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MBALN703: Business Ethics Corporations In Management

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Question:

The Task: Based on the scenario below, you are required to write a 2000-word report. In this report, you must demonstrate an understanding and application of various consumer behaviour concepts and theories by analysing the facts gathered from the video and the survey, and present strategic recommendations. You will be required to incorporate recent peer-reviewed literature in order to justify your proposed recommendations.

How can Corporate Social Responsibility be meaningful if it is not based on formal binding legislation enforcement?

You may start your analysis with a discussion about the importance of business ethics, its philosophies and practices. You are expected to demonstrate an analytical knowledge and critical understanding of different ethical perspectives, including ethical business objectives. In doing so, you may refer to a number of ethical issues, including equality at the workplace, racial and sexual harassment, corporate sustainability, corporate governance, corporate citizenship, environmental sustainability and globalization. In your analysis, you may also include thoughts about the implications of business ethics in different contexts around the world.
 
 

Answer:

Introduction

In any corporation around the world, from the senior management to workers at all levels, ethics are reflected in every business. The growth of corporations depends on its sound ethical code of conduct established in its structures to guide both the management and employees in their daily activities within the organization. Companies are facing growing demands that, they look past their interests, as well as prioritize the needs of societies in which they operate. Businesses have some obligations to the society past generating profits (Goel & Ramanathan, 2014, pp. 49).  The concepts of ethical behavior and corporate social responsibility (CSR) in the contemporary company environment have come to consideration in CSR in both developing and developed nations due to the growing sense of corporate scandals, such as Enron, General Motors (GM) and WorldCom.  Business ethics deals with the internal values, which are thye ingredients of the corporate culture that influences decisions on CSR where external environment is an important consideration. Whilst business ethics comprises the moral standards and principles that guide the behavior of businesses, CSR is an integrative management idea that establishes responsible behavior within a corporation, competencies along with values and interests of stakeholders (Barrett, 2009, pp. 25).

Business ethics has played a central in allowing business to adopt CSR where it brings in considerable benefits to the organization. The thought that business enterprises have some obligations to society beyond generating profits for its investors has been in existent for many decades that partly accounts for the prominence of CSR that has carried on to grow in its importance. The primary belief is that businesses have a social and ethical responsibility and the economic mission of fashioning value for shareholders of the corporate organization. The paper will examine the different perspectives of business ethics and the CSR and its impacts on the society (Ferrell, 2004, pp. 128).

 

Business Ethics, Philosophies, Practices and Perspectives 

Ethics entails codes of values along with standards, which guide the action of an person, or a group concerning what is right against what is wrong. Thus, ethics set standards as to what is good or bad in behavior of organization along with decision-making. Business ethics concerns internal values, which are a part of corporate culture and influences choices regarding social responsibility in line with external environment (Goel & Ramanathan, 2014, pp. 50). Business ethics entails applying standards of honesty besides fairness to relationships with clients and coworkers. They are form of applied morals or expert ethics, which investigates ethical standards, as well as moral challenges that may originate in a business setting. In addition, business ethics entails the behavior that a business complies with in its everyday dealings with its stakeholders-clients, personnel, suppliers, immediate community, and society at large) (Bondy, Matten & Moon, 2006, pp. 1478). The growth of the business depends on its sound ethical code of conduct. The reasoning that sustains business ethics as a high-quality business practice is that moral backgrounds will fashion the appropriate atmosphere that will help to promote the development of ethical human resource practices.

Ethical Dimensions of Business from the Manager’s Perspective 

The duty of the executive is to allot adequate resources to the business and impacting the individuals to accomplish the right job. Thus, the executive stands in an elevated moral ground within the company’s scale plus it is imperative for the executive to execute duties efficiently and hunt a moral strategy while management human resources in the organization. The ethical viewpoint in the background of the director could entail the integrity, confidentiality, impartiality, as well as professional behavior that the manger ought to reflect. Integrity would need the manger to behave in an honest manner with the spectrum of the appropriate duties and should behave in a way, which could demonstrate honest approach of behavior to other also. In addition, the manger should be fair while handling the diverse managerial duties, especially to people they manage. This implies that the manager should treat all the people uniformly in a manner where the workers must be felt that they are not maltreated. This is an important concept connected to human psychology, as well as the bond they have on the company that will in the end boost the intensity of incentive of the firm leading to the motivation of personnel (Dimitriades, 2007, pp. 1240).

In addition, the privacy of the company’s information could be the primary apprehension an executive requires to stress as a high-quality plus a satisfactory ethical conduct, which will consider the element in which a worker must keep the information disclosure if requested. Additionally, as a manager in any corporation, they are probable to have a right of entry to sensitive data where a manager should keep the data secret from the third party (McWilliams, Siegel & Wright, 2006, pp.9). Consequently, professional behavior could comprise the proper conduct a manager is needed to demonstrate as a supervisor would be seen as an example for the other workers. In business activities, it is apparent that the executive could experience many circumstances in which they have a moral dilemma; however, as an executive, it is important deliberation that the executive must give due regard along with the precedence for all time to moral acts. This is vital because it will benefit the business and the manger plus other stakeholders linked to the situation (Rodin, 2005, pp. 47).

 

Ethical dimensions of a business from the perspective of the individual

Many studies have shown that it is probable that a moral company strategies can lead to keeping individuals win the organization for a rational duration. Hence, moral business strategies should be fair to all people where these people tend to receive the same treatment form the company and the equitable aspect of the organization will potentially promote the individual’s moral perception. In addition, a business that perceives itself as value-oriented on ethical concepts will tend to have superior brands that suggest that an individual will be satisfied and happy to buy the brands and equally they are probable to be greatly enchanted. Additionally, ethical business will tend to promote and always endeavor to encourage integrity as chief in business dealings, where the integrity aspect in the business will indicate that the business will offer the individuals with the actual image where the person will tend to have an apparent consideration regarding the products of the business (Engelen, 2011, pp. 25).

Ethical dimensions of a business from the perspective of the society

In many instances, an ethical company will emphasize on adhering to a more generic strategy to the productivity of the corporation plus they could be inclined to meet the stakeholder’s objectives other than promoting self-centeredness of the company’s management. Thus, ethical companies will always get products that are of premium excellence and actually the eventual brand will be of high-class and this will tend to promote the fulfillment of the customer where they will be happy (Zheng, 2006, pp. 78). The business that promotes ethical practices will endeavor to mould its choices found on efficient corporate governance processes that will demonstrate that the company offers due regard to the owners/investors too. It is clear that moral company would promote eco-friendly practices where these practices will also lead to enhanced societal perception for the society and similarly a moral firm could probable to have minimal demands from interest organizations also. In general, a business, which seeks its approaches founded on right concepts, will amplify the general social view regarding the company that will probable to fashion increase brand image for the company (Russo & Perrini, 2010, pp. 209).

Corporate Responsibility 

There is no longer limited to undertaking ordinary activity in pursuit of profit; however, to fulfill the gap in the business environment. Most significantly, the social responsibility is not an unfulfilled responsibility of the organization or a business entity, but part of the obligation meted out to contracting entities, such as employees, suppliers, or the government. Corporate responsibility emanates from company’s ethical values and has three primary elements: good governance, CSR, as well as environmental accountability (Kraisornsuthasinee, 2012, pp. 187). This is the way business becomes an all permeating influence in the governance of the organization. The senior management is not only liable to envisage such a change, but to translate this vision into practices that will benefit the society at large and also to ensure that corporations embrace a balanced strategy towards the three dimensions. Moreover, it must be affirmed from the behavior of the business as it is not simple for them to get away from this reality by taking part only in lip service other than practical aspects (Preuss, 2011, pp. 18).

 

Corporate Social Responsibility (CSR)

Viewing CSR via Freeman’s normative stakeholder theory, it is apparent that corporate social responsibility is a subset of business ethics. The theory begins with the supposition that its norms are fundamentally and clearly ingredient of the company operation.  The theory holds that companies are “ethically” accountable to take care of apprehension of the bigger collection of stakeholders that include customers, shareholders, suppliers, personnel and the community other than the owners of the business along. Corporate social responsibility is founded on the doctrine that corporate are obligated to accomplish their roles to a bigger collection of stakeholders rather than owners. It must not be an addition rule by the corporation; however, CSR must be incorporated into its governance constitution along with strategy (Parmar et al., 2010, pp. 403).

Thus, CSR is a conceptual that has developed with the consequences of globalization plus improved competitiveness of business. CSR is an approach where the firm requires sustaining its resources to use them in the prospect, where this approach will be anchored in business ethics, economic performance, as well as philanthropic inputs. The concept of CSR is concerned primarily on how to generate significance to the stakeholders of the company other than generating value for its owners (Russo & Perrini, 2010, pp. 208). As a result, financial performance could be taken to the company’s performance, as well as rank of profit the company is anticipated to create and the comprehending that the company will secure its future towards profitable business plus sustain sufficient level of cash. In addition, the firm has a responsibility of care to its stakeholders to achieve it goals in a manner that the investors could be dependent on the firm proceeds to get the essential return on investment (ROI). Also, this will allow the workers of the firm could anticipate performing sufficiently to safeguard their jobs and the suppliers to continue supplying the business in the future and get payments for the goods delivered already (Amaeshi & Adi, 2007, pp. 11).

The philanthropic inputs could be focused on the donations, as well as the services that the firm caters to the greater society.  These contributions could comprise what the company may undertake to uplift the living standards of the society by providing basic needs, such as food. In many instances, some communities have been affected by catastrophes, such as floods and the company may provide humanitarian foods. Ethical behavior demands that a company should perform its operations based on ethical standards to build its reputation as a good employee and a good company (Cacioppe, Forster & Fox, 2008, pp. 683).

Good Governance 

Companies are formed base on the division of ownership plus control, where the investor or shareholders depends of the manager of chief executive officer (CEO) to manage the business operations on his behalf. This means that the principal agent association exists between the executive and owner that causes the room for asymmetric information that is there is always a gap between information that the manager has vis-à-vis the owner. This circumstance demands effective governance, corporate governance implies transparency in the business operations. Thus, the owners should be provided with complete information, which means that there must be transparency in processes, where the manager (agent) cannot misuse or take advantage of the asymmetric information (Madura, 2012, pp. 29). The goal of good governance in a business is to have such system of controlling along with managing so that the interest of the shareholders or investor is safeguarded. In order to make this successful, whatever challenges are in the processes must be eliminated. Hence, the processes are essential to forbid the executive to push their own self-interest to purse their own goals at the expense of that of the investor that is not in accordance with the goals of the organization. These processes should be institutionalized to safeguard the interests of the shareholders, that is, profit maximization along with wealth optimization (Dimitriades, 2007, pp. 1242).

Consequently, ethical organization has the implication for governance that implies improved profits. It is imperative to generate within the ethical framework. There is a move in the psychology of investors where they are not only inquisitive to understand how much profit the firm made, but too how the profit was generates, that is, ethically or unethically. For this reason, the company has to be ethical, where profits are generated within the confines of ethical principals towards promoting good governance (Bolaji, 2011, pp. 18).

Environmental Accountability 

Corporate responsibility has the third element in regard to accountability of the company of the company towards the environment. This implies that as company interrelates with its environment, it obtains its core resources from the immediate environment. Thus, it too impacts the environment through its operations. Hence, it is too answerable to the environment for any form of effect that it males. Earlier corporations around the world dumped their wastes with impunity in the environment. With the increasing knowledge along with the concern regarding environmental dilapidation, depletion of natural resources, such as fossil fuels and water and the event of global warming, where there is legal along with moral force on companies to understand that the earth requires to be conserved, as well as looked after so that prospect generation arte not adversely impacted. Corporate responsibility is intimately connected to the principles of sustainable development (SD), in suggesting that business must be obligated to undertake choices founded not only economic factors; however, as well on the environmental along with social consequences of their actions. Accordingly, corporate responsibility regards the way the corporation align their behavior besides values with the anticipations and requirements of diverse stakeholders. In addition, it too defines a firm’s dedication to be responsible to its environment, that is, the earth, to be accountable to its bigger humanity, which include populace plus to be accountable in their practices that entail the good governance that dictates the earnings for shareholders or owners (Jamali & Mirshak, 2007, pp. 244).

 

Implications of Business Ethics 

In several surveys conducted on the impacts of CSR policies have on their business performance along with behavior, it has been found that these companies has been impacted greatly by CSR policies. It has been clear that firms are more and more watchful to the performance of the company besides they are offering due regard to the conceptual of corporate social responsibility. It has been obvious that stakeholders of these companies who are the team of individuals that are in a position to influence the business. The CSR practices play a leading role in promoting business ethics and the performance of the company (Lockett, Moon, & Visser, 2006, pp. 115).

Improved Brand Image

In most cases, it is clear that firms are more and more focused on promoting their brand image, as well as consciousness of the firm amongst the society values they are working to pursue this endeavor, firms are more and more concentrating on corporate social responsibility. Thus, this is similar surplus that companies such as McDonalds are trying to attain. Corporations are currently conscious of the function of CSR in improving their brand image and they are more and more watchful to performing morally plus in a sustainable way, which has led to the state where the corporation releases corporate social responsibility reports every year to the general public to make them attentive regarding its corporate social responsibility programs and too approaches that they intend to perform in the prospect (Mohr & Webb, 2005, pp. 121). This has the prospective to enhance the brand recognition along with the awareness of companies, like McDonalds and they will differentiate themselves from rivals in the business.

Better customer perception

CSR has the potential to promote business ethics through policies that offer a huge stress on good superior brands along with enhanced client service delivery. Thus, it is clear that based on the company’ CSR reports, they normally focusing on producing superior products that meet the expectations of its clients that will create a positive perception regarding their products. The increased positive perception regarding the high quality products will increase customer loyalty and customers’ attention to the products of the company. Customer loyalty will be greater for companies promoting its CSR where business would be uplifted because of socially and ethical business practices resulting in enhanced profitability of the business (Hockerts & Moir, 2006, pp. 86).

It has been established that those companies that pursue CSR practices has advantage when it comes to competitive nature as compared to the competitors. It is clear that the competitive aspect of the marketplace sphere is huge in which all the firms are more and more shifting towards differentiation strategies to promote their competitive advantage against the competitors. Many companies attain more clients due to its competitive advantage and similarly ethically vigilant investors will defiantly invest in firms that are promoting and pursuing sustainability strategies through their CSR practices. This shows that through CSR programs, companies will tend to generate competitive advantage over their competitors that will lead to a better performance position (Militaru & Ionescu, 2006, pp. 9).

Conclusions

The paper investigated the importance of business ethics based on different ethical perspectives. Business ethics play a leading role in influencing the business resolution plus practices in attaining their business goals through promoting sound and ethical practices. Business ethics entails applying standards of honesty besides fairness to relationships with clients and coworkers. The business ethical are attained through corporate social responsibility (Epstein, 2012, pp. 1). The CSR practices in the business have been found to promote the company’s brand image, competitive nature, and business customer perception among other impacts. It is apparent from this report that sound CSR practices and policies in a company tend to promote the performance of the firm because of cost reductions, improved brand image, innovativeness, which will result in increased competitive advantage against the rivals in a given industry.

 

References 

Amaeshi, K. M. & Adi, B. 2007, “Reconstructing the Corporate Social Responsibility Construct in Utlish”. In Business Ethics European Review (Chichester, England), 16(2), pp. 3–18.

Barrett, D. 2009. “Corporate social responsibility and quality management revisited”. The Journal for Quality & Participation, 2(1); 24-30.

Bolaji, A.B. 2011. “Problems And Prospects Of Corporate Social Responsibility In National Development”. Continental Journal of Sustainable Development; 2(2), 19-25.

Bondy, K. Matten, D. & Moon, J. 2006. “MNC Codes of Conduct: CSR or Corporate Governance”. ICCSR Paper Series. No. 40. ISSN 1478-5124.

Cacioppe, R., Forster, N. & Fox, M. 2008. “A Survey of Managers’ Perceptions of Corporate Ethics and Social Responsibility and Actions may Affect Companies Success”. Journal of Business Ethics, 82(3): 681-7000.

Dimitriades, Z.S. 2007. “Business Ethics and Corporate Social Responsibility in the e-Economy: A Commentary”. Electronic Journal of Business Ethics and Organisation Studies. 12(2); 1239-2685 .

Dimitriades, Z.S. 2007. “Business Ethics and Corporate Social Responsibility in the e-Economy: A Commentary”. Electronic Journal of Business Ethics and Organisation Studies. 12(2): 1239-2685.

Engelen. B. 2011. “Beyond markets and states: the importance of communities”. UNESCO, Blackwell Publishing Oxford.

Epstein, J. 2012. “Six reasons companies should embrace CSR”, Forbes. Available from: https://www.forbes.com/sites/csr/2012/02/21/six-reasons-companies-should-embrace-csr/, [Accessed: 11/11/2018].

Ferrell, O. 2004. “Business ethics and customer stakeholders”. Academy of Management Executive, 18(2): 126-129.

Goel, M. & Ramanathan, P. E. 2014. “Business Ethics and Corporate Social Responsibility – Is there a dividing line?”, Procedia Economics and Finance. 11(2): 49–59.

 McWilliams, A., Siegel, D. &  Wright, P. 2006. “Corporate social responsibility: strategic implications. Journal of Management Studies, 43(1): 1-18.

Hockerts, K. & Moir, L. 2006. “Communicating corporate responsibility to investors: The changing role of investor relations function”, Journal of Business  Ethics, 52( 1): 85-98.

Jamali, D. & Mirshak, R. 2007. “Corporate Social Responsibility (CSR): Theory and Practice in a Developing Country Context”. Journal of Business Ethics.72(4):243–262.

Kraisornsuthasinee, S. 2012. “CSR through the heart of the Bodhi tree. Social Responsibility Journal. 8(2): 186-198.

Lockett, A., Moon, J., & Visser, W. 2006. “Corporate social responsibility in  management research: focus, nature, science and sources of influence”, Journal of Management, 43, (1): 115-136.

Madura, J. 2012. “Fundamentals of Business”, 7th Edition, New Delhi: Cengage  Learning India Private Limited.

Militaru, G. &  Ionescu, S. 2006. “The competitive advantage of corporate social Responsibility”, Scientific journal of business, 68, (2):1-15.

Mohr, L. & Webb, D. 2005. “The effects of corporate social responsibility and price on consumer responses”, Journal of consumer affairs, 39, (1); 121-147.

Parmar , B.L., Freeman , R,E., Harrison, J.S., Wicks ,A.C., Purnell, L., Colle, S.D. 2010. Stakeholder Theory: The State of the Art” , The Academy of Management Annals, 4(1): 403-445.

Preuss, L. 2011. “Innovative CSR: A framework for anchoring corporate social  Responsibility in the innovation literature”, Journal of Corporate Citizenship, 42; 17-33

Rodin, D. (2005). “What’s wrong with business ethics. UNESCO”. Blackwell Publishing, Oxford.

Russo, A. & Perrini, F.2010. “Investigating Stakeholder Theory and “The Corporate Objective Revisited””. Journal of Business Ethics. 91(3):207–221.

Zheng, L. 2006. “A study on relation of corporate social responsibility and corporate value: empirical evidence from Shanghai Securities Exchange”, China industrial economy, 2(1); 77-83.

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