Business Management: Social Responsibility and Ethics - Term Paper Example

Business Management (Social Responsibility and Ethics) Introduction In the recent past, many companies had viewed business ethics in terms of administrative conformity with legal laws and devotion to internal guiding principles. Currently, the situation has taken a u-turn. Business ethics have been given high attention world wide and a lot of companies have realised that for them to have good returns, they should earn respect and confidence of their customers. Corporations, professional firms as well as individuals are like never before being held accountable for their actions. This is due to the increasing demand for higher standards of corporate social responsibility. As a result, several business ethics theories have been developed. It is worth noting that accurate guidance of ethical principles is quite fundamental if business ethics is to comprise of a substantive discipline (Green 2004). The quest for such business ethics principles has given birth to a number of theories which have been tailored to suit the business environment. For the purpose of this paper, only two of these theories will be discussed. In addition, this paper will provide a basic definition of corporate stakeholder groups as well as corporate social responsibility and thereafter, the paper will describe how the relationship between a corporation and at least two of its stakeholder groups can be managed through corporate social responsibility activities. The paper will also anticipate some potential conflicts which might occur in the process of management. Body Business management has undoubtedly taken a new shape due to stiff competition in the business field. Business management generally involves getting all the concerned individuals together to bring about desired business goals and objectives. In basic terms, business management consist of planning, organizing staffing as well as directing a group of persons with an aim of accomplishing the desired goals of a business. Due to the undying quest for corporations to compete effectively and gain high rates of return, Corporate Social Responsibility (CSR) is becoming an essential or else a fundamental activity to businesses globally. Now that the world is increasingly becoming a global village and large business organisations serve as global providers, they (corporations) are increasingly acknowledging the benefits of making available Corporate Social Responsibility programs in their every division of the organisation. It is quite worthwhile to note that there is an increasing recognition of the immense contribution of the private sector on the society. The societies in this sense are employees, clients and customers, the communities, business partners in addition to shareholders and the government. It has become vividly clear that corporations can contribute significantly to their own returns as well as to the societal wealth by putting into consideration the impact they have world wide especially when making decisions. It is at this juncture that this paper describes what Corporate Social Responsibility (CSR) is. This term more often than not is used synonymously with a number of terms such as Corporate Citizenship, corporate social performance as well as sustainable responsible business and on other occasions; it is CSR is usually linked to the concept of Triple bottom Line Reporting (TBL). Triple Bottom Line Reporting is normally used as a scaffold for checking a corporation’s performance with regard to social, economic as well as environmental considerations (William and Freeman 2001). The concept of Corporate Social Responsibility has time and another been expressed in a several ways. Basically, it is about building protractible corporations which for sure require healthy economies, markets and communities. The essential drivers for Corporate Social Responsibility include the following: to start with, there is the enlightened self interest which involves creating a synergy of ethics, a stable society in addition to a stable global economy whereby markets, labour and the communities are in a position to function simultaneously. Social investment is the second key driver in the concept of CSR. It has been observed that corporations that have relentlessly contributed to physical infrastructure and social capital have made their customers to have confidence in them and thus tend to be attached to these corporations. Third in the list of key drivers of CSR is the issue of transparency and trust. Several surveys done on business transparency and trust have revealed that business has low ratings of trust and transparency in public perception. However, all is not lost since there is an increasing expectation that corporations will be a more transparent and trustworthy and hopefully more accountable and at the same time be ready to report publicly on their performance in economic, social as well as environmental fields. Last in this list is the increased public expectation of business. Internationally, corporations are expected to show an extended hand to the society other than providing jobs and contributing to the economy. They should be contributing to the welfare of the society as well. These are some of the fundamental drivers of Corporate Social Responsibility (Maxwell, 2006). In any corporation stakeholders must exist. This is anyone who has an interest or else a stake in what a certain entity does. The stakeholder groups may include the shareholders, the government, the senior management staff, non-managerial staff, various trade unions, customers and not limited to creditors and the local community. The above discussion has been outlining the concept of business management and to a large extent on Corporate Social Responsibility not leaving out the parties involved. It is at this juncture that this paper put this into perspective linking at least two theories of business ethics namely the stockholder and the social contract theories. It is worth noting that these two theories to a large extent present distinct as well as unsuited account of a business person’s ethical responsibilities, therefore, at most one of them can be correct. The first theory of discussion is the stockholder theory. According to this theory, business are merely arrangements by which a group of people, in this case the stockholders advance capital to another group, which is the managers, to be used to accomplish the set objectives and for which the stockholders obtain an ownership interest in their business enterprise. This shows that the managers act as the agents for the stockholders. It is worth arguing that the managers are given the power to run the money provided by the stockholders. However, they are bound by their agency relationship to manage the affairs of the stockholders solely for the interest defined by the principals of the stockholders. Additionally, the existence of this kind of relationship means that managers cannot have an obligation to expend corporate resources without the authority from the stockholders in spite of of any societal gain that could be amassed by their actions. In so doing, that corporate can have no social responsibilities. According to Dickens (2005) the stockholder theory also holds that mangers are mandated to follow the guiding principles of the stockholder strictly and whatever that they may be. It is worth noting that the stockholder theory has on several occasions been subjected to kind of hash critics by some business ethicists. They describe this theory as an outcome relic of corporate law. In addition to this, they argue that the theory contains myopic view of corporate social responsibility. Social contract theory is yet another theory in business ethics. This theory consists of a family of closely related theories. It is the most widely acceptable theory since it asserts that all corporations are ethically obliged to promote the welfare of society. This theory of business ethics is usually geared towards deriving the corporate social responsibility. It views the society as the one that gives the corporation the right to exist and thus in return, the benefits of the corporation should trickle down to the society. It is with no doubts that social contract theory incorporates Corporate Social Responsibility in business management, and supporting the stockholder theory would be unsound (Donaldson and Dunfee 2005). The potential conflicts that might occur between the stakeholder groups and the corporations may be cultivated by the various business ethical theories that are practiced by the corporations. Viewing this into perspective, corporations practicing stockholder theory have no room for the society other than contributing economically and offering employment. This paper feels that the society around these kinds of corporations may not be concerned or have any interest with these corporations. They may not feel attached to them. The society may have conflicting issues with these corporations which may lead to the closure of a corporation. Conclusion In conclusion, it is imperative that in business management, corporations should embrace corporate Social Responsibility (CSR) so as to cultivate saline business environment with the stakeholders. Corporations ought to put into place various Corporate Social Responsibility activities for their own benefit and that of the society. It only by using business ethics theories that benefit the society that corporation will gain better returns at the same time gain confidence from the stakeholders. References Dickens, H. 2005, Business ethics: A managerial, stockholder approach, Macmillan Publishers, Washington. Donaldson, T. and Dunfee, W 2005, Integrative social contracts theory: A conception of business ethics, Elsevier Publishers, New York. Green, R. 2004, The Ethical Manager, Prentice hall, New York. William, M. and Freeman, M. 2001, A stockholder Theory of the Modern Corporation, Peter Holt and others publishers’ Wessely. Maxwell, J. 2006, corporate social responsibility, Metropolitan book publishers, New York. Read More