Discuss about the Corporate Social Responsibility and Institutional Theory.
Corporate Responsibility and Corporate Governance refers the mechanisms, processes and relations between the directors of corporations. Therefore, an organisation has to possess a god corporate responsibility within the workplace to maintain the ethical and business purposes (Brammer, Jackson & Matten, 2012). It includes the processes and policies of the corporation by which the business is guided to meet the organisational objectives and goals. Therefore, the study is focusing on the importance of corporate responsibilities and corporate governance to lead an organisation smoothly and ethically. The ethical values are very important to maintain the business relationships with the other companies. Additionally, it plays a very vital role in maintaining the business policies as well as the business ethics.
Therefore, in this study the role of business ethics will be discussed with the ethics organisational ethics frameworks to analyse the British Petroleum oil spill scandal in 2006 (Jo & Harjoto, 2012). This will help to understand the values of ethics and corporate governance for controlling the business without harming others. It has created a massive effect on the market and reputation of the organisation that they have earned with their goodwill in past. Therefore, the study will reveal the necessity of practicing a good corporate responsibility to achieve the business reputation and ethics.
Business ethics is the very important element for an organisation to understand the right and wrong thing in the business practice. According to Mason, and Simmons, (2014), business ethics are the policies and processes that enable the business heads to understand which are right for the organization to gain profit in a right way. Profit can be earned in various ways, and among them the easiest way is to achieve it a wrong way. It means that if the organisation earn their profit by unethical activities, then how much they earn it will be against the rule of business ethics. The organisations should follow the ethics when they are planning to earn or to increase their profit level but they should not do this in an unethical manner. If the organisations will try to break the ethical frameworks of business, then they have to face loss in finance section as well as reputation. The British Petroleum faced it when they tried to cut their costs of repair and polluting (Jo & Harjoto, 2012). Instead of getting profit, they have faced a huge loss in their business and it has decreased their reputation in the market.
A huge accident was took place in the “Gulf of Mexico” on British petroleum operated by Macondo Prospect. There was a section of BP operating the oil under the sea floor. It was massively hampered when the explosion and sinking of the Deepwater Horizon oilrig happened. As opined by Cherry et al. (2015), the BP oil spill was started on 20th April 2010, near the Mississippi River Delta at the “Gulf of Mexico” in United States. The main incident was related to the explosion of the oil tanks in the midst of the sea and the oil has spread all over the sea very badly. The oil was floating on the seawater for almost 87 days and destroyed the environment of the water. The ecosystem was badly affected by this massive disaster and the lives besides the area were damaged. It was reported as the largest oil spill in the history of the petroleum industry, as the previous one, the Ixtoc I oil spill, which was thought to be the largest was smaller than this. It was approximate 8% to 31% larger in volume than the previously largest.
The most effective result of this incident was the missing of the eleven workers who were working at the time of the explosion. This incident has a great impact on the seashores, estuaries and wetlands from the spreading oil. They tried to stop the oil from spreading all over the water by using the “skimmer ships”, “floating booms”, and “controlled burns”. However, almost 1.84 million US gallons (7,000 m3) of Corexit oil has been spread within the short time and British Petroleum was not able to resist this disaster (Cherry et al. 2015). The spread was remained for a long period of one month; a wide damage to aquatic and wildlife habitats was seen along with unfavourable effects from the reaction and clearout deeds. The fishing and tourism industries were also harmed by this incident. The rescue team has worked for removing the oil from the beaches to stop the disaster due to the oil that the eco system of the water as well as the beaches can be saved from a severe damage. The special oil clean up team has worked for four days per week to remove the oil from the shore of Louisiana that was almost 55 miles long area (Silliman et al, 2012). The report says that in the year of 2013, the dolphins living in the water was dying rapidly due to the reaction of the oil spill. Additionally, it was reported that not only the adult dolphins but also the infant dolphins were dying six times than the normal. It was really a very concerned situation for the animals. There are many diseases has also seen in the people of the place. According to the report of 2014, the two disorder tuna and amberjack were exposed to oil from this massive oil spill disaster. A disease developed deformities in the heart and other organs that have the power to shorten their lives as well as proved to be fatal. Another disease has found there called cardio toxicity, which was spread among the animals that came to direct contact with the oil in this incident.
The US shale industry gas spread the billions of gallons in the water of the ““Gulf of Mexico””. This was a fracking procedure of the industry, which affected the biological diversity in the offshore. The ““Gulf of Mexicol”” was suffering from the devastating oil fracking and this “BP oil spill” has made the situation worse (Starbird et al. 2015). The Eco Watch, an organisation for protecting the environment and eco system, has also noticed this situation and marked it as the destroying incident of the environmental balance. This organisation has also worked to improve the condition that was created by the British Petroleum in this deepwater oil spill case. It was destroyed the ethical values of the company as well as the society.
Therefore, the ethics of business can be divided into 4 parts or levels and the business have to overcome these four levels to maintain the business ethics in their business. These four level are
- First level societal issues – These are the issues regarding the most essential elements of the organisations. These are analysed by the organisational management to understand the main issues for which the business is hampering or they have to face losses (Sammarco et al., 2013). It also observed as the societal issue of an organisation. Organisations should take care of their business as well as their society too. This level is relating to the morality of the business. As for example, it can be said that the child labour problem is the responsibility of the corporation sectors. In this case, the British Petroleum has faced the huge problem in the year of 2010 due to the massive explosion of the oil. It has affected the societal balance by spreading pollution in a massive way. Therefore, it was a failure of the organisation in providing proper ethical values. For instance, Tom’s Shoes is one of the organisations who not only do their business to gain profit but also think about the people who have no shoes (Starbird et al., 2015).
- Second level of issues regarding stakeholders – The second level of ethics is referring to the stakeholder’s issues. The organisational issues regarding stakeholders can affect the organisation’s reputation as well as their business. Therefore, the companies’ policies and business strategies are very much concerned with the stakeholders. For instance, In 2010 when McDonald’s was sued for their new business product, Happy Meal toys, to tempt children to eat these harmful food.
- Third level issues – In the third level, the companies always try to maintain their internal relationship between the management and the employees to work according to the business ethics. It includes the pay, and employee participation, which are considered as the ethical internal policy issues (McNutt et al. 2012).
- Fourth Level issues – In the last level of this ethical framework, the personal issues of the employees are considered. In an organisation, the employees rather controlling the issues regarding the societal and stakeholders can control the personal issues.
- The ethical framework considered few more elements such as
- ERM (Environmental Resources Management) – Environmental Resources management is related to the human nature relationships. This is concerned with the ethical aspects of the cultural and social issues regarding the environment that deals with the changes. In this case, BP has not followed the ERM that has led them towards this massive ethical disaster.
While concluding the study, it can be said that the ethics are very important for any organisation. If the organisations do not follow this, then they will face same problem like British Petroleum deepwater oil spill issue. This has proved that the corporations should follow the corporate responsibility and corporate governance for maintaining their reputation in the market. This study has revealed the ethical dilemma of the British Petroleum and the consequences of this incident. In last part, the study has also evaluated the Business Ethical Framework that includes the four stage levels to resolve the business issues. Therefore, the study has analysed the importance of corporate governance and responsibility to develop the ethical frameworks for their employees. Otherwise, the companies have to face ethical issues like British Petroleum as they had faced in the accident of deepwater oil spill.
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