Social Responsibility of Business Corporations - Term Paper Example

Integrating Values- The Legality, Morality, and Social Responsibility of Business Corporations Making Campaign Contributions in Exchange for Political and Legislative Favours Introduction Law, Morality, and social responsibility are the three main values that guide business organisations. These three values are the pillars upon which every business organisation is built. Law refers to legal regulations governing business organizations; according to online law dictionary, business law refers to the “laws that apply to business entities, such as partnerships and corporations” (law dictionary. Com). On the other hand, Business ethics refers to ethics as applied to the field of business or commercial matters. Every business organisation must have a code of ethics that serves as a moral compass for the business organisation. Corporate social responsibility on the other hand can be defined as the responsibility that a Corporation has, beyond economic and legal obligations, to act ethically and to contribute in a positive way to the good of the society (Trevino &Nelson). Corporate social responsibility requires that every business organisation contribute to the good of the society in which it operates. This paper looks at whether or not the common practice of corporations making campaign contributions in hope of political and legislative favours is in line with these three values of business organisations. In America, Politicians, especially presidential candidates are sponsored by big corporations in exchange for favourable legislations if the sponsored candidates win in the elections. The funding of the political campaigns by corporations is a controversial issue; some people are of the idea that the funding of the political campaigns by politicians is in line with the law, the ethics, and the social responsibility of business organisations, while other people are of the idea that the funding of the political campaigns by corporations is against the law, the ethics, and the social responsibility guiding business organisations. This topic is quite significant because the sponsoring of political campaigns has big influence in the American politics, i.e. without the corporations sponsoring politicians in America, many politicians in America, especially the presidential candidates would not be able to fund their campaigns. Background Information Before we explore the controversy of the funding of political campaigns by politicians, it is important to have background information regarding this topic. On the law and the funding of the political campaigns by the corporations, it is argued that since the law recognizes business corporations as persons, the business corporations have rights to influence the political process by sponsoring their preferred candidates. On the ethics of the practice of funding political campaigns by the corporations, it is argued that the practice is morally right because it is made in the interest of business corporations and that the action does not cause any harm to anybody. On the social responsibility, it is argued that the sponsoring of political campaigns by business corporations is a form of social responsibility because it can help the people from poor backgrounds to win political seats, thus impacting positively in the life of the members of the society. Legal Section Introduction to legal system The main aim of business law is to ensure that business organisations operate in line with the constitution of a country, without violating any of the fundamental rights of the members of the society. Unlike the business ethics and the business corporate social responsibility which are enforced through a corporation’s internal mechanisms, business law is enforced by the government, failure to comply by the business law can lead to lose of business licence, or the closure of the business organisation by the government. Statement of Relevant Legal Principles and Rules of Law The United States Constitution recognizes rights to free speech, free press, the right to freely assemble, and the right of the people to petition the government. The first amendment to the US constitution recommends that these are basic human rights that every member of the society is entitled to. These legal rights are the rights upon which the practice of funding the political campaigns by the corporations is based on (First US Constitution amendment, web). As we have already seen, the US Constitution recognizes the corporations as individuals with the rights that the first amendment to the US Constitution guarantees all the members of the society. But this idea of corporations as being persons with human rights is a topic of controversy and it has been challenged in the American Courts. In the case between the Bank of Boston versus Bellotti Court, the Supreme Court in US ruled that corporations have all the rights guaranteed to the individuals by the first amendment of the US Constitution (First Bank of Boston Versus Bellotti. Web.). In this case, the Supreme Court also ruled that corporations also have the right to influence political process and legislation. This Supreme Court ruling, therefore, set the precedence that Corporations have the rights to sponsor political campaigns in the US. In this case therefore, the Supreme Court in essence ruled that corporations are people under the US Constitution. For this reason, the US Congress is barred by law from making any legislation that would discriminate against the corporations because discrimination against anybody is unlawful in the US Constitution. However, despite the Supreme Court ruling on the legality of corporations as persons with full basic human rights, many people disagree with the legal view of Corporations as persons, and it has been argued that this view has made corporations to dominate the society, and to oppress the poor members of the society through their massive resources. Application of Law and legal analysis on the practice of funding political campaigns by the corporation, in exchange for favourable legislations As we have seen above, the law gives full rights to the corporations to influence political processes and legislations. For this reason, it is legal for the corporations to fund political campaigns with the view of benefiting from favourable legislations from the funded politician. However, due to the vast resources and the attendant big influence that the sponsoring of political campaigns by the corporations have on the America politics, it can rightly be argued that giving corporations the right to influence political processes and legislations is against democracy because, the corporations’ big influence will deny the majority the ability to elect their preferred political candidates. However, since the law recognizes corporations as persons with all the basic human rights that are entitled to the individual human persons, it would be illegal for the government to deny corporations the right to influence politics and legislations. Legal Conclusion In conclusion, the sponsoring of political campaigns by the corporations is in line with the law, as a value of business corporations. The US constitution approves the legality of sponsoring the political campaigns by the corporations. This therefore shows that the legality of sponsoring political campaigns cannot be contested on legal grounds, but it can be contested on the ethical grounds. Business Ethics Utilitarian Ethical Analysis As a discipline of stduy, Ethics is a branch of Philosophy. Traditionally, Philosophy has been defined as love of knowledge. Philosophy is a discipline that has truth as its subject matter. This therefore means that, unlike other disciplines, Philosophy is not limited to any particular element of reality as its subject matter, i.e. Philosophy is interested in the truth of the whole reality. To arrive at the truth of reality, Philosophy employs logic in investigating the root causes of things, so as to arrive at the objective truth. The four main branches of Philosophy are Logic, Metaphysics, Epistemology, and Ethics (Cavico & Mujtaba, 2009). As a branch of Philosophy, Ethics studies the nature of human beings, the place of human beings in the world/universe, and the relationship of human being with other human beings. Ethics is interested in the study of human conduct, with the view of giving recommendations on how human beings ought to behave. When Ethics is applied in the field of business, it is known as Business Ethics. As a discipline, Business Ethics covers the whole sphere of human conducts in business field, ranging from human relations with one another in business field, the objectives of any business, and even the manner in which people relate with their business or companies/corporations. Brief Explanation of Utilitarian Theory The utilitarian theory of ethics is a teleological theory of Ethics, i.e. the morality of an action is determined solely by the end results of the action, and not by the means used to do the act or the motive that prompted the action. In this view, what one intends to achieve in doing something or in taking a particular action is what can be either morally good or bad. The criterion for determining the morality of an action in the Utilitarian theory of Ethics is pleasure versus pain, i.e. an action is regarded morally right if it maximizes pleasure for the majority of people, and, conversely, an action is regarded as morally wrong if it causes pain to the majority of people (Cavico & Mujtaba, 2009). When applied to the field of business, the utilitarian theory hold that in determining the morality of an action in business, we should always be guided by whether or not the action will result in maximizing pleasure for the majority of people, or minimizing of pleasure for the majority people, the latter is morally wrong and the former is morally right. According to Cavico and Mujtaba, in determining the morality of the act of funding political campaigns by corporations, we should follow the following model (Cavico & Mujtaba, 2009). The first step is to accurately and narrowly state the action to be evaluated, in this case, the action here is funding of political campaigns by corporations in exchange of favourable legislations. The second step is to identify all people and groups who are directly and indirectly affected by the action. In our case, the people affected by the practice of sponsoring political campaigns by the corporations are the shareholders of the corporations, the individual politicians who are funded by the corporations and the general public because the sponsoring of the politicians by the corporations influences and determines in a big way those who win political seats. The third step is specify and determine in terms of pleasure and pain, the effects that the action will have on those who you have identified as being affected directly and indirectly by the action. In our case, the first group, i.e. the stakeholders of the company will be affected in both positive and negative ways by the action of the corporation of sponsoring political campaigns. The negative consequence to the stake-holders will be that the corporation will spend massive amount of money in such projects, and this will lead to extra expenses on the corporation. On the positive side, the funding of political campaigns can result to favourable legislations to the corporation by the politicians sponsored by the corporation. On the side of the individual politicians sponsored by corporations, the politicians will benefit a great deal because they will be able to campaign without financial constraints. To the general public, the sponsoring of political campaigns by corporations can have both negative and positive effects. On the negative effects, the funding of political campaigns by corporations can compromise democracy because of the big influence that corporations have in the political processes. On the other hand, the sponsoring of the political campaigns by politicians can be advantageous to the members of the public, for it can enable the poor people with good leadership skills to win political seats. These therefore are the direct and the indirect consequences of sponsoring political campaigns by the corporations, to all those who would be affected by the action. The fourth step is to measure for each affected group, the good consequences against the bad consequences, and determine which predominates for each of the affected groups. In our case, we would measure, first, the good consequence and the bad consequences of sponsoring political campaigns by the corporations to the stakeholders of the company and determine which predominates between the two. Secondly, we would measure the good and the bad consequences of the action to the individual politicians who are sponsored by the corporations, and then determine which predominates between the two. And lastly, we would measure the negative and the positive consequences of the action to the general public, and determine which consequences predominates between the two. The fifth step is to quantify the good and the bad consequences of the action to each group affected by the action; the quantification is done on a numeral scale of -5 up to +5, representing units and extremes of pleasure and pain. The sixth step is to sum up all the good and bad consequences of each of the groups affected by the action. In our case, we would sum up the good and the bad consequences of the funding of political campaigns by the corporation, to the stake-holders of the corporation, the individual politicians sponsored by the corporations, and lastly to the general public. In the seventh and the last step, if the action results in an overall positive number, the action produces more good than bad, and it is therefore a morally right action, on the other hand, if the action results in an overall negative number, the action produces more bad than good, and the action therefore is morally wrong. Moral Conclusion Pursuant to Utilitarian model An application of this utilitarian model to the practice of funding political campaigns by corporations will show that the practice is unethical. This is because a comparison of the negative and the positive consequences of the action to the stakeholders of the company shows that the negative consequences predominates, this is because the chances of a sponsored political candidate winning and influencing legislations are quite minimal. Secondly, the fact that the practice of funding political campaigns by corporations compromises democracy shows that the negative consequences of the action to the general public predominate. This fact therefore shows that funding of political campaigns by the corporations is unethical. This view, however, is a controversial issue and different people have different opinions on it. Kantian Analysis Emmanuel Kant’s theory of Ethics is known as the deontological theory of Ethics. In this theory of Ethics, Emmanuel Kant believed that reason and acting with a sense of duty is the foundation of morality. For Kant, reason is the foundation, the content, and the force behind any moral law (Cavico & Mujtaba, 2009). Immanuel Kant believed that moral actions are rational for they are supported by reason, while immoral actions are irrational, for they are not supported by reason. Immanuel Kant therefore believed in the existence of a moral law, that is supported by reason, and that binds humanity. For Immanuel Kant therefore, moral actions and ends are achieved through proper application of reason in ethical issues (Cavico & Mujtaba, 2009). Emmanuel Kant, therefore, differed with the proponents of the utilitarian theory of ethics on the basis of morality. According to the utilitarian theory of ethics, the basis of morality is human beings pursuit for happiness, while for Immanuel Kant, the basis of morality is reason and sense of duty. In his deontological theory of ethics, Kant emphasised the importance of duty, and he argued that one is morally obligated to do their duty, irrespective of the consequences of their actions. This fact therefore shows that unlike the utilitarian theory of ethics that bases the determination of the morality of an action on the end results of the action, Kant bases the determination of the morality of an action on the duty, i.e. an action is morally right if it is done in fulfilment of one’s duty, and it is wrong if it is contrary to one’s duty (Cavico &Mujtaba, 2009). Emanuel Kant also saw all ordinary human beings as being capable of differentiating the right and the wrong actions, thus being capable of acting in a morally right way. For Kant therefore, morality does not require special training in order for people to be able to act in a morally right manner. Emmanuel Kant expressed this idea clearly in his categorical imperative. Categorical imperative is a central principle in Kant’s deontological theory of ethics. The Categorical Imperative Kant conceived the Categorical imperative as the thought process that human beings use in order to arrive at a moral judgement ( Cavico, & Mujtaba, 2009). Kant understood an imperative as a command, or an unavoidable obligation. There are two types of imperatives according to Immanuel Kant, the Hypothetical imperative and the Categorical imperative. According to Kant, an imperative directs and instructs one on how to act in moral issues. The main difference between the hypothetical imperative and the Categorical imperative lies in the fact that, while the hypothetical imperative outlines the necessary actions to be taken in order to achieve a certain results or end, the Categorical imperative is a command to act in a certain way irrespective of the consequences. For Kant, human morality is governed by the Categorical imperative. Kant argued that actions are either morally right, or morally wrong, and that there is no middle ground on the morality of actions. For this reason, the morality of an action cannot be determined by the consequence or the end result of the action. For this reason therefore, Immanuel Kant saw human morality as being governed by the Categorical imperative, i.e. the command to act in a certain way, irrespective of the consequences of the action. In his Categorical imperative, Kant gave three standards that an action should conform to, for the action to be regarded as morally right. First, the action must be possible to be consistently made into a universal law, applicable to all such moral situations, under the same circumstances (Universal Law Test). Secondly, the action must respect human beings as ends in themselves, and not as means to some ends (Kingdom of Ends Test). Thirdly, the action must respect the autonomy of human beings as rational beings, and the action must be acceptable to rational beings (Agent-Receiver Test). Application of the Three Tests of the Categorical Imperative to the Practice of funding political Campaigns by the corporations, in exchange for favourable legislations To begin with, an application of the Universal law test to the practice of corporations sponsoring politicians in exchange for favourable legislations shows that the action cannot be consistently made into a universal law. This is because the sponsoring of political campaigns by the corporations in exchange for favourable legislations is in some instances a form of bribery. Also, as we have already said in this paper, the funding of political campaigns by the politicians is a threat to democracy. For this reason therefore, this action does not pass the universal law test. Secondly, an application of the kingdom of ends test in our topic shows that the sponsoring of political campaigns by the corporations in exchange of favourable legislations does not treat human beings as ends in themselves, but as means to some ends. This is because the act of funding political campaigns by the corporations is actually a mean by the corporations to achieve their objectives, i.e. the politicians are used by the corporations as means of making legislations that are favourable to the corporations that sponsored them. For this reason, this action does not pass the kingdom of ends test. Thirdly, the application of the agent-receiver test on the practice of sponsoring of political campaigns by the corporations in exchange of favourable legislations shows that the action does not pass the test. This is because this practice is a form of bribery, and for this reason it is not acceptable by rational beings. Kantian Moral Conclusion As we have seen in this paper, the main basis of Kantian deontological theory of ethics is reason and sense of duty. Kant is of the view that we must always fulfil our duties, irrespective of the consequences of our actions, as long as we are guided by the right reason in all our actions. Kant also gave the three tests to guide us in determining whether an action is morally right, or morally wrong. An application of the three tests to our topic has shown that the practice of sponsoring political campaigns by the corporations in exchange for favourable legislations does not pass any of the three tests. This fact therefore shows that this action is morally wrong. Additional Ethical Analysis My preferred additional ethical theory of ethics for analysis is the Aristotelian Virtue Ethics. According to the Virtue theory of Ethics propounded by Aristotle, the sole determinant of the morality of an action is the doer of the action. The theory holds that the character formation of the doer of an action determines whether the action that the person does is morally right or wrong. A good character in a person is formed through constant habituation to good or virtuous acts (Nicomachean Ethics, book 11, chapter 1). On the other hand, a bad character in a person is formed through habituation to bad or vicious acts. When a person with a good character, a virtuous person, acts, their actions flow from their good character, and therefore, the actions are always virtuous/morally right. When a vicious person, a person with bad character, acts on the other hand, their actions flow from their bad character and the actions, therefore, are vicious/morally wrong. In moral dilemmas, a virtuous person would spontaneously choose what is morally right, through the help of their good character. When applied to the business field, the Aristotelian virtue theory holds that the moralities of actions done in the business organizations are determined by the character formations of those who make the decisions. For example, the morality of actions and decisions made by the managers of a business organization will be dependent on the character formation of the managers of the business organization who make the decisions. Application of Aristotelian Virtue Ethics on the practice of funding political campaigns by the corporations, in exchange for favourable legislations An application of the Virtue ethics on the funding of political campaigns by the corporations in exchange of favourable legislations shows that the morality of this action will be determined by the character formation of the parties in the decision. If the managers who make such decisions have good characters and they make the decision for the good of the business corporation and for the common good of all people, then the funding of the political campaigns by the corporations is morally right. Also, if the politicians who seek funding from the corporations have good character formations and if they seek the funding for the common good of the society, and if the funding will not influence them to make legislations that will not be in the interest of the whole society, then the funding of the political campaigns by the corporations is morally right. On the other hand, if the managers of the corporations who make such decisions have bad character formations, and if they make the decision to fund certain politicians for selfish interests, then the funding of the political campaigns by the corporations is morally wrong. Also, if individual politicians who seek funding from corporations have bad character formations, and if they seek the funding for selfish and bad motives, then such funding of political campaigns by the corporations is morally wrong. Overall, however, the practice of funding of the political campaigns by the corporations is morally wrong from the virtue ethics point of view because, the main motive behind the funding of the political campaigns by the corporations is to influence the politicians to make legislations that would favour the corporations that funded them. Such legislations are often not for the common good of all the members of the society. This fact therefore shows that, from the Virtue Ethics point of view, the practice of funding of the political campaigns by the corporations in exchange for favourable legislations is morally wrong. Conclusion to the Ethics Section In conclusion, the practice of funding of the political campaigns by the corporations in exchange of favourable legislations is a controversial moral issue. The position that one holds in this issue is largely dependent on the theory of ethics that one has subscribed to. The three theories of ethics that we have looked at in this paper give three different criterion of judging the morality of an action. An application of the three theories of ethics to the common practice of the corporations of funding political campaigns of certain politicians in exchange of favourable legislations has shown that this practice is morally wrong. This fact therefore shows that, although the funding of certain politicians by corporations in exchange for favourable legislations is legal, the practice however is unethical from the perspective of the three theories of ethics that we have explored and applied in this case. Having looked at the legality and the morality of the practice of funding certain politicians’ campaigns by the corporations in exchange for favourable legislations, let us now look at whether or not this practice is in line with the Corporate Social Responsibility. Social Responsibility According to Cavico and Mujtaba, Social Responsibility is a standard which demands corporations to work for the social and economic betterment of the society as a whole (2009). This means that it is possible for a corporation to have a social responsibility, even in the absence of moral and legal responsibilities. Under the Corporate Social Responsibility business value, corporations are required to contribute to the betterment of the economy, the society, and the ecosystem, while maintaining a balance between them all (Cavico & Mujtaba, 2009). Corporations therefore should be careful lest they spend too much of their resources on social responsibilities, resulting in the financial strains in the corporations and eventually closure of the corporation. This can be a form of social irresponsibility because it can cause harm to the economy. Corporations therefore are expected to balance between being socially responsible, and at the same time ensuring that the resources spent on social responsibilities do no cause financial harm to the corporation. Application of the Social Responsibility Definitional principle to the topic in question An application of the Social Responsibility on the corporate act of making campaign contributions to the politicians willing to return legislative favours shows that this act is actually a form of social irresponsibility. This is principally because, with the American nation being a democracy, any action that is against the principle of democracy is a form of social irresponsibility. Democracy demands that the voice of the majority should never be muffled. As we have already seen in this paper, when a corporation contributes to the campaigns of politicians in exchange of legislative favours, such an action undermines the voice of the majority, and it is therefore against democracy, and ultimately a form of social irresponsibility. Social Responsibility Recommendations Since the corporation act of contributing to the campaigns of some politicians with the aim of getting legislative favours in the event that the funded politicians wins in the election is socially irresponsible, corporations should look for better means through which they can execute their social responsibility mandates. For instance, corporations can contribute in the education of children from poor backgrounds; corporations can also make contributions in the conservation and the preservation of the environment. Social Responsibility Conclusion In conclusion, the application of the principle of social responsibility to our topic in question has shown that the corporation act of contributing to the campaigns of the politicians, from whom it expects legislative favours, is a form of social irresponsibility. This is because the contributions by the corporations make the corporations to have a lot of political influence, thus muffling the voice of the majority. This fact therefore shows that corporations should look for better means of executing their social responsibilities. Conclusion In this paper, we have seen that the Law, the Ethics, and the Corporate Social Responsibilities are the three values on which the actions and the decisions of corporations are supposed to be based on. The law value guides the business organisations in conforming to the law or the constitution of the country where the business operates. Business Ethics, on the other hand, acts as a moral compass for the business organisation. Lastly, the corporate social responsibility principle guides business organisations in contributing to the betterment of the societies in which they operate. Every business act or decision, therefore, should conform to these three values. In conclusion, an application of these three values guiding business organisations has shown that the corporate act of contributing for the campaigns of certain politicians with the aim of getting legislative favours has shown that this action is in line with the law, but it’s against the business ethics, and also against the corporate social responsibility. In my view, corporations should desist from such actions because it is a form of bribery. To make their voice heard and to get the favourable legislations that they need, corporations should use other legitimate means rather than using the unethical mean that is against the interest of the whole society. References Aristotle. Nicomachean Ethics; Aristole; Ethics. ( Robert Crisp, trans). Google books.( n.d). Retrieved on. 08-05-2014. From. http://www.archive.org/details/TheNicomacheanEthics Cavico, F.J, & Mujtaba, B.J.(2009). Business Ethics: The Moral Foundation of Effective Leadership, Management, and Entrepreneurship. USA: Pearson Custom Publishing. First Bank of Boston Versus Bellotti. Web. First US Constitution Amendment. Web. Trevino, L.K, & Nelson, K. (2011). Managing Business Ethics. USA: John Wiley &Sons. Read More