Corporate Social Responsibility and its Obligations

Business entities are established for various reasons, and in most cases, the reason is to make profits and improve the returns of the investors and stakeholders. The companies are surrounded by communities, and they exist in communities. Apart from making huge profits, the companies have a moral responsibility to protect the society, and this is enhanced by practicing the corporate social responsibilities. Corporate social responsibility (CSR) refers to a firm’s obligation to have a positive impact on the society and minimize the negative impacts it has in the society by being concerned with the society’s long-run needs and wants (Tai, and Chuang, 2014, p.117). The corporate social responsibility is governed by formal legislations which are enacted by the industry the company belongs to, the society and in most cases by the government. In some cases, CSR is guided by business ethics. This report is written to highlight the importance of business ethics and how corporate social responsibilities can be meaningful if not governed by formal binding legislation enforcement. 

Refers to knowing what is right and what is right in the business or workplace. The business ethics enable the business to do what is right in relation to the products and services offered, policies and procedures employed during the recruitment process, having a conducive environment and giving people of the society equal employment opportunities without discrimination (May, et al.2014, p.72). The firm establishes a program that will help it manage the ethics. Code of conduct can be established to guide the operations of the business. The code of conduct helps the business to make choices which are right even if it is not required to do so by the legislation. The organization can also cultivate an ethical culture and embark on ethics training to improve the business ethics. The business ethics has enabled the business to realize that they have a moral duty to protect the people and the society and it should not always think about its economic state.

Improve reputation.

An organization with sound business ethics is likely to improve its reputation which will lead to increased benefits to the organization. Corporate social responsibility without formal legislation binding can, therefore, be meaningful because the company will improve its reputation. The improved reputation will help the business to attract investors (Park, et al.2014, p.297). The reputation will also lead to improved share prices which will enable the company to raise capital from the public. This will enable the business to operate efficiently. The improved reputation will also enable the business to attract more customers who will purchase its products. Customers always want to be associated with morally ethical businesses and this will lead to improved sales and revenues leading to more profits.

The Importance of Business Ethics

Reputation will enable the business to retain best employees as employees feel valued. This will help to reduce employees’ turnover which will help the business to minimize disruptions of activity and this will lead to improved productivity (Lewis, 2003, p.360). The reputation brought about by the sound business ethics will enable the business to attract best employees from the society. This will reduce the recruitment costs as employees are willing to work for the organization. Attracting the best employees will enable the organization to produce quality goods and services which will attract a large market leading to improved profits. Corporate social responsibility will still be meaningful even if not guided by legislation because it brings benefits to the organization.

Better decision-making

Ethical business practices will enable the organization to make better decisions because the decision-makers will consider the social, economic and ethical implications of the decisions to the business (Su, 2014, p.90). This will enable the decision maker to make the decisions that will cater for the interest of the society, organization, employees and even the law. This will help the organization to avoid scandals which may affect the reputation of the business and affect its business operations. Organizations will, therefore, make decisions that are ethical even in situations where they are not forced by the law.

Protection of the society.

Business ethics will enable the organization to protect the society. A healthy society will lead to a productive workforce and therefore the business will conduct social responsibility practices that include improving the level of education in the society, build hospitals and provide the community with equal employment opportunities (Nica, 2013, p.12). This corporate social responsibility will be guided by moral ethics and not the law because the organization has realized that it cannot succeed in a society which is not satisfied with the operations of the business. The business gets permission and licenses to operate from the community and therefore has a moral obligation to protect the society to improve its reputation and ensure sustainability of the society is enhanced.

There are various theories and philosophies that guide the business ethics applied in various organizations. The theories include;

Theory of egoism.

The theory states that the decision maker freely chooses an action to follow his desires or interest, the decision is right. Provided the decision maker is not forced to make a decision the theory holds that the decision is right (Rachels, 2012, p.193). The decision maker’s ego makes him choose such an action because he feels that it is best for the organization and the society at large. In this theory, the results of the action are not as important as the action or the decision that leads to the results. The decision maker is judged according to the action taken regardless of whether it has positive results or negative results. Organizations should, therefore, choose ethical actions which they feel will benefit the organization and the society.

Benefits of Sound Business Ethics and Corporate Social Responsibility

Utilitarianism theory.

In this theory, the decision is considered morally right if it results in the greatest level or amount of good for the largest number of people in the society. In this theory, the action which leads to the result is not important. It can also be referred to as consequential theory because it is only concerned with the result (Muehlhauser, and Helm, 2012, p.110). The result of the action which brings more benefit to the society and employees is the one that is considered to be morally right. In this case, the end justifies the means.

Teleological ethics.

This philosophy advocates that if the result of the action is considered to be morally right, the action leading to the result is also considered morally right even if it is not (Berker, S., 2013, p.353). In some cases, the unethical action may lead to a good result, and this philosophy will still regard that action as being morally right because it resulted in a good result.

Deontological ethics.

This philosophy states that if the action of the business is considered morally right, then automatically the result will be good (Crossan, et al.2013, p.572). This philosophy of ethics is concerned with the actions and not the results of the action. In this case, the means justify the end.

Virtual ethics

In this philosophy, the ethics of the business are not judged whether right or wrong. It focuses on the character of the decision maker or the person performing the actions. If the character of the decision maker is deemed morally right, then the actions will be morally right and this will result to good results (Nadolny, et al.2013, p.985). If the character of the person performing the actions is not good, then the results will not be good.

This ensures that the business has applied ethical values in its economic targets and the actions and strategies that will be used to achieve those targets or goals (Baden, and Harwood, 2013, p.620). The objective is to ensure that the organization achieves its targets and goals by practicing the ethical business practices which will ensure the welfare of the society is enhanced. The objectives include;

Fairtrade.

The organization should ensure that it uses practices that encourage fair competition and not means that will force other businesses in the society to be eliminated from the business (Raynolds, 2012, p.282). The business should ensure that competition for customers is through the production of quality services and goods. The company should provide quality products and services and sell them at a fair price that reflects the value for the money and using the goodwill of the business to produce inferior goods and services and charge high prices.

Theories and Philosophies That Guide Business Ethics

Employee satisfaction.

The employees working in the organization should be satisfied by being provided with a conducive working environment which will improve their welfare. The business should have a moral right to protect the employees and not exploit them to make high profits (Ballestero, et al.2012, p.490). The employees should be fairly compensated, and the business should not underpay the employees to reduce the operational costs at the expense of the employees’ welfare.

Customer satisfaction.

The ethical objective of the organization should be to provide quality products and services that will satisfy them. The business should not make high profits by producing poor quality goods and selling them at a high price to the customers (Brammer, et al.2012, p.17). The business should not produce goods that may harm the customers by using the wrong procedure to cut the production costs. The business ethics should ensure that customers are not exploited in the case of monopoly businesses to make high profits.

Without the formal legislation bindings, corporate social responsibility will still be meaningful because apart from legal CSR, corporate social responsibility has three more aspects which still make it more meaningful. The aspects include;

Corporate social responsibility helps the business to gain more economic benefits. Providing quality goods and services to the community will enable the customers to be satisfied, and this will help to increase the sales which will lead to the generation of more revenues and profits (Kitzmueller, and Shimshack, 2012, p.66). Safe products and working conditions will enable the business to cut on the costs of accidents which could have occurred if the business does not practice ethical business practices in the organization and this will help to reduce the operational cost and therefore even without the formal legislation binding, CSR will still be meaningful.

Providing jobs and paying the workers well will ensure that the reputation of the business is improved and this will reduce employee turnover and help in attracting the best employee to the business. This will help to reduce the recruitment costs and also avoid disruption of activities in the organization due to employee turnover (Hilson, 2012, p.134). This will help to ensure the company produces quality products and services due to having the best employees and also avoid costs associated with the shortage of goods due to work disruptions. This will help the organization to gain more economic benefits and even without the legal bindings, businesses will still adhere to the ethical practices that protect the welfare of the society.

The Ethical Objectives of an Organization

The business pays taxes that are used to develop the facilities that the society needs. This will help to improve the welfare of the society, and the society will be able to purchase the products offered by the company, and this will improve the sales. The business will also have a good reputation in the society and have good relations with the society (Khan, et al.2013, p.213). This will enable the company to be more accepted in the society, and this will attract investors and more customers. This implies that formal legal binding is not only the factor that enables companies to engage in corporate social responsibilities.

This type of corporate social responsibility enables the organization to take the right actions that are right, just and fair and respects the people and the society. The ethics ensure that the business operations do not harm the people and the society (Murphy, and Schlegelmilch, 2013, p.1809). Corporate social responsibility, in this case, is based on the humane principles, human rights and religious convictions which state that doing good to other people and society is also honoring God. The moral-ethical prevent the organizations from engaging in corrupt practices that prevent them from delivering the quality products to the society like the production of unsafe goods that may harm the public.

The organization also has a responsibility to ensure that they do not produce products that pollute the environment. The production process should not also pollute the air, water, and land. Organizations have an ethical obligation which even when not forced to do so the existing laws need to protect the environment and ensure environmental sustainability (Homburg, et al.2013, p.64). Pollution will lead to hazardous health complications that may harm the society and the employees, and this will affect the health of the employees and lead to reduced productivity and poor reputation which will affect the image of the company leading to reduced profits.

The business also has an ethical obligation to ensure that it practices best labor practices. The business should provide the workers with a conducive working environment which will protect them from hazards (Homburg, et al.2013, p.64).. The business should not exploit the workers by forcing them to work extra hours without pay. The business also has to ensure that it does not operate the company using children labor. The workers should be given right compensation for their services and not being underpaid so that the company can make more profits. The organization should always be guided by ethics to ensure the society is satisfied and safe.

This type of corporate social responsibilities ensures that the business gives back to the society in various ways. This CSR is not guided by formal legislations by it is guided by charity principles and stewardship principles (Homburg, et al.2013, p.64). Charity principles advocate that the organization should assist the less fortunate in the society. This enables the business to contribute to projects that will ensure that the welfare of the society is improved. The projects include building hospitals, schools, and even churches. Stewardship principles enable the firm which has enormous resources to be the caretaker of the less fortunate. This is even written in the biblical doctrine that the wealthy should take care of the less privileged. This principle enables the business to engage in activities such as sponsoring the poor children in the society to go to school and even building children home for the orphans.

The following factors also enable the business to practice corporate social responsibilities without not forced by the formal legislation.

The organization has a moral duty to set business ethics in the organization that will ensure that all employees are treated the same regardless of the gender, age, race, nationality, and religion (Janssens, and Zanoni, 2014, p.328). The organization should ensure that employees performing the same tasks are paid equally. The organization should also ensure that all people are represented and even embrace the affirmative action to ensure that people with disabilities are employed in the organization and accommodated without discrimination. The promotion in the organization should be based on performance and not through favoritism which results in discrimination to the other party.

The organization has a moral responsibility to ensure that it does not treat some employees or applicants unfairly because of their race or originality. The organization should ensure that everyone in the organization feels welcomed. The organization ethics should also ensure that employees do not face unwelcome sexual advances from other employees and they should take the necessary action because this will damage the reputation of the company (McLaughlin, et al.2012, p.638). Such harassment will also result in unethical culture and atmosphere in the organization which will lead to poor results. Business should set a code of ethics and conduct that will guide and the employees in the organization.

Sustainability issues are changing the way organization operate because they have to create value for their stakeholders. Corporate sustainability enables the organization to create long-term value for the investors by following business strategies that will ensure that business operates in ethical, cultural, environmental, social and economic atmospheres (Schaltegger, et al.2012, p.103). Failure to practice the ethical business practices that will enable the business to operate efficiently for long, the business will be crippled. This sustainability enables the business to use the available resources to minimize scarcity efficiently. This also enables the organization to produce goods which do not pollute the environment to enhance the sustainability.

Corporate governance refers to the processes, rules, and practices that directs and controls a company. The company has to balance between the interest of the management, suppliers, shareholders, employees, customers, government and society (Westphal, and Zajac, 2013, p.632). The purpose is to ensure that the company is run in a way that will ensure the company achieves long-term success by considering all the stakeholders when making decisions. Corporate citizenship refers to the social responsibilities of the company that enables it to create a balance between the needs of the society, environment and the shareholders (Baumann-Pauly, and Scherer, 2013, p.12). This enables the company to improve the welfare of the society and improve the living standards of the society and still create value for the shareholders.

Refers to the business taking actions and decisions that will minimize the negative impacts of the business to the environment. The organization has an ethical duty to ensure the environment is protected to continue creating long-term value for the shareholders (Malhotra, et al.2013, p.1271). Ethical practices will enable efficient use of resources, and this will prevent depletion of resources that causes scarcity and leads to increased costs of products.

Embracing business ethics has numerous implications which help the organization to continue creating long-term value for the shareholders and improving the welfare of the stakeholders. Business ethics has helped in enhancing environmental sustainability which will ensure there is the availability of the needed resources for the production of the goods and services needed by the society (Malhotra, et al.2013, p.1272). This has also helped to minimize pollution that leads to global warming and hazardous health complications. Business ethics has also enabled companies to improve their images and reputation which can enable them to compete with international companies.

Conclusion

From the findings of the report, it is now clear that even without the formal legislation bindings, corporate social responsibility is still meaningful. This is because businesses have established a code of ethics and conduct that prevent the organization from engaging in activities that can harm the society. Corporate social responsibility also brings many economic benefits to the company and even without the formal legislations, companies will continue practicing the corporate social responsibilities. Corporate social responsibility has helped a lot in enhancing corporate citizenship and sustainability, environmental sustainability, enhancing equality at work, reducing racial and sexual harassment in organizations and improving the corporate governance.

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