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LAW2103-Corporate Social Responsibility And Business Ethics

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  • Course Code: LAW2103
  • University: University Of Exeter
  • Country: United Kingdom

Questions:

a.Discuss the concept of limited liability and Company as a Moral Agent
 
b.Discuss critically the proponent advances by Milton Friedman and the arguments for Corporate Social Responsibility.
 
c.Provide Four (4) examples where a company initiates a CSR movements and its impact/implication to the business and Explain your opinion with regards to corporate social responsibility. 

 

Answers:

Introduction

It can be considered that becoming socially responsible within the corporate sectors can help to manage proper business values and ethics and promote effective communication, furthermore understand the moral roles and responsibilities of organizations. According to the theory, the corporate sectors are treated as moral agents who are bound to carry out some roles and responsibilities. It is though not true that all the corporate sectors may be treated as moral agents. It can further be added that the limitations and liabilities of CSR, is a direct result of the mistake and its incapability. It can be outlined that the CSR can be framed as sort of political objective to determine the differences between business politics and business ethics.

This report encases the details about the role of CSR with relevance to the companies as the moral agent. This report also discusses and argues with the concept of limited liabilities of CSR and company as a moral agent. With further progress, this report discusses the advances in the statement as proposed by Milton Friedman and details arguments for Corporate Social Responsibility (CSR). This report further provides four examples where the company initiates CSR movements along with the impacts of the same with reference to the business ethics.

The report is prepared to determine the various concepts of CSR with relevance to the business ethics and facilitate the understanding of the effects as well as impacts of the same on the business operations.

a) Discussion of Limited Liabilities and Company as a Moral Agent

The discussion based on the fact of a company as a moral agency can be processed along with either or all of the three major lines. Firstly, it can be argued that a company is competent enough to undertake premeditated actions, and is consequently an agent subjected to the moral addressing and authorization. Secondly, it can be stated that if a company is considered or not considered as the moral agent, in the main sense, it is likely that it can still be regarded as a secondary moral agent. Finally, it can be stated that even if the company is unable to meet the criteria and requirements of metaphysical standards and quality, it is much more important to focus on becoming socially responsible and create a positive environment within the organisation. Most of the statements can facilitate the management of normative foundation and consider the Corporate Social Responsibility as an important aspect to make individuals maintain proper values and ethics. However, many of the statements are not dependent on proper justifications, which permits them to be addressed individually.

Based on the limitations, there are two major issues associated with the justification for the morality issues related to becoming socially responsible. First, it is evaluated that the morality or maintenance of business ethics can fail sometimes in situations where it is most needed. In simple words, it can be explained as the situations in which doing the wrong or unethical things is profitable for the business than following the ethical means that would not pay anything or would not benefit in any manner. However, it can be stated that such situation hardly exists where doing the ethical or the doing what can is profitable are considered separate in nature, but in most cases, they both co-exist in practical situations. 

 


In accordance with the perspective, the second problem regarding morality is the statement that it is not a concern for most of the companies and morality pays is not at all true. Rather some compelling empirical evidence demonstrates that most of the profitable companies focus less on becoming socially responsible, rather prioritize on better production, marketing promotions and profit generation. Thus based on these problems, these are the main liabilities of Corporate Social Responsibility. However, based on certain strategic justification it can be argued that some of the companies have their own social compulsions, even though due to certain circumstances this obligation often obstruct the way of the company's profitability. On a certain point, it can be stated that the ethical responsibilities of the individuals, endeavors to demonstrate how the duties create definite ethical claims on the commercial practice of the business executives. However, one of the liabilities does include the fact that the major aspects including the Corporate Social responsibility and Corporate Citizenship are dependent on the company itself and it should be thought to be an active ethical subject, nonetheless the principle concern  to achieve sustainability, often this is overlooked and proceeded. With relevance to the business ethics and limited liabilities, it can e justified, that Corporate Social Responsibility can only be considered to be mean to achieve the political goals of the company whereas the principle and applications of CSR do not make just as an ethical claim. It can be further stated that the Corporate Social theory does not compete with the agency theory, but in practicality, CSR binds itself to it. Therefore, in short, it can be justified that CSR is a duty that is incorporated within a company and its operators but the principal drawback of the same, failure to follow the ethical path in the business due to the compulsions of making profit and generating revenue, which can be hard in the path of virtue. The main crisis lies in the fact that the operators are aware of the principles yet they are compelled to overlook the same.

b) Critical analysis of the proponent advances by Milton Friedman along with arguments for becoming socially responsible within the corporate sector

While closely related to the advocacy by Milton Friedman, it can be evaluated that though becoming socially responsible is largely prevalent within the corporate governance, yet it can be considered that the main operation or the authorization within the corporate body mainly rules in the interest of the company publics and the stakeholders. In simple words and sarcastic manner, it can be stated that the corporate social responsibility in business only acts to expand its business and not spread ethical influence in the business. This is supported by the fact that the official executive of the company are legally and contractually bound by the duties to fulfill the duties towards the responsibilities of the company’s clients and the stakeholders, who is in turn considered as the representative of the company as the secondary agents. It can be justified by the fact that this information is not just applicable in theoretical perspective but hold a bitter resemblance with the realistic legal compliance. It can be stated that several critics have proposed their individual theories to contend with this governing proposal of corporate governance over the Corporate Social Responsibility in the ethical business practice. Based on diverse proposal, it can be encountered in a couple of ways. First, it can be argued that the corporate governance along with the corporate laws does not coincide with the agent theory. Secondly, the company management is bound to perform for the benefits of the company as a whole individual, rather than just work for the profitability of the shareholders. This is because the financial interests are long termed for the company, which cannot be compromised in any manner. Therefore based in the circumstantial and practical evidences, it can be stated that the agent theory is both informatively wrong and strategically less effective. Just like the various models and theories of corporate governance, the Corporate Social Responsibility theories can help in evaluating the most effective approach on practical, realistic and even to provide a better strategic view. On the contrary, it can be stated that the morality principle does offers a competition to the corporate governance regarding the fact that companies performs according to the interest and the profitability of the stakeholders. This has been supported by the fact that the success of this kind of authority makes either the company more successful or the failure of this approach results in the failure. However, it can be complied with the fact that there are some kinds of compliance with the social obligation that prevails within the company and can be found to be deployed strategically from both the ends. In addition, it can be complied with the fact that theorists who emphasize on Corporate Social Responsibility with the business ethics endeavors to determine the fact that companies have some of the definite morality principle and duties to meet some of the social needs and necessities. They also emphasize more in the focusing on the desires to achieve higher profitability by ignoring the ethics. It can be claimed that these kinds of approach and concepts have  been established and determined by different approaches. It can be added that the principle of Moral Projection, by Professor Kenneth Goodpaster is of the one such a approach that adds to the fact that a company is a entity that has the capability of deliberation and make crucial decision, yet keeping the morality and ethics intact. The second approach of the principle attempts to establish ethical limitations that can be applied to the official operative of the company such as the managers, executives and the other official representatives. The arguments based on the statement that a company is a moral agent that has rose due to the triggering of certain occurrences and events that can be explained in a manner that points towards the facts and things, which has been intentionally taken by the company itself. However, in the course of the argument some of the realistic and important points can be overlooked or missed, such as even if it is fully agreed to the fact that company is an intentional ethical agent one fundamental problem still prevails within one statement. The problem statement that can be considered being, a company is a moral agent complete and it proves that most of the  intentional agents within the company are moral agents. Nonetheless, based on the previous arguments, this can be acclaimed as a hypothetical fact due to the possible certainties. 

 


Based on certain perspectives, it can be argued that the employees who are performing on behalf of the company taken the key actions are the moral agents because a company cannot be justified as an autonomous agent and cannot sustain itself as a moral agent. The appointed officials who perform on behalf of the company take the lease or credibility of the actions, which can or cannot meet up with the ethical requirements. On the other hand, it can also question to the fact that if the company is not an agent of morality and there is a failure to meet the ethical requirements, then who can be held in accord of ethical preach and breach. In response to this, it can be stated that the transference of the moral attributes is a mere transmission across the company in concern. In most of the cases, the transference of praise or allegations is acutely transmitted within and across the company since all of the secondary actions of the occupants are derivative in their nature as well as can be ethical and unethical, either ways along with its evaluation, in accordance. In other words, it can be considered that a company is such an entity, which is tangible and intangible equally, yet cannot be subjected to prosecution and moral treatment. However, the occupants of the company are tangible and subjected to prosecution and retribution. Yet the company can be subjected to certain loss, like defamation and reputation loss.

With relevance to the concepts and the arguments of Customer Social Responsibility and a company as a moral agent, it can be only classified as a non-living and non-responsive institutional structure that is not ethically self-sustaining, yet it has to take the responsibility of for any kind of occurrences related to the meeting or breaching of the ethical requirements.  It is mostly designed to perform according to the protocols and generating of profits. Instead, the officials are accountable for the respective actions in the procurement or the failure of the ethical responsibilities, which is directed towards the discretion or integration of the company. It can further be added that the agency theory has been utilized to fetch the business ethics back into the representation. The efforts put forward to manage the Corporate Social Responsibilities could be successful by managing an agreement between a company and its environment within which the corporate sector operates, and this can make the society fall under a different category and considered as a different entity. In case it can be demonstrated that a certain company has its definite ethical responsibilities towards its adjoining community or society, then the agents taking the responsibility for the respective actions through the business would be inheriting those ethical competencies.

c) Examples of Companies initiating CSR and its impact on the business

There are certain examples of Corporate Social Responsibility that has been initiated by some of the well-known companies, resulting in their rising popularity and recognition in the existing society.

Example 1

The first example of CSR is from Google, which it has taken to spread awareness for the use of resources efficiently and use the renewable power as well as recycling. It can be elaborated that the online search portal giant has initiated some of the major effective approaches to create sustainability awareness and maintaining values and ethics to promote good citizenship, though being one of the world's largest companies could make it put efforts properly for gaining the positive results with ease and effectiveness. One of the major corporate sustainability initiatives could be the Google Green where the resources were utilized properly and renewable sources of energy had been used. It would also be important to keep the basics in mind such as recycling and turning off the lights to save power as well as cost of operations. Due to this, the investments in this hard work had a global effect on the supply chain’s bottom line. Google has experienced huge reduction in power and energy consumption by more than 50 percent. The cost savings that have been gathering from this initiative has only helped conserve the outgoing revenue but it has been redirected to the other vicinities of the multi-million business or to the financiers. 

 

Example 2

Xerox, the leading printing giant, initiates the second example of CSR initiative that has been cited. This company has been offering many programs that supported the approaches to become socially responsible. The programs and initiatives proposed for involving the community at Xerox community could be beneficial as well. Since the year of 1974, half of the millions of people have been part of this program. In the year of 2013 alone, Xerox has contributed more than $1.3 million to facilitate around 13,000 employees to get involved with the community program regarding sustainability awareness promotion. This in return not only has facilitated Xerox to be recognized in the adjoining communities, but also in terms of the commitment that employees when they take up the cause and in turn they supported by their employers, thus facilitating the building up of an effective relationship between the company and its employees. It has also been observed that by the incorporation of a limited number of billable hours every year for volunteering efforts, this has helped Xerox to gain double benefits like increase in morale of the employees and creating better production, furthermore creating better opportunities for new candidates to join in.  . 

Example 3

The third good example of CSR is one of the leading retail outlets, Target, that has been contributing to the community for a good cause. Most often it can be found that even good corporate citizens seem to ignore the very concept of CSR. However, it is evident that not all the big corporation have ignored the very concept and has lent a hand to the philanthropic purposes with a higher objective. While countless shoppers might think Target as just another big-shot retailer, it can be considered as more than just a place to buy the daily commodities. Target is considered as a major example of managing social responsibilities within the corporate sectors based on the fact that it has contributed to more and better management of labors and assets to the local environmental communities, by supporting them in which they have stores. They have been doing this charity since the year of 1946. Nonetheless, during the past few years, the organisation has put committed efforts by shifting its focus on sustainable efforts towards management of educational programs and making educational facilities available for more people in both rural and urban areas. More than five percent of the profit level achieved has been provided to the local communities for improvement of the educational facilities, which can be summed up to around $4 million every week.  It can be assumed that Target has donated more than $ 825 million since the year of 2010, in the area of education, alone. With the help of this CSR initiative, Target has not only gathered more respect and reputation in the local environment and the communities but its customer base has been expanding ever since, where target's clients feel proud to be associated with such an organization. 

 

Example 4 

The final example of CSR initiative is that, which has been adopted by General Electric (GE). It is world’s largest Digital Industry that has been transforming the industry with its assorted share in the stores’ share in technologies and software solutions, facilitating everyone of connect and learn. It can be assumed that the employees of General Electric has been contributing and volunteering over a million hours each year. The donations that has been done from the GE foundations, which has been contributing for the welfare and support of the senior citizens, autistic children, various educational programs and facilities along with the urban areas that are not considered as effective for working purposes. On the Global community days, GE coordinates and addresses the urgent projects and lends a helping hand to every extension known. The Corporate Social Responsibility by GE has covered most of the pressurizing issues in GE’s business with respect to the prevailing corporate responsibility principles. With relevance to this, General Electric (GE) satisfies its most of the notable stakeholders’ interests.  The various stakeholders have been concerned about the environment according to the approaches undertaken by General Electric to become socially responsible and contribute to the community. By becoming socially responsible, the corporate sectors could gain a positive brand image and name, furthermore enhance the ability of the company to manage the resources properly and ensure successful business management with ease and effectiveness. 

It can also be added that these certain interests are considerable because they lay impact on the brand and corporate image of the company, as well as the affects the company’s access to the materials required in its multinational business.

Conclusion

With the help of this report, it could be stated that becoming socially responsible within the corporate sector could contribute to the proper management of Business ethics go side by side. It can be added that both of these aspects are the opposite sides of the same coin due to the existence of the limited liabilities in CSR. This is explained by the fact that when the business values and ethics were not maintained properly, it could be difficult and ineffective to manage business successfully.  It is mostly due to the presence of corporate governance that only seeks the flourishing and expansion of the company at any cost. However, it can also be added that not all the companies retort to means that seeks only profitability, even though it is obviously the underline motive of every company. Several arguments have been made in favor and against the statement of company being a moral agent. Nonetheless, on a personal opinion, company cannot be justified as a moral agent, instead the people working for the company are the moral agents, whose actions makeup or disintegrates the company as a reputable institution of commerce.

There were various pros and cons of corporate social responsibility for a business organisation. One of the major advantages was the improvement of brand image and creating positive mindset among the customers to influence customers’ buying behaviors. It has made possible to attract more employees who are skilled and possess relevant knowledge to work within the diversified workplace while existing employees have been retained as well. Due to the implementation of CSR strategies, the inflow of capital was possible, which had improved the economy of the country by obtaining valuable foreign exchange. Corporate social responsibilities also allowed for creating a healthy environment through generation of clean and renewable energy sources to contribute to the positive health of the environment. Though there were several advantages, still there had been few drawbacks as well including the focus on creating sustainable environment rather than focusing on the objectives to make good profit in business. The production costs increase while the legislations, laws, rules and regulations related to CSR varied from place to place, which were considered as cons. With the help of the examples that had been cited, it can be rightly justified, that the employees are the key contributors of the CSR initiatives, where they are not or cannot be distinguished in  a separated manner from their respective institutions and it is their actions and hard work that make up for the rising reputation of the companies. 

 

References

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