Corporate Social Responsibility Multi-Nationals - Assignment Example

Running Head: CORPORATE SOCIAL RESPONSIBILITY FOR MULTI-NATIONALS Corporate Social Responsibility Multi-Nationals Name Institution Corporate Social Responsibility Multi-Nationals Introduction Corporate Social Responsibility (CSR) for the business is a self regulatory mechanism for businesses organizations such that a multinational business enterprise or organization is able to follow the stipulations set up by the governments, follow the ethical standards required and also follow international norms. The initiative behind the Corporate Social Responsibility is to reciprocate the gains obtained by the business establishments to the environment, community, consumers, stakeholders and members of the public under which the business organization’s services extend. Through Corporate Social Responsibility, a business organization indulges in activities of public interest like community growth and development and though elimination of practices that could be harmful to the public and the environment. In view of the above description it is sufficient to say that Corporate Social Responsibility is a process of intentional inclusion of the public interest in to the corporate decision making of a business enterprise with regard to benefitting the triple bottom line which is composed of people planets and profit. Background for CSR Every business organization is established so as to make profit and therefore be beneficial to the stakeholders who are either the promoters, employees or the shareholders. To realize this goal a good operational climate should exist between the organization and these stakeholders. The organization should obtain full support from the employees, customers and the shareholders. Therefore such an organization owes these people a kind of appreciation from this support it has obtained from the community. This is therefore the driving force that propels Corporate Social Responsibility. By performing these duties the organization is assured of support by these stakeholders and the government and is able to become more profitable. CSR for Multi-nationals According to the Atkins (2006) the Corporate Social Responsibility is a challenge to many organizations and thus there is a need to put these organizations on their toes such that they do not become irresponsible. Many business multinationals are under risk of forgetting their roles in undertaking development projects for the communities around which they exist. Corporate Social Responsibility is new concept that a multinational organizations can use toward achieving social equity and stability in the world where we are far from gaining the responsibility and equity we deserves. Arguments have been put forward that a business organization has no role to play towards the welfare of a community and the customers since such an organization will only be acting as the government. Critics argue that any business’ main reason of being established is economical in nature and therefore should not indulge in any social responsibility (Manne, 2006). On the other hand proponents argue that Corporate Social Responsibility is not only beneficial to the community but also profitable and propels advancement and growth of these organizations. In fact actions of social responsibility should aim at complementing the works and the responsibilities of the government. Any such action of social responsibility should be relevant to the community (Friedman, 2002). The governments of nations worldwide should give guidelines on the Corporate Social Responsibility code of conduct and in so doing the multinational companies will be provided with legal framework on their operations. The corporate social responsibility is not restricted to the acts of goodwill towards the community. It may also involve making considerations for the surrounding communities before important decision are made. For instance this when a company want to move to another location it must consider the welfare of the communities where’re it is located. When an organization relocates it may lead to unemployment and other disaster to the communities. According to Donaldson a case was experienced when the Lykes-Youngstown Sheet and tube town decided to relocate. Apart from trimming down the number of employees where almost 5,000 people were laid off, approximately 10,000 more positions of employment in the surrounding area related to this position were lost. In a view of this a number of questions may arise in connection with of the extent of the degree that Corporate Social Responsibility should extend. There are however three different perspectives on multinational business organizations code of ethics with regard to appropriate business ethics. One of them outlines the roles and the responsibilities of the corporations and to whom those duties are supposed to be carried out. The second code outlines the responsibilities which are more profitable to the intended groups, the responsibility which is hold best the interests of the firms. Finally there has to be an outline that looks into the real activities of such a business multinational toward the social responsibility. These codes of ethics can however have a little significant effect to a change in behavior of the organization with cases of frequent occurrences of breach of business ethics. The required change will therefore call for a complete restructuring of the organization. Discussions of the social responsibilities of business are notable for their analytical looseness and lack of rigor (Friedman, 2002). This is because some companies may take very lightly the responsibility they have on the stakeholders, the customers and the public at larger. Such companies indulge in these activities to justify the phrase Corporate Social Responsibility without taking at heart the interests of the communities which they serve. Monopolies organizations are more so the case, due to the fact that they lack competitions from other quarters within their line of operations the management of these multinational business firms does not see the need for corporate social responsibility. Such firms are more interested in making profit and therefore they assume that by providing goods or services that is their line of business they are acting towards social responsibility. The basis of this argument is that suppose the monopoly corporate enterprise withdraws its operation then no other company will be left to offer the same services. This may result in a supply gap of the goods or services and therefore many related business opportunities and jobs may be lost. Thus where companies are transacting business as a monopoly the Corporate Social Responsibility is likely to be ignored until such times when the management is changed or a complimentary company comes into operation and monopoly status is lost. In a similar way the executives managing a business firm may be on management level based on performance contract. This is a different way of undermining the spirit of Corporate Social Responsibility. Under the performance contract, the top management authority of a company or organizations signs a contract that stipulates that they shall continue to be the directors of the organizations only when some conditions are met for instance when company records a positive growth, when a firm hits a targeted limit in either production, processing, manufacturing, distribution, circulation recruitment or even profit. Under those conditions the managers may decide to put their interest beyond the interest of the company with respect to the Corporate Social Responsibility. These managers understand that failure of them to hit the set targets will result in their dismissal as par the contract. On contrary if the target aimed at is reached the directors may be given rewards apart from their contract being renewed. Aware that the amount spent on Corporate Social Responsibility could be used to enhance profit, add to production the corporate executives resort to all sorts of excuses to avoid the responsibilities in to the communities (Reichmann, 2007). Critics of the Corporate Social Responsibility argues that since the business multinational is owned by the stakeholders then taking money and investing in charities amounts to theft. These critics argues that it is the right of the stakeholders to decide how they want the business organization’s finances spent, be it in social projects or otherwise and the amount to be invested. With a view of this argument it is clear that the relevance of any project as a social responsibility by a business organization relies on the type of such social responsibility with respect to either giving assistance or taking part in activities with impacts on populations and environment. Some companies’ social responsibilities is driven by incentives. They will undertake the role of community responsibility only where there are economic incentives. Their main areas of consideration are based on their economic benefits rather than the ethical considerations. Therefore needs arise under such conditions to demand for an increased role in corporate social responsibility from multinational firms operating in such a place or a country. CSR for Herman Miller Inc There are growing fears that the trend toward the globalization has reduced the multinational companies (MNCs) into profit driven objects at the expense of the workforce, community and the environment degradation. To respond to those fears there is a wake up call for companies to show their action at the welfare of the people and the planet. The first step that has been undertaken with a view of this is to adopt the code of conduct concerning the CSR. According to Friedman (2002) the discussion of the social responsibilities of business are notable for their analytical looseness and lack of rigor. This is true as we have seen be cause such discussion tends only to discuss the role of companies in the CSR without putting special emphasis on the code of ethics that governs CSR, the role of the government in providing the regulations for the operations of the Corporate Social Responsibility and the nature of the CSR initiative in benefiting people, planet and profit. To illustrate the Friedman’s case let us take the example of the Herman Miller Inc. This is an office and home furniture manufacturing company situated in the Michigan. Herman miller Inc had been facing a problem; the company had been known to produce excellent Eames chair using a certain type of hardwood tree found in the rain forests. The corporate leaders were now informed that due to wide spread harvesting of such trees from the rain forest the company was contributing to deforestation. Options available were to use trees of other kinds but this could not have been the way to go since this specific type of the tree is the one that gave these chairs a nice rosewood finish. Thus use of another kind of the tree would have resulted into a loss of the market just as some of the company’s executive suggested. Worse still the company was experiencing financial difficulties and thus there was no way to jeopardize the value of its shares in the New York stock exchange putting its signature product the Eames chair under market risk. Under such difficulties questions arose into the role of a business enterprise in the society, its scope and responsibilities. This case brings into focus the diverse view under which CSR operates but not limited to providing charities to the communities. The lack of vigor in this sense implies the simplicity with which the responsibility of a business multinational may be taken while disregarding a couple of other important perspectives which exists under special circumstance for instance under those problem faced by the Herman Miller Inc. a number of things which were previously out of focus but comes to our attention from this case study is the role, the purpose and the scope of the Corporate Social Responsibility. Further questions may arise on the relation between CSR and maximizing profits for shareholders, serving the larger public with minimal financial gains from this service. According Friedman (1970) the critics of business social corporate responsibilities says that there is nothing like the social responsibility of the business. The author claims that only people can have responsibilities. He argues that unlike in business a corporation can be regarded as an artificial person and therefore can have artificial responsibilities. On the other hand a whole business can never be said to have a responsibility in whatever vague sense. The CSR of a business enterprise can be established first by examining what it implies and for whom. Under the free enterprise system the business is headed by a corporate directors who act at the best interests of the business- to earn as much profit as the business can, while respecting the laws of the land , laws of the society and the ethical laws of business. The Herman miller Inc therefore put down a statement of corporate values, entitled ‘things that matter.’ These values formed the basis of the Herman Millers Corporate Community. The institution stipulates that to the aim of this document is to make a better world through environment advocacy, contributing to non profit groups, environmental advocacy and volunteering time and acting as good corporate citizen. This action by the Herman Miller Inc justifies the statement the Kaler’s (2002) statement that stakeholders Businesses owes more e perfect or imperfect moral duties to the stakeholders than to the public at large in the perspective that the interest of the business should precede those of the public and the environment. Solution to Problems of Corporate Social Responsibility The solution to the problem of the corporate social responsibility lies in the cooperation between the individual business organizations and the government. To put in place stronger and uniform guidelines the United Nations comes in to ensure that despite difference in regulations , difference in history and difference in the mentality regarding these companies the , for instance the eastern countries are deeply affected by the socialistic mentality. In such counties every business multinational has a mandate by the government to serve the community. In such countries the Corporate Social Responsibility regulations and charitable causes are easily observed by these organizations operating in these countries. When the protocols for the Corporate Social Responsibility are being laid out, certain guidelines should form the foundation stone. One of the guidelines should express the areas of public interest where the actions to be undertaken are mostly likely to serve the interests of the public. Secondly the guidelines for regularizing the rules governing the set up of the CSRs should describe the kind of policy instruments that fosters such actions and finally the description of the target policy. In a survey on business and the ethical role in Bulgaria, Romania and Croatia many firms whose views were inquired agreed that the business organizations have every role to play towards the well being of the workers, being caring and transparent instead of taking part in Corporate Social Responsibility (Peinardo-vara, 2008). However there is a common agreement that roles of business multinationals are supposed to be stronger and should impact the society in a bigger way. Five areas of potential in encouragement of multinational organizational by the government to take part in corporate social responsibility have been identified. One such area is the economic sector. This is where the organization should ensure that the workers have the employment and retirement security, giving the employees safety a first priority, the organization should have respect for labour standards, the fairness should exist in the process of giving contracts and in the area of supply chain management. Moreover, the organization should be encouraged to have respect for the labour laws and the protection of intellectual property rights. The second important area of the social corporate responsibility is in the environment sector. Environment is vital resource for the existence of human and plant life and there every effort should be focused at improving conserving it. This is because any organization in whatever field leaves impact in the environment and the two should coexist without conflict of interest. To achieve the government should encourage CSR activities that improve environment safety in production, design and distribution. The business firm should also conduct environmental inspection, monitoring and assessment to determine the extent of success of their environment management and conservation scheme. Another important area worth of a consideration in the social corporate responsibility mission is the social platform (Boardrooms briefings, 2008). The organization must make certain that the entire human and the employees rights are protected and upheld. Attempts should be made at the reduction of violence and management of conflict situations. The business organization need to conduct an assessment of the impact of decisions made on the social life of the residents around the business organization, the employees and the consumers. Then harmonization of these decisions to the needs and observations of the social environment can then be made. This is also an area where the organization should be encouraged to invest in apart form the charitable involvements and then conduct social monitoring and reporting. On the area of governance, the government should encourage these organizations to protect the rights of corporate shareholders and the investors. Reduce forms of corruption that are typical with corporate organization. The corporate management should also ensure that that all operations are done in a transparent manner such that everybody is accountable for his actions (Boardrooms briefings, 2008). To ensure that organization undertake actions of corporate social responsibility as a way of being responsible to their customers, employees, environment and the members of the public the government should undertake a number of steps that enforces this behavior. There should be laws and regulations that allow the government to find out about the social responsibility of a specific company. Failure to a company undertaking social responsible roles should result to penalties in monetary form or otherwise. Secondly the government should encourage acts of social responsibility amongst the corporate institutions through providing incentives in form of tax. In a similar way the government may give technical assistance, non binding guidance and the guidelines that that stimulates association between the corporate and the civil society thereby raising both the public awareness and the corporate awareness (Kolstad, 2007). Thirdly the government may decide to partner with these corporate institutions to provide both business and public resources thereby obtaining the economies of scale. Furthermore the government can be committed to providing specific resources that will be used entirely by these corporate establishments for the purpose of social responsibility. Still on this, the government may provide and disseminate a hybrid of ideas that comprises the best practices towards this cause. Finally governments of these countries where these multinational corporations are based may decide to start a special Corporate Social Responsibility recognition scheme that supports, publicizes and awards the institutions that have excelled in this practice. By so doing the government encourages and CSR by being itself a good example (Economist Intelligence Unit, 2005). Conclusion However achieving all these acts of corporate social responsibility is a long journey because consideration has to be given to the sector of the company and, the CSR Criteria of the country and the mentality of the government which could be either the socialist mentality or the capitalist mentality. But however long the process is the corporate multinationals should remember that they owe responsibility to the environment and the surroundings by acting ethically correctly. In the developing countries these multinational are as powerful as the government since the government is heavily reliant on them for and therefore the government regulations are not followed. At this point the cooperation of the international community in establishing an international ethical code for Corporate Social Responsibility is vital. While we are engraved in speaking about the corporate social responsibility we should not forget that the state has even greater responsibility too. Most importantly however, is to encourage the cooperation of both. References Boardrooms briefings (2008): Corporate social responsibility. A Publication of Directors and Boards Magazine. Harvard business school. Pearly Meyers Partners. Chadwick, R.F. & Schroeder, D. (2002). Applied ethics: The Social Responsibility. New York: Routledge. Economist Intelligence Unit. (2005).The Importance of Corporate Responsibility. New York: Oracle. Friedman, M. (2002). Legitimacy and responsibility: The Social Responsibility of the business is to increase profits. New York: Routledge. Reichmann, Gulia. (2007).The State, Multinationals and Social Responsibility: Social Anthropology. Brighton: University Of Sussex. Kolstad, I. (2007). Corporate Social Responsibility of Multinational Corporations. Michelson Institute: Thematic research group: Kaler’s, J. (2002). Morality and Strategy in Stakeholder Identification. Journal of Business Ethics. 39,(1-2), 91-100. Manne, H.G. (2006). Milton Friedman Was Right- Corporate Social Responsibility Is a Bunk. Washington, D.C: American Enterprise Institute. Peinardo-vara, E. (2008). Corporate Social Responsibility (CSR): Latin America and Caribbean. Retrieved 6th Aug, 2008 from Read More