hand corporate social responsibility is anexercise done by an organization in order to endear itself to thesociety. This happens by way of engaging voluntarily in beneficialactivities within the society in which it is situated. Socialresponsibility is akin to giving back to society and it serves touplift the living standards of individuals therein.

Ethicsand corporate social responsibility are now viewed as relatedconcepts because social responsibility in which companies engage isan ethical concern. Goel &amp Ramanthan (2014) point out thatcorporate social responsibility is based on ethical underpinnings asit compels an organization to take into consideration the plight ofall its stakeholders who include clients, community, vendors,governments, employees and so on. Social responsibility serves toimprove a company’s reputation and according to Cruz, Vaduva, Fotea&ampNeagoie (2015) who cite an Emanuel University of Oradea study onbusiness ethics and CSR attitudes, 64 out of 99 respondents agreethat a company that wants to be seen in favourable light has toengage in corporate social responsibility.

Historically,the roots of CSR can be traced back to the 1940s to 1960s wherenotions of business responsibilities other that making profits firstemerged. Carroll and Shabana (2010) note that it was Frank Adams whothen was an oil an executive at Standard Oil Company who “introducedconcerns about management’s broader responsibilities in a complexworld… companies had to think not just about profits but also abouttheir employees, customers and the public at large” (p. 2).

Thispaper will look at aspects on business ethics and concerns within theCSR.

  1. Ethics

Ethicsas earlier noted has to do with decisions on what is right andprovides codes of behaviour and course of actions when faced withdilemmas. They guide an organization on how to do things. Thefollowing are some of ethical standards applicable in a business setup.

  1. Trustworthiness

Trustis an important element in any organization be it in their internalaffairs or external dealings. Certainly, a company that is perceivedby customers as having a good reputation emphasizes matters on trust(Salehi, Saedinia &amp Aghaei, 2012). Trust can be achieved throughresponsibility and accountability. Measures should be put in place toensure that unbecoming activities such as corruption and mischief byan organization’s employees are checked.

  1. Respect

Respectis a two way process between two or more persons. In a businessentity, respect is maintained within the organization when employeesand their bosses co-exist well. Channels should be afforded wheregrievances from all parties can be directed and amicable solutionsachieved. Mutual respect, Goel &amp Ramanthan (2014) contend, is akey element seen in Enron’s (which was a huge energy multinationalbefore unethical behaviours saw its downfall) vision and values.

  1. Responsibility

Thisimplies being careful in ones undertakings and owning up to onesfailures and promptly taking remedial actions. Growth will often beexperienced in an environment where employees and management areencouraged to be responsible. Situations in which people refuse to beaccountable to their actions breed discontent and imply recklessnessthat will ultimately have a devastating effect on a company’sgoals.

  1. Fairness

Fairnessmeans impartiality, justice and dealing with all stakeholders in anunbiased way. Favoritism in business should be avoided at all costsas it may negatively impact employees. Unfair business practicesshould be discouraged because they may be harmful to competitors andstakeholders. Such unfair practices include corrupting governmentofficials in order to win tenders or gain support in forming mergers.An example of a recent corporation to be adversely mentioned inrelation to bribery of South Korean state officials is Samsung.

  1. Concern for human welfare

Corporationshave human beings as their most important resource thus they shouldstrive to ensure that employees are given a good working environmentdevoid of intimidation, coercion and inhumane treatment. Employeesshould be treated with respect as human beings with families. Properfinancial packages should be given commensurate to the nature of workthey do. Donaldson and Fafilou (2003) say that human relationsconcerns in the workplace was highlighted by Frederic Taylor in hisScientific Management Theory which indicated that organizations thatgrow treat employees well and not as part of the production process.

  1. Creating an ethical organization

Businessentities have to create ethical environments where ethical values aregiven prominence more than profits. Means to getting that bottom-line(money) should be moral. Cory as cited in Salehi, Saedinia &ampAghaei(2012) shows that “companies should behave ethically and beprofitable in parallel, and even if ethics diminishes theprofitability of the company, they should still behave ethically”(p.3).

Oneway in which organizations use to remain ethical is the through codesof conduct. These are rules that guide an organization or aprofession by explaining the dos and don’ts and highlighting theconsequences of deviating.

Thesecond way is creating a climate in which whistleblowers are securewhen they expose scandals. Whistleblowers are individuals in anorganization who are aware of malpractices going on and out ofconcern for the public (and in some cases malice) provide informationand documents on these vices to the public mainly through the media.Whistleblowers are protected by law and many should be encouraged tocome out and expose rots in corporations that harm the interests ofemployees and the general public. A good example of a role played bywhistle blower as seen in Donaldson &amp Fafilou (2003) is about thecar manufacture Mitsubishi American plant where whistleblowersexposed a sexual harassment case in the facility. Mitsubishi wascompelled to pay a $34 million settlement.

  1. Corporate Social responsibility (CSR)

Corporatesocial responsibility is considered an ethical act as it is driven byvalues which emphasize the concern for those within and outside ofthe business set up. The whole idea of CSR is premised on the ideathat all businesses have to be concerned about the welfare ofsocieties and not driven by profit motives alone (Carroll &ampShabana, 2010). CSR is defined as those activities that anorganization undertakes to bring benefit to society and are aimed atbuilding mutually beneficial relationships.

  1. Arguments in support of and against CSR

Therehave been comments against the concept of CSR. Some voices claim thata business is in existence solely to make profits and not to succumbto the needs of society. Carroll and Shabana state that the lateMilton Friedman claimed that businesses are there to maximize profitand that social concerns are of no use to businesses.

Furthermore,others view businesses as not in a position to handle social issues.In fact, anti- CSR quarters insist that liberal society shouldcorrect it ills and in the event they are incapable the governmentshould step in.

Anotherargument as noted by Goel and Ramanathan (2014) is that somecompanies engage in destructive activities in its productionprocesses and use CSR to clean their wrongs. An example is an oilcompany engaging in massive pollution engaging in pro -environmentalactivities such as planting trees and creating awareness onenvironmental issues.

Campsin support of CSR claim that businesses will in the long term benefitif they are perceived positively. This means that CSR is used as atool to ensure future favourable working environments. Others claimthat CSR keeps government’s regulatory efforts at bay becausecorporations will be seen as being concerned about societal welfare(Carroll &amp Shabana, 2010).

Tocounter the argument that corporations do not have the capability tohandle social issues, those backing CSR claim that corporations havethe financial muscle, human capital they should be given anopportunity to play a role. Here, business is seen as havingexpertise sourced from its various departments coupled with money andcould in some way be able to solve certain social problems.

Generally,the public will be keen on whether big businesses give back tosociety and if they do companies will earn their goodwill. Forexample, corporations could build schools in remote areas where theyoperate, construct health facilities or even source labour from localpopulation. CSR activities are also beneficial to employeesespecially where companies are concerned with employees and theirfamilies. This is achieved by paying them well and creating programsthat enhance concern for each other’s welfare.

  1. Who does CSR impact

Itshould be noted that CSR activities impact an organization’sstakeholders. Stakeholders are entities that are affected in one wayor another by a company and its activities and may respond in a waythat may be beneficial of harmful to the organization. These stakeholders include owners, management, employees, customers, investors,government and the community.

CSRendeavors will for instance cater for the needs of the community byengaging in activities beneficial to the community such as ruralelectrification. For investors, CSR displays the organization asconsiderate to the welfare of society and this enhances itsreputations which might result in increased profits. Employees alsobenefit from CSR activities that focus on their plight inside andoutside the workplace.

  1. Relationship between ethical standards and CSR

Theethical standards discussed earlier are applicable to CSR activities.For instance, organizations should be fair, transparent andaccountable as it rolls out its CSR schedule. Each stakeholder shouldbe given adequate consideration and favoritism avoided. Therefore,ethical considerations should guide CSR which is in itself an ethicalundertaking.

Conclusion

Insum, business ethics and CSR go hand in hand. Ethics enables anorganization avoid friction with all stakeholders through such meansas adapting a code of ethical conduct. By focusing on the need tosolve societal problems, CSR is engaging in an altruistic activitythat is ethical. Even though CSR has its opponents it has numerousbenefits to the society, employees, clients and the business itself. CSR may contribute to the society and uplifting of living standardsby building roads, schools and advocating for environmental concernsamongst other activities.

References

Carroll,A, B., &amp Shabana, K, M., (2010). The business case for corporatesocial responsibility:

Areview of concepts, research and practice. InternationalJournal of Management Reviews85-105. DOI:10.1111/j.1468-2370.2009.00275.x

Cruz,S, E., Vaduva, S., Fotea, I. &amp Neagoie, D. (2015). Businessethics and corporate social

responsibilityattitudes among leaders in Romania. Retrieved March 9, 2017, fromhttp://conferinta.management.ase.ro/archives/2015/pdf/87.pdf

Donaldson,J., &amp Fafilou, I. (2003). Business ethics, corporate socialresponsibility and corporate

governance:a review and summary critique. EuropeanResearch Studies,4, 90-110

Goel,M., &amp Ramanathan, P, E., (2014). Business ethics and corporatesocial responsibility- is

therea dividing line? Procediaeconomics and Finance,11, 49-59.

Munoz,F. F., Encinar, M, I., &amp Canibano, C. (2012). On economics,ethics, and corporate social

responsibility.ModernEconomy,3, 355-363.

Salehi,M., Saedinia, M., &amp Aghaei, M. (2012). Business ethics.International Journal of

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