Using practical examples,critically evaluate how organisations can adopt and apply ethical theories into their operations to demonstrate their business ethics and CSR programmes?
Ethics is considered one the most important philosophies to run a business efficiently. The original meaning of ethics being custom or character, but the ethics in today’s world means principles of conduct. Business ethics forms an important branch of applied ethics. It consists of subjects that arises moral problems and ethical principles in a business environment. Solomon distinguishes business ethics into three levels: micro, macro and molar. Micro level is concerned with rules that implicate fair exchange between two individuals. The macro level is concerned with the cultural and institutional rules of commerce in a society. The molar level is concerned with the basic unit of commerce. Business is related to both individual and society. Corporate Social Responsibility and ethical practices can be implemented in companies as an idealistic idea. The abuse of power by decision making must be eradicated and behaviors that will be recognized by the stakeholders must be assessed. All the companies give a right shape to their companies by increasing the social responsibilities towards a better society. Therefore it has an influence on a business. The importance of ethics in business life makes it important for the companies to form ethical codes (Gulcan, 2011).
Business ethics is a reflection on ethical dimensions followed in business or institutions. It involves analysis of moral issues and uses categories such as utility, obligations and justice. The problems addressed are internal such as discrimination in promotion and hiring. The external issues concern with the stakeholders, environmental issues and governmental compliances (Brenkert and Beauchamp, 2010).
Importance Of Business Ethics To A Company
Business ethics is important because the society cares about the well being. Business must use their power in a way that is concerned with interests of multiple stakeholders. The actions or a decision taken by a company affects everyone involved in the organization. The stakeholders include employees, suppliers, shareholders (Bowie, 2013). It is important for an organization to act in a way because the reputation is at stake. The businesses must act responsibly by not causing financial damage. Creating trust and value is important in a business; equally important is to maintain the value and trust. The code of business ethics is important for the company. The righteousness of the act is proven by the consequences. (TrevinÌƒo and Nelson, 2004).
Ethical theories are divided into two main categories- Teleological Theories and Deontological Theories
Teleological theories are based on Consequential approach and are also known as result based ethics. Consequentialism is based upon two main principles namely-
- If the act is right or wrong that is judged upon the results
- The righteousness of the act is proven by the consequences.
The Consequentialism theory is based upon two main theories-
Utilitarianism- This theory can be summed up as the greatest good for the greatest number. As per this theory, actions must be evaluated by their consequences. The classical utilitarianism theory was propounded by Jeremy Bentham. The utilitarianism act proves morally right only if it maximizes the utility. The utilitarian sets out relevant alternatives that are devised by him. He lists to individuals who might be affected by the decision or while the decision making process. As assessment is made how the individuals might be affected while applying the alternative acts. An act will be chosen by the utilitarian that would maximize utility. It results in creating the greatest total balance of benefit than harm. Rule Utilitarianism is another form of theory, in which the rule utilitarianism brings out the greatest good (Shore, Coyle-Shapiro and Tetrick, 2012).
Hedonism is a fundamental moral obligation for maximizing pleasure or happiness. The doctrine lies in pleasure or happiness or good chief in life.
Deontological Theory follows the non-consequential approach for which the morality of actions is based on adherence to rules. They focus upon independent duties. The scientific meaning of deontological theories is the science of duty. The theories in accordance with this theory are duty theories, rights theories. The deontologists believe in acting what is right. The moral philosophy state followed is that of Kants’. Professor Kant believed in a theory of doing the right thing even if it produced a bad result (Duska, 2007).
Corporate Social Responsibility
Corporate Social Responsibility is a concept where companies integrate environmental and social concerns along with their business operations. It is an imperative towards the community and environment. It implies the perspective of an organization to be sustainable. The expectations of shareholders and stakeholders are addressed while maintaining a balance in economic, social and environmental concerns (Okpara and Idowu, 2013)
According to Dobers (2009), CSR has gained importance as organizational value and gained importance for corporations. CSR involves activities that affect the social attributes and environment while adopting advanced human resources management programs. CSR is required by the organizations to expand an understanding of the responsibilities of stakeholders. Ethics can be used as a critical component that affects organizations decisions and responsibilities. CSR also helps in building a corporate reputation (Gonzalez-Perez and Leonard, 2013).
Criteria Of Corporate Social Responsibiltiy
Economic Responsibility- The economic responsibility in a business is producing goods and services in needs with the society and maximizes its profits for owners and shareholders. It is also called as profit maximization responsibility. It also involves maintaining a competitive position in the market. If a company decides to contribute a part of earning back to the society, it must increase its return. The profitability has to adhere with performance in the marketplace (Daft and Marcic, 2004).
Legal Responsibility- Society has to comply with laws and regulations in accordance with earning profits. The laws and regulations that are promulgated by local and state governments must be complied with. The social contracts exist between society and business to pursue economic missions. The laws like equal employment, opportunity commission and environmental protection and a company breaking such laws are considered for their poor performance. The business must engage its resources for business activities and needs to stay within the framework of law.
Environmental Responsibility- The environmental approach in CSR programmes includes greater use of renewable resources and greater recyclability of materials. The products produced by the business must integrate environmental management tools into business plans and maintain the environmental standards. The business must aim in causing least harm to the environment and maintain greenery around. Initiatives must be taken by the companies in promoting a greener environment (Babiak and Trendafilova, 2011)
According to Morimoto, Ash and Hope (2005), the six key elements to successful implementation of CSR are good corporate leadership, integration of CSR into corporate policy at all divisions in business, good coordination between government and civil society, good stakeholder management and regulation of national and international level (Moon, 2007). The companies can have a pursuit towards long term competitiveness and can utilize a wider community with expertise. The Key Performance Indicators can be used in maintaining a balanced scorecard and measure performance. CSR helps in removal of misconduct in the company by abiding through laws and regulations.
There are several case studies in the world that have provided examples of implementing corporate social responsibility and abiding with the ethics code. These case studies are examples on how the businesses must incorporate corporate social responsibility and ethics in their business structure. These examples give businesses an idea that the business can attain profitability even with the incorporation of ethics and social responsibility.
Football Club Barcelona
It is the one of the most attractive and favorite club for football lovers. The club was founded in 1899. The club is commonly known as Barca in order to sustain its identity. The organization faced various ups and downs; there have been phases for success as well as failures. The management board consists of a president and vice president. Various responsibilities were undertaken and socially responsible activities were conducted in order to fulfill the goals. The company did a lot of charity work to show a concern in the society. A few strategic initiatives were undertaken by the club. The company developed sponsorships with a few nonprofit organizations and helped the government with its debt clearance. The company developed alliance with UNICEF to help children having vulnerable diseases, UNESCO in order to handle issue of doping, UNHCR in order to create a healthy and wealthy atmosphere for citizens (Ceskakinantropologie.cz, 2015). The club made efforts to rise in the eyes of people to be more than just a football club. It supported various programs with the aim of providing welfare to the needy people. The foundation is based upon promotion and education of positive values of sports. The company uses children and adolescents as beneficiaries. Football club Barcelona created a sense of trust among individuals with collaboration and shared values. The Catalan contributes a certain percentage of its income to the FC Barcelona Foundation. The company invests in building self-development, community, character and belonging. The management still needs to find new revenue streams facing challenges like other business (Foundation.fcbarcelona.com, 2015).
Starbucks follows good governance, social responsibility and ethical conduct to the running of business. Starbucks has increased their shareholder value. The company intends to focus on maintaining relationship between company and stakeholders. There were several initiatives undertaken by Starbucks to build a responsible environment. Starbucks commits itself in upholding culture by investing in local neighborhoods and global communities. Starbucks backs youth action by providing them training, employment and education. They also raised funds with Children’s Hospital in Sheffield. Starbucks also committed themselves in creating a sustainable environment. They started providing with eco-friendly cups so that they can be recycled and waste is reduced. They also minimized their energy consumption by using renewable sources of energy. They are identifying ways in order to reduce water usage and the store designs are constructed in a way to involve energy efficiency. They also comply with getting the highest quality of coffee by ethical trading and responsible growing practices. They are directly working with the farmers to ensure a sustainable supply of coffee. The purchase of cocoa is ensured for a long-term supply and they meet with social responsibility to their suppliers. Starbucks introduced Fairtrade International for launching new fund for smallholders. The climate required to grow coffee is a major problem for farmers in times of climate change. Such problems are addressed and mitigating strategies are designed in order to help farmers. They also applied with Giving Back To Women in Liverpool by helping women who faced domestic violence (Starbucks Coffee Company, 2015).
British petroleum is one the largest oil and alternative energy companies in the world (Bp.com, 2015). It has set various confident and meaningful targets and reduced its Carbon dioxide emissions. It has also developed alternative sources of energy like solar power. They have used an image to create a greener environment by making the responsibilities broader that contribute to business decisions. Apart from developing a progressive approach to a greener environment, the company framed ethical conduct policy that adhered with Human Rights regulations. This regulation ensured that all operations are legal and fair in nature by eliminating bribery, facilitation payments and other illegal factors from the company. The company has proposed good business decisions and does not fail its stakeholders by creating efficiency in the organization. The company worked on its sustainable image in order to cultivate ethical behavior reputation. There have been bad phases like Gulf of Mexico explosion and various other events that have been a result of unethical decision making. But the company strives to be fair and just to its stakeholders. The current business practices pursue self-interests regardless of the demands of human beings. Alternative sources of energy were developed for a better future of the world. The company also intends to make good citizenship by increasing its corporate effectiveness. The company pledged its name with Red Cross for providing financial support. The company also involved with United Nations Global Impact in order to maintain a sustainable environment (Hicks, 2010).
Cadbury Schweppes was formed in 1969 by the merger of a beverage giant Schweppes and chocolate company Cadbury. The first milk chocolate was manufactured by Cadbury and continued processing chocolates till date (Seawright, 2007) .The Company takes the social responsibility seriously and seeks to improve as they have an impact on the society. They believe in respecting human rights thereby trading ethically and interacting with their value chain. It believes in producing best long term results for the stakeholders. Cadbury treats its employees with respect and care. The company gives importance to ethics and takes decisions in a way useful to the company and society. The company has an ethical behavior along with good corporate governance. They treat the stakeholders fairly. They have a well managed corporate and social responsibility and the values are achieved by business principles. They were ranked second and voted as the most admired companies for community and environmental responsibility in 2003. The supply chain and distribution process has direct control at the transformation stage that influences the behavior of suppliers and distributors. They monitor supplier and check if they adhere to stringent standards. They conducts environment audit for the policy. The company is a member of global coalition comprised of industry, special interest groups, governments and nongovernmental organizations. They support cocoa farmers and their families. They practice Fair Trade by paying a fixed minimum price to farmers’ co-operatives. They buy cocoa through sustainable tree crop management programmes. The environmental responsibilities include treating waste water before disposal, improving energy efficiency and control the release of gases in the atmosphere. The company provides high quality refreshments and meets the highest safety standards. The company provides employment and opportunities to people regardless of their age, gender, sexual orientation, marital status and other factors. (Simms, 2005)
Corporate Social Responsibility and ethical practices can be implemented in companies as an idealistic idea. The abuse of power by decision making must be eradicated and behaviors that will be recognized by the stakeholders must be assessed. All the companies give a right shape to their companies by increasing the social responsibilities towards a better society.
Ethical theories and corporate social responsibility can be applied by companies in bringing about success. The companies must adhere with social, legal, economic and environmental responsibilities in along with the regular state of business. The companies must take initiatives in improving the state of society and neighbors. The businesses must not focus entirely on the own business by not regulating with the legal and environmental compliances. Efforts must be taken to make a greener and healthier environment. Corporate Social Responsibility and ethical practices can be implemented in companies as an idealistic idea. The abuse of power by decision making must be eradicated and behaviors that will be recognized by the stakeholders must be assessed. All the companies give a right shape to their companies by increasing the social responsibilities towards a better society. The social practices and ethical dilemmas must be taken into account by the companies. The ethical theories of a consequentiality and non consequentiality must be put into practice for doing the right thing.
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