All businesses exist for a sole purpose of maximizing the shareholders’ wealth. That is making profits and more profits. This begs the question, what then happens to the other stakeholders besides the shareholders? Accordingly, a business has responsibilities that go beyond the shareholders to other stakeholders such as creditors, employees, customers, investors, suppliers, and strategic partners. There are other non-market parties such as the media and the society who also have important relationships with the organization. Many years now, the Corporate Social Responsibility has been considered to be of importance to mankind.
However, over the last two decades, Corporate Social Responsibility has greatly become of concern to the business world. As a result, this has led to an improved interaction between the businesses, society, and the society as a whole. Before CSR became of concern to the business world, ventures mainly concerned themselves with their decisions’ economic results. However, at my personal level, I have learned that this is no longer the case. In the current environment, organizations are entitled to take into consideration the moral, legal, ethical, as well as the social consequences of the decisions that they make. The primary goal of this essay is to offer a detailed reflection considering the Corporate Social Responsibility, employees and business ethics within the workplace. The paper will discuss the Corporate Social Responsibility’s concept. It will provide a detailed definition of this phrase and determine global factors that make it essential for organizations to practice Corporate Social Responsibility.
The Purpose of a Corporation
For many years now, the question relating to the purpose of an organization has been widely discussed. Some of the great theorists have expressed their different point of views, arguing that either the primary goal of a firm is to maximize its value or to become devoted in their mission and to essentially satisfy their stakeholders’ needs (Attig, El Ghoul, Guedhami & Suh, 2013). Generally, the two primary theories that exist when defining this is the shareholder value theory and the stakeholder theory. The shareholder values theory explains that an organization has got one specific objective which is to maximize its profits, including generating shareholders’ value. At the other end is the ‘stakeholder’ theory that indicates that besides an organization making profits and generating shareholders’ value, it is also entitled to pleasing its stakeholders who consist the customers, suppliers, employees, and the society at large. Milton Friedman is among the earliest precursors of the shareholders’ value theory (Pauly, Wickert, Spence & Scherer, 2013). According to him, he once emphasized on if the corporate executives, if they remained within the law, had other duties in their business activities besides making money for their stakeholders. According to him, the answer was no.
However, I think that several people assume wrongly that the only reason that an organization exists is only to make money. Despite that this is the important result that translates to the existence of an organization, it is also essential that we go deeper and identify the real reason as to why a business exists (Boulouta & Pitelis, 2014). By investigating this, I have inevitably come to the conclusion that individuals come together and exist as an institution that we label the name an ‘organization’. This is to make them capable of achieving a particular objective collectively, which they could not be in a position to achieve separately, thus they make a contribution to the society.
Stakeholder theory is almost similar to the Corporate Social Responsibility concept which is regarded to have undeniably attracted a lot of attention over the past few years (Cheng, Ioannou & Serafeim, 2014). Similar to the above theory, CSR’s primary goal is to understand all the stakeholders and strike a balance between the primary objectives of an organization and the goals of each and every stakeholder. Both Friedman and Packard have got extreme opinions which have encouraged mid-term approaches to form other scholars (Chernev & Blair, 2015). For instance, Peter Drucker suggests that a socially responsible company is that whose profits at least equals its cost of capital and does not waste the society’s resources.
Corporate Social Responsibility and Ethics
On my own view, Corporate Social Responsibility cannot be defined by the amount of money that an organization contributes to a charity. Rather, Corporate Social Responsibility should be defined as the overall involvement by a company in the activities that are essential in the quality of the society’s life (Chin, Hambrick & Treviño, 2013). Corporate Social Responsibility has emerged as an important matter that is associated with the multinational business community and it has progressively become a mainstream activity. Within the private sector, there is an increased recognition of the impacts that activities have got on the clientele, competitors, investors, governments, workforce, the society, business associates, shareholders, the environment, and other groups (Cho, Lee & Pfeiffer, 2013). Additionally, I have noted that it has become progressively clear that a company is capable of contributing to its individual wealth and the society’s wealth in general by considering how they affect the entire world when making their decisions.
Multi-corporations’ ethics entails actions that are considered to be morally upright. It is common knowledge that some of the activities carried out by corporations do not meet the required ethical standards (Delmas, Etzion & Birch, 2013). The reason behind this is that most of the firms are more focused on making a profit rather than including other things in their activities. Due to the sheer number of individuals involved, employee and business ethics is an upcoming issue. On a small scale, the action takes by few people may appear to be safe. However, when figured on a large scale basis, these actions could be devastating. For instance, when a company decides to fire some of its employees with the intention of keeping the organization’s profits margin high, may be deemed unethical (Deng, Kang & Low, 2013). As a result of the wake of the financial breakdown, several individuals such as the civil servants mainly in the middle persons lost their jobs. Aimed at making sure that the organizations saved money, most of the staffs were laid off. Hence, such as action is considered as being unethical. The reason behind this is that despite that the firms are somehow at a loss, laying off of these workers translates to the fact many individuals are likely to suffer.
Within the environment which businesses operate, they are an important aspect of the society. As a potential future manager, I should ensure that I possess the required knowledge and understanding that future prosperity is dependent on sustained good associations with several individuals, groups, or even organizations (Di Giuli & Kostovetsky, 2014). For an organization that is deemed to be intelligent, there is the understanding that the business cannot prosper if it operates within a society that is unsuccessful. This is irrespective of whether the society is failing as a result of environmental, social, or even governance challenges. Notwithstanding, the society has got a lot of expectations from the private sector in regard to their responsible and ethical behavior. The customers’ expectations are that the products and the services should be a reflection of environmentally and socially accountable business ethics at prices that are reasonable (Du, Swaen, Lindgreen & Sen, 2013). Additionally, the shareholders are also demanding for financial performance that is improved and which interlink the environmental and social element and the opportunities that the offer.
Corporate social responsibility is multidimensional and it covers a wide range of issues. They include corporate ethics, accountability and transparency in reporting corporate responsibility to others. Also, eco-efficiency designing goods and services that have a reduced impact on the environment, contributing to the social environment where the business operates protecting the employees’ rights, availing a healthy working environment and having a positive influence on stakeholders such as the society or government as a whole.
There are many debates surrounding corporate responsibility, among them; the primacy of business that organizations cannot serve the society well before it make profits and so its main aim should be profit making (Flammer, 2015). There is also a debate on whether businesses should do well before doing well in society or doing well in society makes it possible for the organization to do well financially. Another argument is the morality of profits, whereby corporations are morally obligated to serve the society over making a profit. All these debates do not hold a single answer. Therefore, it is always prudent that we look at corporate responsibility ‘through the lens of Biblical themes’.
Justice righteousness and truth are all important virtues that should be upheld in the marketplace. Corporate social responsibility keeps in view all the policies that affect the workplace positively such as teamwork, employees’ welfare, and the ethical decisions that affect the entire organization (Hahn, 2013). Organizations that uphold the Biblical themes are held in high-esteem at the marketplace for they are serving a cause that is greater than profits. Some of the governments have made it a requirement for organizations to report their social corporate responsibilities in their financial records. This move is geared to encourage the act of ‘giving back to the society’.
Factors that have translated to the Growing Interest in CSR
Through my course, it has caught my attention that the increasing interest in Corporate Social Responsibility has been due to a wide array of factors. Among these factors include the changing concerns and expectation among the citizens, customers, industrial change, not forgetting the public authorities’ globalization (Hoi, Wu & Zhang, 2013). Also, the growing concern has been due to the increased social criteria’s influence on the individuals and institutions’ investment decisions. Nonetheless, there is an enhanced concern regarding the degradation of the environment. Particularly, this is an essential area of concern due to the fact that conserving the environment has become a crucial aspect for every person in the society (Homburg, Stierl & Bornemann, 2013). With the multi-corporations gaining millions of profits, it is prudent that they give back to the society. However, it is shocking to observe the wanton disregard in conserving the environment among some few organizations in regard to handling their industrial waste, sheer indifference or even the use of recyclable paper. As mentioned earlier, Corporate Social Responsibility is made up of activities that give back to the society or ensuring that there is fairness in the carrying out of activities.
Protecting the environment has become one of the primary focus among most humanitarian organizations. According to most of these humanitarian firms, they argue that environmental conservation should be at the heart of every organization and it should be considered as an essential aspect (Ioannou & Serafeim, 2015). This is due to the fact that the environment can be termed as the only invaluable natural resource that the human being has been given. The issues associated with managing industrial waste among several companies has been of great concern among most environmental organizations. This is due to the one accord of irresponsible handling of waste in some of the firms. For instance, I can attest that the scenario of the great pacific garbage patch is in existence to express how most of the organizations are failing to handle the dumping of their waste responsibly (Jizi, Salama, Dixon & Stratling, 2014). This great pacific garbage patch is an accumulation of human waste that was improperly dumped, thus finding its way into the ocean. This patch has resulted in several problems which include the loss of aquatic life as well as water contamination not forgetting to mention the introduction of several pollutants to the water bodies.
By analyzing the Corporate Social Responsibility, I have noticed that it is clearly and certainly unethical for organizations to be reaping huge profits at the expense of the environment and other aspects of human life (Khan, Muttakin & Siddiqui, 2013). Corporate Social Responsibility clearly states that firms should devise better mechanisms of handling their waste disposal. Regardless that it is currently unclear of the best means of handling some of the wastes that include hot water and others, responsibility entails ensuring that before any waste is disposed of, it has passed through some prerequisite tests (Korschun, Bhattacharya & Swain, 2014). These tests are meant to make sure that the wastes being disposed of are safe for disposal, considering that they are not likely to pose harm to the human beings in any way, inclusive of other lives. Thus, CSR is considered to be a control mechanism for ensuring that the multi-corporations remain ethical in every action that they undertake.
Earlier, I thought that Corporate Social Responsibility is not a responsibility for all the organizations. However, my thinking has been greatly changed as I conducted research on CSR and ethics (Mason & Simmons, 2014). I have understood that Corporate Social Responsibility makes sure that corporation across the globe engages themselves in several other activities that are viewed as giving back to the society. Some of these activities that are considered to be of help include engaging in activities that are aimed at assisting the disadvantaged individuals in the society, engaging in activities that are aimed at involving the society such as fundraising for the needy, and other related activities (Michelon, Boesso & Kumar, 2013). In the financial and corporate world, CSR has a positive effect on performance.
Factors Indicating the Need for Corporate Social Responsibility
There are many factors that indicate why Corporate Social Responsibility is needed. The population is the first factor. The high population growth in developing countries will result in the creation of bigger markets that are dominated by youthful individuals who will have questionable access to the standards of living such as those in the developed nations (Morgeson, Aguinis, Waldman & Siegel, 2013). According to statistics, it is evident that by 2025, eighty-five percent of the global population will be living in the developing nations. Hence, this presents problems to organizations that seek to engage themselves in Corporate Social Responsibility because there is a clear evidence that these populations will be requiring a lot of financial aid.
The other factor that shows why Corporate Social Responsibility is needed in wealth. Regardless of the increase in the global wealth, there has been an increased income gap thus threatening the society. It is thus the mandate of every organization to strive in attempting to make sure that there is a balance in wealth distribution. My analysis has shown that almost eighty percent of the world population can be classified as being poor, eleven percent in the middle, and a low eleven percent are described as rich (Saeidi, Sofian, Saeidi, Saeidi & Saaeidi, 2015). This means that corporation should work hand-in-hand in making sure that the trend whereby the poor continues becoming poorer and the rich becoming richer is eliminated because it appears unethical for some few individuals to have so much while others have got nothing at all. Also, nutrition indicates the reason why there is a need for Corporate Social Responsibility. Presently, there are millions of people who are malnourished, with so many lacking foods. Every year, there are thousands of people who die out of hunger, while the corporations are observed to spend millions of money on fancy holidays for their staffs. It is important that every organization takes responsibility and spare some time to reflect on the money that it uses for its executives’ benefits, compared to the finances that the organization spends on assisting the needy in the community. While these benefits are important in motivating the employees, they should not be overemphasized at the expense of the suffering citizens.
The third factor that should be taken into consideration when designing the Corporate Social Responsibility programs is education. There is a widespread basic education. However, many individuals lack the opportunity to learn. Approximately, there are over one million children who are not in school. The highest percentage of children who lack education is mainly in the developing nations (Servaes & Tamayo, 2013). Globally, one among every five adults is illiterate. These are staggering figures considering the current increased learning opportunities. Organizations are faced with the problem of promoting learning by developing schools, constructing technical training institutes, or by funding educational development programs. Additionally, the corporations can encourage education by taking in trainees as well as interns and providing them with the opportunity to develop their skills in jobs, thus enabling them to fairly compete in the corporate world.
This self-reflection on Corporate Social Responsibility has shown that CSR is an essential aspect for every business entity. My research has helped me gain a clear picture of the several areas in which an organization may select to focus its Corporate Social Responsibility. In Corporate Social Responsibility, the first area that an organization may decide to focus on is the environment. In the development of the Corporate Social Responsibility programs, I have been exposed to several other areas that should be considered during the development of the Corporate Social Responsibility programs. These areas consist of employment, health, education, as well as nutrition. Investing in Corporate Social Responsibility is important because it combines the stakeholders’ financial goals, with their dedication and the obligation of the factors that are concerned with the society’ well-being. These factors include practices that are environmentally friendly, justice in the society, or even economic growth. Apart from being Corporate Social Responsibility’s aspects, these elements are also used to display an organization’s ethical standards. It is considered unethical for some individuals to own a lot while other individuals own totally nothing, at the expense of the suffering members of the community. Nonetheless, it is also considered unethical for organizations to earn a lot of profits at the expense of the environment, by engaging in practices that degrade the environment thus resulting in illnesses and the loss of life. Through this reflection, it can be concluded that Corporate Social Responsibility as well as maintaining high ethical standards is not an option for an organization but an obligation for all the businesses.
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