Non-Government Organisations and National Governments in Influencing Business Strategy - Research Paper Example

?Critically assess the changes taking place in business approaches to sustainability, including the roles of NGOs and national governments in influencing business strategy Introduction This study aims at assessing the business approaches towards sustainability, which would involve analysis of the role that the government and Non-Government Organisations (NGOs) have to play in this. The most significant shift that has been felt in the business environment is in case of sustainability and attitude of the decision-makers towards the significance of sustainability in corporate judgments. The enterprises are generally considered to be the ones who receive the environmental changes which are cost intensive and time consuming (Adams, 2006). However, presently, it has been noticed that the companies are developing policies and goals considering the regional and national goals and also, focus towards sustainability rather than giving importance to piecemeal. There are examples of various individual firms, which are working in collaboration with the NGOs and even government-regulated organisations, in order to achieve corporate goals sustainably (Ekwueme, Egbunike and Onyali, 2013). However, before discussing the change or shift in the business environment towards sustainability, the implication of business sustainability needs to be understood. Business sustainability is also known as the way to manage people through a set procedure by which the financial, environmental and social risks are handled and the opportunities and obligations are met. Business sustainability impacts three most significant aspects namely, planet, people and profits (Zu and Kaynak, 2012). Business health not only signifies the financial health of the company, but also the ability of the business to survive shocks. Business which creates value economically and also, contributes towards a healthy ecosystem and stable communities are considered to be a sustainable business. Further in this study, the discussion would throw light on the changes occurring in the business environment, where organisations are moving towards sustainability (Gadenne, et al., 2002). CHANGES TAKING PLACE IN BUSINESS APPROACHES TO SUSTAINABILITY Sustainability and implication of sustainable development in business The notion behind sustainable development has received increasing acknowledgment, yet it is a new concept for various business executives. A well-accepted principle is protecting the capital base of the organisation. Yet these organisations do not think of extending this practice towards the human resource or nature. Sustainable development signifies achieving those potentials which can be integrated into the measurement system and planning of the organisation. Sustainability development theory has a collaboration of various theories, which assist in bring about transformation. However, in this case, only the modernisation theory would be discussed. Modernisation theory depicts the analysis of contemporary ways to eliminate the obstacles by availing modern ways to progress (Hakala and Zsuzsanna, 2012). The manager at Chevron Corporation dealing with environmental affairs believes that environment is indeed a significant issue which presents with both opportunities as well as challenges for the business (Soderbaum, 2008.). It has been put forward by OECD that the practices and attitudes of sustainable change reveal a realistic prospect towards harmonising the economic and environmental considerations. It has been observed by managers that pursuing sustainable strategies is a sign of superior business sense (Eisenhardt, 2000). The concept of sustainable development has also been integrated into the process and policies of business, which are assisting in re-designing the management methods. Two aspects have come forward in sustainable management methods such as, accountability towards non-traditional stakeholders and continuous improvement in the reporting practices. Governance is becoming an increasingly important factor. The stakeholders’ interest is given importance through proper stakeholder analysis. The existence of the companies is now being directly linked to sustainable development of the global environment and community as a whole (Mainardes, Alves and Raposo, 2011). In the establishment and transformation of the business environment towards sustainability, corporate social responsibility plays a major role. The social justice theory states that every member in the society is important and cannot be discriminated on the basis of wealth and power (Capeheart and Milovanovic, 2007). On the basis of this concept, the companies are now also working for the well-being of the society and other external stakeholders. This is the core concept behind social justice theory, which is applied in sustainable transformation of organisations nowadays. Governance in International Business Environment Governance is a social progress in the international business environment, which has been directed towards political integration with the aim of solving problems related to compliances. The international organisations such as, United Nation Organisation (UNO), International Monetary Fund (IMF) and Council of Foreign Relations, are the international bodies with put forward policies and principles of corporate governance, based on their domain or jurisdiction. They play major role in expanding the normative mechanism, formulation of corporate policies and objectives, globalisation of organisation and designing reforms for the organisations, who are trying to attain the status of sustainable growth. Compliance issues arises in financial perspective, management of human resource, promotion, purchase or sells, which the companies can only manage due to the guidance they receive as policies from these international institutions (Lanis and Richardson, 2013). Every country has their governance guidelines and policies according to which the business environment functions. However, in order to compete in the global marketplace, globalised governance standards need to be developed and followed. UN has brought in various reforms in order to strengthen the governance framework, so that challenges such as, the financial crisis of 2008, is not repeated. In order to reframe the global governance framework, UN along with WTO, World Bank and IMF has been evaluating the political, economic and social rights in the international business environment. Culture is the nervous system for an organisation and it offers every organisation with their respective unique qualities. The prevailing culture of self-governance and informed acquiescence infuses governance which leads to transparency in business operation (Khan, 2011). Co-operative approach towards sustainable goals Through co-operative approach, the companies would be able to understand the meaning of cooperation and partnership for laying the foundation for sustainable growth. The concept of creation of shared value also matches with the notion of co-operative approach because both of these theories state that sustainability should be the heart of every organisation and business model, which should be ensured through economic, environmental and social performance, thereby benefiting the stakeholders of the organisation. In this case, the national government and NGOs have significant roles to play. The resources are scarce, so the national government should design and develop a governance framework in line with the global governance structure, which will assist the companies to cooperate and coordinate and work towards a common goal, thereby creating value for stakeholders and sustainability (Howarth, 2010). ROLES OF NGOS AND NATIONAL GOVERNMENTS IN INFLUENCING BUSINESS STRATEGY Role of NGOs The NGOs play a significant role in pushing the companies towards their sustainability at global level (Savona, Kirton and Oldani, 2011). The key drivers in this case are the campaigning groups, who have been fighting for regulations related to hazardous waste, land mines or elimination of various social issues. These NGOs have not only been focusing towards the inter-government or government processes, but are also involved in various public functions on national and international platforms. Nowadays, they are aided by the cutting-edge technology and communication systems. So, NGOs are also taking active participation in environmental and social externalities of the business activities (Svensson and Wood, 2003). The multinational brands have been pressurised by NGOs to accurately follow the norms in relation to labour laws, human rights and maintaining ecological balance. The businesses which do not deal in highly specialised products or services are also feeling the heat of pressure that the NGOs have developed to safe guard the interest of the shareholders and customers (Galea, 2004). In order to deal with the rising pressure from the NGOs, the businesses are discarding their Milton Friedmanite approach towards shareholders, which was a narrow way to evaluate shareholders value (IISD, 2013; Tees, 2011). Now the share value is not only an aspect that is analysed, but attention is paid towards enhancing those values further. There are various visible manifestations which have led to this drastic shift. In case of describing the role of NGOs in sustainable development, the assessment of social justice theory is significant because this theory not only involves fairness or impartiality towards employees, customers or society, but also towards the environment (Zu and Kaynak, 2012). So it is a combination of economic, ecological as well as moral philosophies for which the NGOs compel the companies to transform. Ethical arguments, as discussed above, have been put forward by them to pressurise government in order to introduce new ethical laws towards sustainability and for companies to follow them religiously (Barney, 2001). In such a case, the concept of shared value creation can be also discussed. Creating shared value is a concept that was first introduced through Harvard Business Review and later expanded by Michael E. Porter. It involves operating practices and policies in order to enhance the level of competitiveness and simultaneously lead to social and economic growth. It stated a mechanism through which shared value can be created for sustainable development of business (Porter and Kramer, 2006). The small low-profile NGOs, which receive less exposure, can also set a common objective and unite to create value for the employees and customers, thereby fulfilling their purpose of sustainability too. Role of National Governments Governments around the world have been able to identify the challenges that the firms are facing to attain sustainable development (Parr and Zaretsky, 2010). Governments in this scenario need to anticipate the increasing demand towards sustainability of companies, products and services. They can play a major role in aiding the companies towards their transition by causing less damage to the economy (Banerjee, 2007). They can set agendas for the betterment of the citizens, economies and industries. In the developing countries, governments have greater roles to play as they need to encourage the companies to transform their business model that will lead them towards sustainable development. Government have four significant functions to attend to in case of sustainable transformation of business environment. They are policy development, facilitation, regulation and management of internal sustainability (Morse, 2010). While discussing governments’ role in movement of global business towards sustainability, significant theories like, the stakeholders’ theory and theory for corporate accountability, need to be evaluated, that forms the core of sustainable development in companies. The stakeholders’ theory states that any stakeholder of the company cannot be neglected and company must have the corporate objective to add value to their lives. This would not have become so significant if the national governments had not backed the stakeholders’ theory and enforced it on the companies (Cooper, 2000). On the other hand, corporate accountability was adopted by most of the governments to re-define the relationship between the corporate managers and society (Solomon, 2011). It had become strongly prevalent worldwide after the financial crisis. Governments around the world have legalised corporate sustainability as a new paradigm for corporate management and corporate accountability plays a significant role here. They have taken the initiative to monitor the companies and ensure that they meet the social need to serve its customers in a better way and also, decrease the cost of production through innovation. Quality, cost quantity and reliability of distribution and inputs must be improved and companies should not operate in isolation as the business process is a cycle in which every player need to generate value for themselves and their stakeholders (Jones, 2000). Conclusion This study was totally based on the approaches of sustainability which has brought about a transformation in the business environment. In this context, the role of government bodies and NGOs has also been evaluated, so as to not only identify the causes and effects, but also the agents of change towards sustainability. The NGOs have played major role in coming out of the domain of regulations in which the government bodies function in order to throw light on neglected issues such as, health care policies of employees, environmental issues and reduction of hazardous waste. They were the once who revolutionised campaigns related to human rights and labour exploitation. On the contrary, the role of the government has also changed than what it was. Traditional framework within which the governments of different countries functioned has altered or transformed towards sustainability. The vision has been upgraded towards green economy. Strategies have been developed by them for transition towards an economy which would be able to control water, energy, waste and governance. Innovation is the new mantra but not without development of its stakeholders. Reference List Adams. D., 2006. The future of sustainability: rethinking environment and development in the twenty-first century. Cambridge: IUCN Banerjee, S. 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