Importance of Corporate Responsibility - Coursework Example

Corporate Responsibility Student’s Name Subject Professor University/Institution Location Date Lilong & Jianxin (2009) argues that, corporate responsibility is built on a company’s ethics as defined by the shareholders, owner, directors and management. The ethics element work alongside the company objectives and interests to give the right balance between the company interests and the rights of immediate employees, clients, suppliers, business partners and society at large. Ethics combine with company’s culture which operate through the functioning values, beliefs, behaviors and provide a predictable patter of actions in an organization or a business context. Those companies, which have currently assumed strong cultures in their operations, have resulted to achievement of higher results through a laid focus of doing things. Corporate responsibility involves an integrated self-regulation for any business. It is a company way of promoting and building in a mechanism that ensures and monitors active compliance with the law, various international norms and ethical standards. The responsibilities embraced trickle down to set a positive company activities amongst its employees, consumers, communities, public spheres and its environment. According to Li, et al (2011), the term corporate responsibility has been used more so by multinational corporations whose activities and impacts produce various effects to people and environment. It is expected that the companies should not wholly depend on the government to be regulated in their operations but it has to actively take initiatives as per the overarching values and responsibility. This assures the actors, competitors and customers that their expectations are met. The integrated corporate responsibilities work together in attaining the company’s mission through applications of the principles for ensuing or emerging problems in a business environment. In actual sense, there is formal legislation which are developed and enforced, but generally the company will can strive more to endear ethics, culture and corporate responsibility. This work for the long run attainment of national competiveness, contribute to social and economic development and prosperous social environment (Kramer, 2011). In an organizational context, self-governance set guiding principles and the management role in defining and guiding values. They create an environment which support ethical behavior and instill shared responsibility. Corporations should ensure their obligations to the society. This accounts for engagement in activities which increase profit and in accordance to the rules of open and free competition while avoiding fraud and deception. The law effectively constrains unfair pursuit of stakeholders’ interests while affecting other claimants. The companies are entitled to follow some steps to define their ethical approach and handle the dilemma of ethics (Lilong & Jianxin 2009). First, they must perceive the imminent danger through fact gathering from different entities be it the consumers, employees, community, management, owners and suppliers. Second, they should take the data into critical analysis to see the implications that affect each stakeholder group. Thirdly, they should synthesis the data by converging different outcomes of the analysis. Consequently step four, five and six that ultimately determine company’s stand and decision is marked by the choice, action and learning. The design chosen should be ethical which will further be enacted by the company, then control and evaluate whether the outcomes are in line with the correct decision. The outcome of the company’s decision matters a lot (Bebbington, Larrinaga & Moneva 2008). The U.S cigarette companies had operated for decades through lies that caused social harm and deteriorated health for cigarette consumers. The conspiracy of the companies in deceiving the public promoted the risks of smoking through addictive nature of tobacco. Through Tobacco Industry research Committee (TIRC), which was established by the companies, they did not precisely give the harmful effects of smoking despite their actual knowledge that it causes disease and cancer which resulted to death of between 400,000 - 500,000 Americans every year. The ruling in 2006 prevented and restrained the companies from further committing future violations in regard to Racketeer-Influenced and Corrupt Organizations Act (RICO). The degree of harm was equally established. As Hancock, Schellinck & Schrans (2008) argues, in this case, it is demonstrated that corporate responsibility cannot be left to be undertaken by individual or group of companies without further enforcement by the regulatory authorities. Enforcement should be undertaken when the companies are unwilling to ensure comprehensive ethical standards in its design, production, advertising and marketing for the goods. When some standards are undermined, the law should actively punish and further establish justice for public and social good. Godfrey, Merrill & Hansen (2009) observes that, the purpose of the firm, though strongly based on economic mission, should also realize its obligations not to lie injure or cheat stakeholders. The rationale of the synthesized ethical should be to safeguard fiduciary relationship in line with different obligations to the stakeholders. As much as the company is concerned of maximizing profit, they should minimize social injury and harm. Social injury may include any activity that violate and frustrate enforcement of international law and domestic rules to protect individuals against safety, health and basic freedoms deprivation. This means that a company has to ensure its responsibilities in the confines of the law so as not to cause social injury. As Monks & Minow (2011) observes, through the use of Kew Garden’s Principle, a company may analyze whether it is responsible or it is causing harm. This is a model of operation under corporate responsibility where the company makes the world better and still remains profitable. This is ensured through an active intake of the challenges to develop in an honest manner it’s morally worthiness and ensuring that the market appreciates its activities to sufficiently allow its survival. The principle defines some steps that are followed in order to determine the harm. First, the need element points out that any increased need should then be followed by increased responsibility. Particularly, this is significant for company who are always seeking to increase their outputs through retention of the customers, gaining new other from similar or new markets through advertisement, promotions and marketing strategies. The target on children which was targeted by the companies would increase harm as the young consumers would rarely determine the level or the degree of harm. To make the matter worse, the companies increased the amount of nicotine to increase the rate of addiction for their customers. The emphasis on the messages that most doctors and physicians were consumers of Camel would have accelerated consumption which increased social injury. The level of output should not be at the expenses of customers’ rights and safety. The second element of the principle in proximity holds a person responsible by the fact that they know or knew the outcomes of their decisions or actions. The cigarette companies in actual sense did research but went ahead to suppress the known smoking risks and marketed the product. It was until the law intervened in 1969 that they bowed to warn smokers of addictive and health risks. As Hancock, Schellinck & Schrans (2008) point out, the legal authority comes in at that point to offer damages, give penalties and further ensure that such parties ensure future responsibility. The research targeted the market and operated through deception and through ensuring unequal awareness between the companies and consumers. The companies neglected the duty of ethical responsibility after testing their products. They further failed to design safe products or else warn users of the dangers of smoking. Thirdly, capability element accounts for both the need and proximity and forgive accordingly if the person in the question was not in a position to do anything. The final element considers the last resort which determines the way forward in considerations that there is no help afterward. A company is obligated to advance its goals by making the best in its world of operation. However, businesses may not always create the preferences of households but constantly get consumers to prefer their products through persuasions. The law pertinent concern should be to mitigate harm but not just mere guidelines and incentives in distinguishing what are minimally acceptable or highly commendable actions. The ethical premise must this be build on utilitarianism where the perspective result to social greater good in the long-run. As Van Greuning & Bratanovic (2009) argues, classical economic view determines the role of participants which affect currency value in various ways. The outcomes depends on investment choices where in case they invest in non-productive than in productive assets, money supply increases and this reduces the currency real value. The financing requirement s of the firm may increase as a result from demand for higher supplier payments and wages. The supplier led inflation risk is consequently created which then reduce the currency real value. Furthermore, the choices that are made about productivity contribution level can then result to increase of currency real value. The participants’ actions affect currency value through direct or less effective mechanisms. The ethical and corporate responsibility comes into question of the conduct of the financial sector and institutions activities that lead to inflation. Corporate responsibility ensures that the players set and agree on the principles to be followed in pursuance of profit and competition. Ultimately, this reduces the dire outcome whose impacts are felt by larger community. In considerations, unethical actions are pointed out when the participants’ conscious intention follows conscious actions where harm is foreseeable. The corporate body is then held responsible for their decisions and actions which fail to ensure the duty of care for social, economic and corporate good (Hancock, Schellinck & Schrans 2008). According to Tesler & Malone (2008), companies should ensure that the benefits of its operation and existence trickle down to the immediate and to some extent wider public. The contribution to the society comes through provision for funding and developing of skills. Though in most cases this calls for little operational and strategic impacts, it is worth as it consequently influence the companies’ overall outcomes. The companies have to see the need to maintain the external relationships which are promoted through corporate philanthropy as part of corporate responsibility. This results to long-term benefits, increase funding and budget allocation to different charities. Corporate competency and business assets are variously utilized and ensure alignment of business and social responsibilities through the developed social programs. When the company spends its resources for social welfare activities and programs, it confirms its strong ethical, culture and corporate responsibility. In conclusion, corporate responsibility is an element which effectively determines the business value creation, risk management and corporate provision of funding and skills. All are needed for the purpose of innovation and creation of sustainable business models; ensure compliance and provision for public growth through skills. As companies creates profit and promote business value, they should enhance their corporate responsibility through establishing and monitoring their impacts and benefits of their operations. Corporate responsibility is a critical element which ensures risk management where companies find it necessary to ensure compliance. This determines how effective a company mitigates their operational impacts and risk and further support external relationships. The target for increased corporate responsibility should be communicated and evaluated. When such findings are communicated to the customers, this furthers the profitability of company. References Bebbington, J, Larrinaga, C & Moneva, J M 2008, Corporate social reporting and reputation risk management. Accounting, Auditing & Accountability Journal, 21(3), 337-361. Godfrey, P C, Merrill, C B & Hansen, J M 2009, The relationship between corporate social responsibility and shareholder value: An empirical test of the risk management hypothesis. Strategic Management Journal, 30(4), 425-445. Hancock, L, Schellinck, T & Schrans, T 2008, Gambling and corporate social responsibility (CSR): Re-defining industry and state roles on duty of care, host responsibility and risk management. Policy and society, 27(1), 55-68. Kramer, M R 2011, Creating shared value. Harvard business review. Li, C et al., 2011, Corporate social responsibility and social responsibility needs of stakeholders. 2011 International Conference on Remote Sensing Environment and Transportation Engineering, 55(9113025), p.192-196. Lilong, Z L Z & Jianxin, Y J Y, 2009, Construct and Evaluate the Indicators System of Corporate Social Responsibility. 2009 International Conference on Management and Service Science. Monks, R & Minow, N 2011, Corporate governance, fifth edition. Chichester, West Sussex, U.K: John Wiley & Sons. Tesler, L E & Malone, R E 2008, Corporate philanthropy, lobbying, and public health policy. Journal Information, 98(12). Van Greuning, H & Bratanovic, S B 2009, Analyzing banking risk: a framework for assessing corporate governance and risk management. World Bank Publications. Read More