Whats a Business For - Essay Example

Running Head: ETHICS ASSI 2 Ethics Assi 2 Name Institution Date Corporate social responsibility Introduction Corporate social responsibility refers to methods used by companies in managing their business activities so as to make an overall impact to the society it operates in. Most companies are focusing their activities on the quality of their management in terms of people and their internal processes, and also on the nature and quality of their impact to the society. This is because the stakeholders are keen on the business activities both internal and external. The stake holders want to know how the business is doing in terms of employees, its products and its impact on the external environment. Social responsibility therefore refers to the responsibility of the organization to maximise its positive impact to its stakeholders and minimise its negative impacts (Mullerat, 2009). However, there are several debates concerning corporate social responsibility as analysed in this essay. Debates on Corporate social responsibility Debates on social responsibilities for corporations have been there for several decades. This started in 1950s with ideas that businesses should focus on more than just maximising their profits. The debates widened in 1960s and 70s due to issues such as poverty, unemployment, pollution and may other social issues. Since then several corporations have realised the need for taking this responsibility over their society which must also be balanced with the demands of the global business economy. However, there are other critics who argue that businesses should only focus on their main mission which is maximization of profits and returns to the shareholders (Crowther, & Rayman-Bacchus, 2004). Critics of Corporate social responsibility One strong critic of corporate social responsibility is an American writer Milton Friedman. Friedman says that responsibilities can only be taken up by people. He says that a corporation is an imitation of a person and therefore it should bear artificial responsibilities. He explains that it is the businessmen who should bear responsibilities or the proprietors. He believes that businesses are trying to defend free enterprise when they claim that businesses have social responsibility on top of maximising their profits. But according to Friedman, in a free enterprise, the corporate executive has responsibility over his employer who is the owner of the business. His responsibility is just to manage the business following his own desires and make as mush profits as possible. This is as long as he conforms to the rules of the society which are contained in the ethical customs (Friedman, 2000). Accordingly, if the corporate executive decides to take responsibility over the social issues, he may therefore be spending his employer’s money for the interest of the society. Such actions will therefore reduce the profits of the business and the returns to the shareholders. This might even result to increased prices to the customers and low wages for the employees. Such actions should therefore be done using the executives own money. The argument of Friedman can be called a classical view of a business and its functions which is described as follows: economic activities should be distinguished from other activities and they should be geared towards economic goals of the business, the performance of the business should be primarily be measured according to its growth in production of goods and services. The main goal of the business should be to make profits and that other social issues should be done by non business organizations (Banerjee, 2007). Another criticism of social responsibility was by Adam Smith. He believed that most people are only interested in themselves and that only wish to be famous. However, according to him these are the traits that contribute to a successful nation. In his book, the Wealth of Nations, he does not support the idea f approval by others as a necessity to succeed in the business industry. In his “invisible hand”, Smith states that there is a God who leads the world into maximization of human happiness and has therefore created human beings in such a way that they can act to their maximum happiness. This leads to a though that we can also be happier if wealthier. Therefore human beings should work so that they can become wealthier and happier. Smith is therefore for the idea that businesses should be focused on making more profits to achieve wealth and eventually happiness. Supporters of Corporate social responsibility On the other hand, there are other writers who argue that corporations must have a sense of social responsibility. They further argue that the level of social responsibility should be in consistence with the maximization of profits. This therefore calls for foregoing of some measure of profits, or an extra mile for non economic purposes. The supporting writes states that corporations are growing so wide and becoming powerful such that they cannot be restrained by market forces or government regulation. This indicates that they can be able to take up the social responsibility and still make profits. Other writers such as Norman Bowie argue that corporations have a social responsibility in enhancing the well being of its citizens since they create employment that is also necessary for their increased production. Due to financial crisis that are there in urban places due to rural urban migration and loss of government revenue that can support communities and schools, corporations should come in and assist in such situations. Such help can assist instead of lay offs by the government to save on the government budget (Bowie, 2002). A review on corporate social responsibility by Charles Handy in the Harvard Business Review explained that a business can serve the poor people in the world and at the same time make profits. This can be achieved by aligning the goals of the business with social initiatives. This can also promote community sustainability alongside the corporate growth. The review found several ways in which corporations can take up the social support and also follow up its profit margins. For example, in support for community welfare, a firm can hire workers in the community who will work in support of both the organization and their community. This will benefit both the community and increase the productivity of the firm. Charles Handy based his support for corporate social responsibility on moral and economic reasons. On moral reasons, he says that all groups in the society should work towards making life better and adding value to it. Since business exist within a certain society, they therefore rely on those societies. They cannot prosper if they isolate from the society. This is because they rely on the same infrastructure as the society, they get employees from the society and the society also offers the consumer base. This means that the organization must go beyond making maximum profits and the best returns to the shareholders for the sake of its interdependence with the society (Handy, 2002). On economic reasons, he argues that corporate social responsibility entails all features of daily activities within the organization. Every activity that is carried out within the organization relates with one aspect of its stakeholders, and the businesses should therefore work towards pleasing its stake holders. Success within a business organization is contributed to by the strength of its brand. Therefore, all operations in a business must be in line with the needs of the stakeholders since they contribute to building the brand name. For example, it is important for people to have confidence in a certain corporation for it to survive in the competitive global market. This confidence can be achieved by ensuring a good image to the society. A good image can therefore be created by proper relationship with the members of the society and recognition of their needs. Corporations may also have impact on the environment in which they are operating in. agricultural activities may lead to release of chemicals into the rivers, and also may result to environmental degradation. Pollution is a community concern which should not be left unresolved. A corporation cannot therefore do business in an area, causing pollution that affects the community members and fail to take the responsibility (Schwalbach, 2010). My position on corporate responsibility My argument is for organizations to take up corporate social responsibility. One of the reasons as to why I support this is that it is very important for any society to feel an impact of a corporation that operates within it. It does not seem patriotic for an organization to operate within a certain area and no benefits are felt. This is because operations of the organization must be felt by the members of the society. For example, a production industry must produce noise that may disturb the community members, they may also be using roads that belong to the society and this must be felt by the members. The organization must therefore address the concerns of the society such as unemployment, environmental pollution and poverty. Another reason is that for a corporation to enjoy a peaceful working environment, they must please those around them. One of the factors that they may enjoy by doing this is security. A society that has high rates of environment and high levels of poverty can have high levels of criminal behaviours that lead to insecurity. Therefore, for a corporation to enjoy security from the society, it must address the causes of insecurity. Unemployed young men may be a security threat to businesses since they are needy and have no job. They may therefore not allow the corporation to operate in a secure environment. A poor community may also be a threat since they will always be seeking for help from the corporation. If the corporation is not willing to help them, they may turn into stealing. Another reason as to why i support corporate social responsibility is for its importance in expansion of a business. A corporation may feel that in its current position it can ignore the responsibility but this may hinder its expansion in the future. A business may wish to take up another line of production, or expand its facilities. When not in good terms with the community, the organization may lack support required in terms of land, labour and infrastructure. This is because most of these are obtained from the nearby community. If the corporation has not addressed the problems in the community, it may be difficult for them to expand. Since corporate social responsibility also involves the welfare of the employees, they are the key to success of any organization. The organization should therefore take the responsibility of the employees not only when they are in the work place, but also outside the organization. It is therefore important for a corporation not to assume its corporate social responsibility for the sake of its future (Werther, & Chandler, 2010). Impact of my position on managers Managers who care about the impact of their activities upon the environment in which they operate must therefore take the responsibility over the communities living there. This will have several benefits which include sustainable development. Sustainable development can be achieved when the organization meets the needs of its stakeholders. An organizational manager must ensure that his organization’s activities are in line with the needs of the community members. A manager who only cares about the needs of his organization which are profits and returns to shareholders cannot go far in its sustainability. This is because during the operations of the organization, there will be arising needs which might need the intervention of the community members. A manager who has showed responsibility over the community may also enjoy peace in his activities. This is because he will be having good relationship with the society and they will also give him support in times of need. A responsible manager must however care about the environment since the community members are also relying on it. He must ensure that the corporation does not cause environmental pollution or does not do anything that is of health threat to the community members. Threatening the well being of community members may lead to undesirable consequences to the organization. The members of the community may use forceful actions against the organization such as looting and this might reduce the production level of the organization (Idowu, & Filho, 2009). Managers who are concerned about the society may also enjoy security that is provided by the community members. When they provide employment to idle men in the society, they will have peace and may be offered protection from criminals in the society. Addressing the poverty levels in the society may also help the organization to enjoy its benefits. This is because people will not keep coming to seek for help. Since several activities of the business may have negative impacts to the community, the manager should reduce the negative impact by addressing the issues that trouble to community members. Basically, corporate social responsibility involves reducing the negative impacts of the business activities in the society. The organization must therefore consider ways of reducing impacts of pollution that comes from its activities and also any other impact they may cause to the environment (Kotler, & Lee, 2005). Conclusion There have been so many debates over the issues of corporate social responsibility. Corporate social responsibility should not be ignored by any organization that is operating in whichever society. This is because it is important for sustainability of the organization. Failing to take up the responsibility is being unfair to the society since operations of any organization must have an impact to the environment. However, the government should also ensure that it offers protection to corporations that take up the social responsibility. It is however important for the success of any corporation. This because corporate social responsibility is a mutual benefit where the society will benefit from resources such as labour and infrastructure from the community and the community will also benefit from employment, security and other benefits. Organizations should therefore look at their roles beyond making profits and better returns to their shareholders, but also on taking responsibility over the society. References Handy, C. (2002). ‘What’s a Business For?’ Harvard Business Review, Vol. 80, No. 12, pp. 49- 55. Friedman, M. (2000)‘The Social Responsibility of Business is to Increase its Profits’, Ethical Theory and Business, 8th ed., Eds.New Jersey: Prentice Hall, 56-60. Bowie, N. (2002). The Blackwell guide to business ethics. New York: Wiley-Blackwell. Mullerat, R. (2009). International Corporate Social Responsibility: The Role of Corporations in the Economic Order of the 21st Century. Texas: Kluwer Law International. Banerjee, S. (2007). Corporate social responsibility: the good, the bad and the ugly. Cheltenham: Edward Elgar Publishing. Schwalbach, J. (2010). Corporate Social Responsibility and Stakeholder Dynamics. Mannheim Gabler Wissenschaftsverlage. Idowu, S. & Filho, W. (2009). Professionals’ Perspectives of Corporate Social Responsibility. New York: Springer. Kotler, P. & Lee, N. (2005). Corporate social responsibility: doing the most good for your company and your cause. New York: John Wiley and Sons. Werther, W. & Chandler, D. (2010). Strategic Corporate Social Responsibility: Stakeholders in a Global Environment. London: SAGE. Crowther, D. & Rayman-Bacchus, L. (2004). Perspectives on corporate social responsibility. Brookfield: Ashgate Publishing, Ltd. Read More