Corporate Social Responsibility and Business Ethics - Coursework Example

Student’s Name: corporate social responsibility and business ethics Instructor’s Name: Course Code & Name: Date of Submission: 1.0 Introduction Businesses are expected to be responsible to the society while undertaking their activities. They are required to undertake their activities ethically by having a concern to their employees and to the public. According to Moir (2001, p. 17) a business can only contribute to the society fully if its operations are efficient profitable and socially responsible. Corporate social responsibility requires the management of a business to lay down policies formulate decisions and follow processes that are beyond the legal requirements while undertaking its operations. This means that the business should be concerned in issues beyond its economic, legal and technical requirements. This is because of the fact that businesses rely on the society in order for them to excel. This essay will discuss the utilitarian ethical theory and also the effectiveness of codes of ethics in instilling ethical behavior in an organization. Furthermore, the paper will discuss the notion that companies are formed to make profits and not to be socially responsible.  2.0 Utilitarianism theory is the most useful ethical theory to guide company decisions 2.1 Ethical theories of decision making According to Fernando (2010, p.10.1) there are several theories that guide companies in making decisions. The theories provide the companies with professional standards benchmarks through which they can develop their decisions. Companies can utilize these theories in order to provide them with a model framework of ethical decision making. 2.11The utilitarian theory The utilitarian theory is concerned with ensuring that consequences and courses of actions benefit the greatest number of individuals without considering who those people are (Bibb 2010, p. 76). The concept behind this theory is that actions are viewed to be moral based on their outcome. The theory requires the decision maker not to favor family or friends when making decisions but to consider the interest of everybody Dion (2012, p.9) emphasizes that the utilitarian theory emphasizes on the consequences of the actions. 2.12 Rights theory This theory stresses on individual rights. According to this theory, ethical decisions should protect the moral and legal rights that are entitled to an individual (Fernando 2010, p.10.2). Individual rights include privacy, free consent and freedom of speech. These rights are morally justifiable because they are originated from the nature of individuals belonging in a community. This theory requires companies to make decisions by appropriately respecting the rights of others. 2.13 Justice theories The theory asserts that companies should be guided by equity, fairness and justice while arriving at their decisions. The theory requires all human beings to be treated equally. According to Coombs and Holladay (2011, p. 184) the theory examines perception of fairness about decisions being made by a company. 2.14 The virtue approach This theory holds that decisions should be consistent with certain acceptable moral virtues (Fernando 2010, p. 10.3). The theory holds the assumption that what is considered moral in a given social setting is not only what is considered normally approved as moral. According to this theory, the company is required to evaluate various options before making a decision. 2.15 The common Good Approach Ethical decision making requires companies to have compassion and respect for others and particularly to the vulnerable members of the society. Weiss (2009, p.115) argues that the common good theory require the management of a company to take into consideration the intended as well as the actual effects of their decisions. The company is expected to make decisions that share a common vision with the society and thus they benefit all members and they respect the differences that exist between individuals. 2.2 Ethical Decision making According to Fernando (2010, p. 10.3) a decision is considered to be ethical if it uses the criteria of utility, justice and rights. The utilitarian theory aims at considering the consequences of decisions. This means that the company considers whether the decision will be unjust or conflict the interests of the society. This is in line with the framework of ethical decision making which requires decision makers to begin by considering the consequences of their decisions. However, it is difficult to effectively determine the consequences of some decisions. Moreover, it is difficult to establish which course of action will provide the greatest benefit to the majority of people. Companies may find it difficult to define what entails best consequences when utilizing the utilitarian approach to make decisions (Bibb 2010, p.76). Due to the complexity that exists in the world, it may be difficult for companies to determine the consequences of their decisions on others. Weiss (2009, p. 114) notes that the notion of common good is not viable because of the fact that common good means different decisions for different individuals. Moreover, companies are established to succeed, therefore the logic of common good may prove to be a barrier towards making the company to be successful in its operations. This is because free riders may abuse this theory by requiring the company to base its decisions towards benefiting them. The common approach theory may make the company to share unequal burdens and sacrifices by basing its decisions on the common good. This is because not all company stakeholders will exert efforts to ensure the existence of common good. Determining who has the right is difficult for companies when making decisions using the rights theory (Spicer 1997, p.283). Moreover, determining what is right and what is wrong may prove difficult for companies given the unique rights that different individuals advocate for. The rights theory does not provide companies with the people to involve during their decision making process. On the other hand, the justice theory does not define what is to be considered fair and equal in making decisions. Companies may find it difficult to apply the virtue approach in making decisions due to the fact that different virtues end up conflicting with each other. Therefore, companies should utilize all the theories of making decisions because by using an individual theory, the company may face some challenges. This means that each theory has an equal importance in guiding companies during the decision making process. Pimentel, Kuntz and Elenkov (2010, p.373) argue that companies should consider all the theories in order to come up with accurate decisions in relation to different scenarios. 3.0 The aim of companies is to make profit, not to address social responsibility 3.1 Arguments against CSR Companies are formed to fulfill economic responsibilities by continuously increasing their profits as well as the returns they offer to their shareholders. According to Bacher (2007, p. 16) when companies undertake corporate social responsibility programs they donate resources in the form of money and working hours. The resources donated reduce the company’s profits and this means that the shareholders do not receive the maximum expected returns for their investments. The company is expected to provide the highest returns to its owners and thus it is required to focus on only generating profits. Therefore, the company should only concentrate on identifying profitable ventures instead of involving itself in social activities so as to ensure that it provides its shareholders with maximum returns. The company is formed to fulfill the financial needs of its owners and to do this it must contemplate on making profits and avoiding social activities. Companies are formed in order to meet the desires of the shareholders which are to specifically make as much profits as possible (Baron 2005, p. 1). It is unjustifiable for companies to utilize the funds that belong to the shareholders for social activities (Bacher 2007, p.16). Moreover, when companies engage in social responsibilities they may create a disadvantage to their suppliers by delaying their payments as well as reducing their employees’ wages in order to finance the social activities. This means that when a company focuses on making profits it creates justice to its stakeholders. Carroll and Buchholtz (2008, p.49) note that when companies engage in social responsibility programs they dilute their core purpose and that is to make profits. Engaging in social responsibility programs puts the company in field not related to its function. The increased global competition means that when companies engage themselves in corporate social responsibilities they put themselves at a disadvantage and this can cause them to collapse (Carroll and Buchholtz 2008, p.49). Engaging in corporate social responsibilities means that the companies incur more operational cost and this can make them to be less competitive hence the need for them to concentrate on making profits. Moreover, when companies involve themselves in social responsibility programs, they undertake activities they are not equipped in. This is because companies lack the necessary expertise required to undertake social activities hence they should only focus at their aim that is making profits. 3.2 Arguments for Corporate Social Responsibility Carroll and Buchholtz (2008, p.50) note that companies have created many serious problems to the society and the only way they can rectify this is by involving themselves in corporate social responsibility activities. Therefore, companies should not only focus on maximizing their profits but they should also be socially responsible. This is in order to ensure that they correct the problems that they may create in the process of making profits. Moreover, by rectifying the problems through social responsibility activities, the company is assured of its long term survival. Through social responsibility activities the company can ward off government regulation and intervention. According to Bacher (2007, p.17) government implements regulatory and legislative requirements on the companies in order to intervene in their operations. Engaging in social activities enables the company to set standards and policies to govern it and thus avoid government intervention. In addition, companies should undertake social activities because they possess the necessary resources. Companies should not only focus on making profits but they should also assist in solving problems faced by the society. Companies rely on the society so as to survive and thus the need for them to undertake social responsibility programs (Carroll and Buchholtz 2008, p.50). Through social responsibility programs the company is able to improve its image to the society hence this ensures its long term survival. Moreover, social programs provide an opportunity for the company to anticipate future problems. This enables the company to develop strategies in order to ensure that it remains profitable. 3.3Case for Corporate Social Responsibility According to Carroll and Buchholtz (2008, p.50) managers believe that companies are not only formed to make profits but to also contribute positively to the society. Engaging in corporate social responsibility enables companies to gain distinctive benefits from the society. This is because the companies depend on the society to provide markets for their products. Investing in corporate activities provides an opportunity for companies to build and gain competitive advantage. This cannot be achieved if companies only aim at making profits. Therefore, the aim of a company is not only to make profits but also to address social responsibility. This is because the company is part of the society and thus the need for it to assist in solving social problems. 4.0 Codes of ethics are the most effective method of instilling ethical behavior within an organization. 4.1 Methods of instilling ethical behavior 4.11 Selection Method McDaniel (2004, p.41) notes that one method of instilling ethics in an organization is relying on the selection and recruitment process in order to obtain employees who are desirable. This involves examining the applicants for absence of wayward behaviors and workplace integrity. Personality assessment tests can also be used to assist in identifying the desired employees. Personality tests assist the organization to gain a deeper understanding about the employee. Selection approach relies heavily on the employees past experiences and assumes that the employee will continue displaying similar behavior in future. However, this method is challenged because personnel administrators have varied intensity in relation to the priority of the characteristics that employees must possess and the fact that employees change. Moreover, ethics cannot be centrally used to analyze employee’s development and performance. 4.12Training method Organizations can also instill ethical behavior through training their employees. Natale and Fenton (1997, p.300) note that once employees are hired the company should focus on building and maintaining ethics among the employees. Training on ethics involves equipping the employees with ethics education, providing ethics support, ethics discussions and formal ethics course work. Murray, Lindsay and Irvine (1996, p. 395) note that training influences and reinforces the need for ethical behavior. This approach relies on continuously reinforcing desirable behavior in the organization. However, this method is questioned on the basis that it is impossible to change the behavior of individuals through training. Moreover, questions arise on whether ethics can be taught given the fact that some instructors are not by themselves ethical. 4.13 Code of ethics According to Pratt (2010, p. 350) a code of ethics describes the organization values and the rules of ethics through which it operates. The code of ethics states what the members in an organization are supposed to do and what they are not supposed to do. It states the prohibited behaviors and thereby it indicates the lowest level of behavior that is morally acceptable. In addition, the code of conduct states and provides a solution to the various types of interest of conflicts that the employees may face while performing their tasks. However, Condrey (2010, p.228) notes that the codes of ethics acts as a legal requirements rather than an ethical requirement. Moreover, an ethics code requires the organization to achieve unattainable objectives. Furthermore, the ethics code makes the company to stop focusing on performance and concentrate on relationships. 4.2 The most effective Method According to Condrey (2010, p.228) the code of ethics cannot be used alone in an organization with an aim of instilling ethical behavior among the employees. The code of ethics alone cannot address the ethical needs of an organization. This is emphasized by Embse, Desai and Desai (2004, p. 151) who note that having the ethical code of conduct does not guarantee ethical practices in the organization. Therefore, the most effective method of instilling ethics in an organization is by combining the three approaches that is selection, training and the code of ethics. Conclusion Corporate social responsibility requires organizations to have a concern for the society as well as their employees while undertaking their operations. In ethical decision making, companies should utilize all the theories in order to come up with the best decision. This is because all the theories are of equal importance. Companies are not only formed to make profits but also to assist the society because they are part of it. Finally, a company should utilize all the methods in instilling ethics among its employees because no individual method can stand by itself. References Bacher, C 2007, Corporate Social Responsibility, Grin Verge, Norderstedt Bibb, S 2010, The Right Thing, John Wiley & Sons, West Sussex. Carroll, A & Buchholtz, A 2008, Business and Society, South-Western Cengage Learning, Mason. Coombs, W & Holladay, S 2011, Managing Corporate Social Responsibility, John Wiley & Sons, West Sussex. Condrey, S 2010, Handbook of Human Resource Management, John Wiley & Sons, West Sussex. David, B 2005, ‘Corporate Social Responsibility’, Stanford School of Business, vol. 9, no. 6, pp. 1-32. Dion, M 2012, ‘Are ethical theories relevant for ethical leadership?’, Leadership & Organization Development Journal, vol. 33, no. 1, pp. 4-24. Embse, T, Desai, M & Desai, S,’ How well are corporate ethics codes and policies applied in the trenches?: Key factors and conditions’, Information Management and Computer Security, vol.12, no. 2, pp.146-153. Fernando, A 2010, Business Ethics and Corporate Governance, Darling Kindersley, New-Delhi. McDaniel, C 2004, Organizational Ethics, Ashgape Publishing, Burlington. Moir, L 2001, ‘What do we mean by corporate social responsibility?’ Corporate Governance, Vol.1, no. 2, pp 16-22. Murray , R, Lindsay, L & Irvine, V 1996,I‘nstilling Ethical Behavior in Organizations: A Survey of Canadian Companies’, Journal of Business Ethics, vol. 15, no. 4, pp. 393-407. Natale, S & Fenton, M 1997, Business Education and Training, University Press of America, Boston. Pratt, J 2010, Long Term Care: Managing Across Continuum, Jones and Bartlett Publishers, London. Pimentel, R, Kuntz, J & Elenkov, D 2010, ‘Ethical decision-making: an integrative model for business practice’, European Business Review, Vol. 22, no. 4, pp. 359 – 376. Spicer, C 1997, Organizational Public Relations, Lawrence Eribaum Associates Publishers, Mahwah. Weiss, J 2009, Business Ethics, South-Western Cengage Learning, Mason. Read More