Influence of Stakeholders on Encouraging Responsible Business Practices - Essay Example

Responsible Business Practices Influence of Stakeholders on Encouraging Responsible Business Practices In the business world, stakeholders constitute of any group or an individual who has an effect or can be affected by the achievement of the business objectives. They include managers, business corporates, shareholders, corporation and the entire business management. These stakeholders play a critical role in promoting responsible business practices by instituting legitimate business ethics. Business practices range from social to economic perspectives. For most businesses, there are values, responsibilities and sustainability issues that are in consideration. As a result of these factors, business management comes up with a variety of ways to ensure responsible business practices as seen in the research study by Olson (2009). The business world has come under criticism that it is to blame for global warming, carbon dioxide emissions, deforestation and pollution. To prove the critics wrong, Cohen (2010) states that the stakeholders having begun a fight to reduce global warming and carbon emissions. The green movement has come in to promote the growth of trees. It also helps in educating the public in regard to emission of carbons. The stakeholders meet annually in Rio de Janeiro for the earth summit. Worldwide campaigns regarding proper business ethics are underway to ensure that businesses reduce pollution and global warming. Apart from the green movement, the stakeholders have stipulated strict rules within their businesses to ensure that there is proper waste disposal. The stakeholders came together in 1997 to sign the Kyoto protocol so as to control the rate of waste disposal as stated in the research study by Kotler & Lee (2005). Stakeholders are now forming various groups to promote responsible business practices. Such corporate groups include the WWF, Friends of the Earth, the Greenpeace as well as the Green Party. These groups play a considerable role in ensuring that business entities protect the environment and consequently lead to responsible business practices. Urip (2010) states that business responsibility includes the code of ethics which are the guidelines for the conduct of employees and behaviour expectation, the stakeholders have come up with the code of ethics through a voluntary statement that commits the business entity to its values, beliefs and actions together with setting appropriate behaviour for employees. These codes of ethics have become increasingly common in most organizations, which most stakeholders promote since they ensure responsibility in carrying on their business activities. The codes of ethics are vital than the legal requirements of a business since the code of ethics addresses the need to guide individuals and develop a workplace which has considerable ethics. Responsible business ethics are presented by stakeholders through a statement of rules, a statement of core values and statement dealing with corporate philosophy. To ensure business responsibility, the code of ethics promotes respect for individuals. Respect of individual entails speaking to customers with exceptional terms even when the customer is hostile, the employee should remain respectful. Fair treatment is also in the code of ethics since the employees do not have to undermine other employees on grounds of sex, gender, age or race. Employees should treat all customers and individuals in the same way. Honesty is vital in every business to ensure that there are no losses arising from dishonest employees. According to Horrigan (2010) the stakeholders especially the management ensure that there are rules and guidelines to promote honesty within the businesses. Through the code of ethics, integrity gets incorporated in the running of the business. Integrity is necessary when dealing with many customers who require fast services since when dealing with many customers there is a lot of money flowing, and employees may face the integrity question since there is a temptation to put some of the money aside for their personal needs. Responsibility is supreme for any business; the stakeholders within the business come up with ways of promoting business responsibility within the business entity and outside. Teamwork is vital for the running of any business to ensure that there are no queues of customers waiting for services. Cohen (2010) insists that teamwork, which is a crucial business responsibility, ensures that work gets done fast and within the time stipulated. Business responsibility contained in the code of ethics varies from one organization to another. Conflict of interest which is common to many businesses should be minimal to ensure that the people within the business get what they deserve. The company resources should be used for the running of the organization rather than for other unnecessary uses. The stakeholders especially the management play the biggest role in stipulating and promoting the code of ethics. The stakeholders inform employees of the expected standards. They also indicate to customer and employees their rights. The management, which is the highest stakeholder, provides consistency when dealing with problems and reassures suppliers, investors and customers the intent of the business so as to ensure adherence to high ethical standards. It is the responsibility of the stakeholders to enable thought about the obligation and interpretation of common morality. The code of ethics ensures value orientation, external orientation, compliance orientation and protection orientation. Other stakeholders who undertake in ensuring that the codes of ethics are implemented include international institutions, ethics committees, environmental and social auditing as well as national governments as seen in the research studies by Horrigan (2010). According to Kotler & Lee (2005) shareholders are paramount stakeholders who have a direct influence on the operations of a business. Shareholder activism is crucial in encouraging business practices which are responsible, shareholders buy shares so as to have a right to speak during the annual general meeting and these shareholders are a voice of concern and help to challenge the business on unethical practices. The shareholders help to make the concerns of other members known to the management. Shareholders help to tackle the issues that are a business goes through in a bid to create a favourable business environment. Socially responsible investment is crucial for any business; this is because the use of a social, ethical and environmental criterion is supreme when selecting and managing investment portfolio which consist of company shares. Responsible business ethics is vital, and the stakeholders have a prominent role to play in establishing appropriate, ethical investments which are vital for the development of a business. Positive, ethical investment includes environmental conservation, equal opportunities together with ethical employment practices. The stakeholders of every business aim at making public transport, which is a backbone of every business, to be a success. Green technology is supreme when it comes to business practices, which are responsible hence every stakeholder should be able to promote green technology. Among the stakeholders who need to encourage responsible business practices is the corporate world in general as stated by Olson (2009). This is because the corporate world is responsible for increasing profits and ensuring that it remains within the instituted boundaries. In promoting responsible business practices, the corporate sector should ensure that business and society depend on each other and demonstrate mutual obligations. The pressure groups who are also stakeholders ensure that the expectations of the public about the business remain positive. In the efforts to ensure responsible business practice, the stakeholders should ensure that customers are more than satisfied, employees are more committed, and there is forestalled legislation. Long-term investments are vital for any business; these investments should aim at improving the life of the investors. Responsible business practice aims at ensuring that there are no social problems; thus the corporate should ensure that their corporations satisfy this requirement. Horrigan (2010) states that use of power responsibly by corporations is supreme since all corporate activities have some social impacts. Stakeholders have the biggest influence on ensuring responsible business practices. This is because the interests of the stakeholders shape the business policies, where some negative business practices demonstrated by stakeholders include adverse publicity, protests and boycotts. These nefarious practices demonstrate the unpleasant side of a business, and it is the role of stakeholders to ensure that there are no such activities taking root in the business. Otherwise, it is the role of the stakeholders to promote positive business practices leading to appreciable publicity and ethical consumers. Cohen (2010) explains that responsible actions aim at meeting the needs of customers where stakeholders should ensure that their businesses are the target of customers for demonstrating responsible, ethical issues. When stakeholders and customers value the advantage added to a product by a company, it implies that the stakeholders have a role in ensuring that products receive positive social attributes. The stakeholders have a direct contribution to responsible business practices since they have direct contact with the operations of the business. This includes economic responsibility where the stakeholders influence the profit making of a business. Stakeholders further have legal responsibility since for the survival of the business, obeying the law is supreme, and it is a responsible business practice. Discretionary responsibility within the shareholders is vital for business. This is through contributions from the stakeholders within the business to the community as seen in the study work of Horrigan (2010). Managers are paramount stakeholders who ensure proper business practices get instituted. This is because managers ensure that there are no unscrupulous business practices which lead to litigation, issue of coarse publicity, loss in the confidence of customers, issue of ethical investment and the possibility of disinvestment in the business. Managers and directors know about the legal status and asset ownership in business. This implies that managers influence the legal operations of a business and every legal decision made has a direct implication on the practices of the business. Responsible business practices include the responsibility of managers and directors in protecting the shareholder’s investments. A business that does not protect the investments of the shareholders is considered to demonstrate irresponsible business practices (Kotler & Lee, 2005). According to Urip (2010) stakeholders have a direct influence on promoting responsible business practices since they provide for corporate governance, which is the mechanism through which a firm gets controlled and from which the firm receives directions. The board of directors is the key stakeholder when it comes to encouraging responsibility since the interests of the people who have control over a firm have interests which are different from the people supplying the firm with external resources, the legitimacy of the business and other issues which constitute responsible business practice. The interests of the stakeholders are most supreme when running a business and the stakeholder has a direct influence on the business implying that they will influence responsible business practice. Responsible business practice may vary from running of the public expenditure, the lending policies of the business, the employment policy and human rights. These among other factors such as corporate governance and the business finances are crucial when depicting the role of stakeholders in influencing responsible business practice. Some of the business practices also include treatment of supply lines, fraud, unfair competitive practices and damage to the environment. The stakeholders have a direct influence on these factors implying that the decisions made by the stakeholders influence the business practices. Kotler & Lee (2005) states that investors also contribute to responsible business practices through the creation of favourable terms within which the business runs. Conclusion This study comes up with the influences of stakeholders on enhancing responsible business practices. The essay stipulates the meaning of stakeholders and defines the business practices. From the essay, the stakeholders play considerable roles in ensuring that the business demonstrates responsible business practice (Urip, 2010). To make the essay easy to understand, there is the analysis of the various issues that a business undertakes to show responsibility, this helps to outline the role of the stakeholders in each business activity. Every stakeholder has an influence on the business ranging from financial affairs to social responsibility. Directors and managers have the biggest role in ensuring that the business demonstrates responsibility. This is because they are the key decision makers of the business implying that if stakeholders make a poor decision, there is a negative consequence on the business and if the decisions they make are valid, the business will demonstrate responsible business practice. From the onset of the essay, there is a clear stipulation of the purpose which is to identify the responsible business practices and illustrate the role that stakeholders play. Every stakeholder should ensure that the business practices are accountable as stated by Cohen (2010). The activities that the business considers ethical contribute to responsibility of a business, in the essay, there is a broad preview of the ethical code of conduct in a business, and this helps to form the basis for analyzing the business practices which a business should consider. From the first section of the essay, there is consideration of the various stakeholders of a business, and then there is a link between the stakeholders and their roles and finally how the roles lead to responsible business ethics making the essay relevant. References Cohen, E., 2010. CSR for HR: a necessary partnership for advancing responsible business practices. Sheffield, UK, Greenleaf Pub. Horrigan, B., 2010. Corporate social responsibility in the 21st century: debates, models and practices across government, law and business. Cheltenham, UK, Edward Elgar. Kotler, P., & Lee, N., 2005. Corporate social responsibility: doing the most good for your company and your cause. Hoboken, N.J., Wiley. Olson, E. G., 2009. Better green business handbook for environmentally responsible and profitable business practices. Upper Saddle River, NJ, Wharton School Pub. Urip, S., 2010. CSR strategies corporate social responsibility for a competitive edge in emerging markets. Hoboken, N.J., Wiley. Read More