Analysis of Theoretical Principles in the - Wine a Tasty Way to Support Social Development - Article Example

Analysis of Theoretical Principles in the Article “Wine a Tasty Way to Support Social Development” Introduction This essay is about an analysis of two theoretical principles related to the article titled “Wine a tasty way to support social development”, written by Mallory Clyne. The two theoretical principles that are apparent in the issues discussed in the article are values and identity and corporate governance. The essay is thus structured as follows: the first section will discuss the issues pertaining to values and identity as identified in the article while the second part will dwell on matters in the article relating to corporate governance and related theories such as corporate social responsibility (CSR). The final part of the essay is a summary of the issues highlighted in the article by Mallory Clyne in terms of their relevance to the aforementioned theoretical principles. First theoretical principle: Values and identity A value is defined as a lasting belief that a particular mode of conduct is individually or socially preferable to a mode of conduct that is in the contrary (Davis 2003, p. 5). A company’s values, or corporate values, can be seen as the cornerstone on which the company is built since they are the principles that the company believes in. In the article by Clyne (2013), the issue of values is evident when the writer notes that corporations are becoming cognisant of the fact that they must come up with new models of business that care for others in the environment in which they are operating in order for them to be successful. For instance, according to Clyne (2013), the new business models must be centred on respecting the rights of human beings, remunerating fairly, and being socially and environmentally sustainable. Essentially, when leaders of organisations set values that reflect the issues identified by Clyne (2013), they are defining the identities of those organisations. Identity can defined as an organisation’s employees’ understanding of the organisation’s central and considerably permanent characteristics that distinguish it from other organisations (Finney 2008, p. 50). For instance, if employees and other stakeholders know that a certain company respects its employees, pays them fairly and competitively, and is socially and environmentally sustainable, they will attach high value to the company and this consequently affects the identity of the organisation. As noted by Finney (2008, p. 50), identity is projected to the external world of an organisation and is reflected back to the company by the company’s customers and consumers, and it is ultimately interpreted by members of staff as elements of image. For instance, a company that has respect for human rights, pays its employees fairly and competitively, and is socially and environmentally sustainable can be said to be adhering to international requirements such as those stipulated by the United Nations Global Compact. The United Nations Global Compact has ten principles touching on four key areas: human rights, labour, the environment and fighting again corruption (United Nations Global Compact n.d.). An organisation that realises the need to come up with new responsible models of business by being involved in the various activities that are significant to different stakeholders as outlined by Clyne (2013) can be said to fulfilling the requirements of the United Nations Global Compact, and will thus have a high reputation at all levels of business including national, regional and international. This is because when an organisation adheres to the principles of the United Nations Global Compact, it can be seen as a responsible organisation that aims at meeting best practice requirements (Smith 2010, p. 90; Huffman & Klein 2013). Another issue that is evident in the article by Clyne (2013) in terms of values and identity is the involvement of companies in charity activities. Clyne (2013) has argued that in general terms, the involvement of the private sector in development only starts with charity. Charity can be regarded as part of organisations’ CSR initiatives. CSR is defined by the World Business Council for Sustainable Development (WBCSD 2002, cited by Amao 2011, p. 68) as the “commitment of a business to contribute to sustainable economic development, working with employees, their families, the local community and the society at large to improve their quality of life. Getting involved in CSR activities means that an organisation engages in activities that concern its stakeholders other than those aimed at increasing profits and those that it is obligated to engage in by law. The significance of CSR activities, such as the charity activities that organisations such as Lush Cosmetics and Tim Hortons Coffee Partnership are involved in (Clyne 2013), is that they are in one way or another linked to organisation’s values and identity. Corporate identity is said to include corporate ethos, aims as well as values that add to the making of an organisation not only different from others but also competitive (Mallin 2009, p. 14). Closely related to this is an organisation’s decision on the type of CSR initiatives it can take. As noted by Mallin (2009, p. 14), an organisation can define its identity through its CSR initiatives, and the aim of this is to identify the corporate values and the commitments that it purports to fulfil towards its stakeholders. Despite this, it is also argued that more often than not, a firm’s identity and that of its CSR initiatives are not the same (Ledwidge 2007, p. 27). This is so because in many cases, CSR is viewed as a requirement, but one that is just supportive as opposed to being an integral component of an organisation’s core strategy (Ledwidge 2007, p. 27). In view of this, it can be argued that only those organisations that align their identity with the CSR initiatives are likely to be successful, which is the point that seems to have been put forward by Clyne (2013) in the article when she mentions the need for organisations to develop new business models that focus on respect for human rights, fair remuneration, and being socially and environmentally sustainable. Second theoretical principle: Corporate governance The article by Clyne (2013) also portrays issues to do with corporate governance and CSR and shows the interrelationship between the two concepts. Corporate governance is concerned with the way in which the management of an organisation manages and controls the organisation and also relates with the organisation. On the other hand, CSR is concerned with the effects that the activities of an organisation have on the social, economic and environmental aspects of the surroundings in which it operates. Both corporate governance and CSR enable organisations to operate gainfully while at the same time acting in a socially and environmentally responsible way to attain business sustainability as well as satisfaction for stakeholders (Rosam & Peddle 2004, p. 3). This point is clearly outlined by Clyne (2013) when the author argues that there is a notable trend of organisations capitalising on a busy person’s pragmatism by mixing consumerism with charity. That is, organisations want to make their customers feel that they can also contribute to developing the society when they buy particular products. By donating part of what they make from their customers to charity, companies are showing that it is possible to mix profit-making with involving stakeholders in initiatives that take care of the society at large. According to Clyne (2013), a number of organisations have been involved in different activities that help the society in different ways. These include Lush Cosmetics which contributes part of its sales to charities across the world and Tim Hortons Coffee Partnership which supports coffee farmers. Another example is the Wine for the World initiative which ensures that wineries in South Africa hire local people and train them to gain experience comparable to American winemakers' knowledge. There is also the Durbanville Hills Winery Trust which helps in improving the quality of life of poor South Africans by donating a percentage of the sale price of each bottle of wine. This trust also supports rural schools and provides funding for children to go through their high school education. Further, another initiative by the Land of Hope provides funding for children’s education. These examples show how companies are donating resources to help poor people in the society, training employees to attain international quality standards – which makes them employable across the world, and supporting schools in rural areas to ensure that children who would otherwise not be able to access education get an opportunity to do so. The link between the various CSR initiatives outlined by Clyne (2013) and corporate governance is that corporate governance determines the CSR activities that an organisation can partake. According to Aras and Crowther (2009), good governance is good public relations, and it is important in all spheres of the society, including business. The same authors point out that when resources are too limited to cater for the minimum expectation of the different stakeholders of an organisation (which is usually the case in most organisations), it is an efficient level of governance that can help to promote the welfare of the society. As such, enlightened organisations are acquainted with the point that there is a clear connection between corporate governance and CSR and make efforts to link the two. From the information presented by Clyne (2013), it can be noted that the various firms which engage in activities to help the society are not necessarily giving out what would be deemed as their excess resources. Rather, it is through meticulous planning that they decide on which programmes to fund. The managements of these firms also take their time to plan how they will raise the funds to support the various initiatives, and it is these planning and decision making processes that fall under corporate governance. From a profit-making perspective, these firms would be aiming to use the resources that are available to increase their shareholders’ earnings, but instead, they choose to donate some part of these resources to improve the livelihoods of the people around them and even others in other parts of the world. Importantly, the fact that some firms donate directly from the proceeds of their sales means that the managements of these organisations want to appreciate the role played by their customers since the more customers buy their products, the more they are able to donate to and aid in the development of the society. Clyne (2013) also shows that corporate governance and CSR are not just about management of resources and helping the society. There other areas of business such as human rights that organisations must respect, and these are usually outlined in companies’ corporate governance policies as well as CSR initiatives. For example, organisations must respect and support the protection of internationally recognised human rights (Tullow Oil Plc 2014; Redmond 2012, p. 603; Balachandran & Chandrasekaran, 2009, p. 51; Smith 2013). These rights include but are not limited to those of employees, local communities, contractors, suppliers, business partners, security forces, as well as governments (Tullow Oil Plc 2014). Companies for instance need to conduct environmental and social impact evaluations and involve communities in identifying possible human rights groups’ concerns and assess ways to proactively deal with them. They also need to ensure that their employees work in safe conditions, are remunerated fairly, that they avoid engaging underage workers, that they do not use forced labour, and so forth. It is only when organisations have efficient corporate government systems that they can meet these obligations and thus actualise the working of new responsible business models as suggested by Clyne (2013). The responsible business models which are also in accordance with recommendations of international organisations such as the United Nations Global Compact since they involve paying attention to human rights, labour standards and sustainable business. Conclusion In conclusion, the article “Wine a tasty way to support social development” by Clyne (2013) highlights a number of issues related to the theoretical principles of values and identity and corporate governance. The values and identity concepts identified are related to the point that organisations are striving to come up with new business models that revolve around issues such as protection of human rights, remunerating fairly, and being socially and environmentally sustainable. It is how such organisations attach value to these issues, such as through the CSR initiatives that have been identified, that in turn determines how they establish unique identities. In regard to corporate governance, it has been noted that good corporate governance strategies determine the CSR initiatives that firms can undertake and how to fund them. For instance, the governance system in place can decide to involve customers in CSR initiatives, which is exemplified by the donating of proceeds from sales to support community initiatives in the various cases highlighted by Clyne (2013). References Amao, O 2011, Corporate social responsibility, human rights and the law: multinational corporations in developing countries, Routledge, Oxon. Aras, G & Crowther, D 2009, Global perspectives on corporate governance and CSR, Gower Publishing Limited, Surrey. Balachandran, V & Chandrasekaran, V 2009, Corporate governance and social responsibility, PHI Learning Private limited, New Delhi. 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