Corporate Social Responsibility and its Contribution to the Framing of Business Ethics - Essay Example

of the Business of the Concerned 7 December Corporate Social Responsibility and its Contribution to the Framing of Business Ethics Corporate Social Responsibility pertains to the way a business takes into consideration the social, financial and the environmental impact of the decisions taken by it (Anderson Jr. 2006, p. 4). The concept of Corporate Social Responsibility has assumed much relevance and importance over the years because of an apt realization on the part of the varied stakeholders associated with businesses are they managers, employees, investors or costumers that economic growth is unavoidably linked to the overall social and environmental well being (Anderson Jr. 2006, p. 4). Thereby, Corporate Social Responsibility tends to be a pivotal issue for the organizations that tend to do business in a sustainable way. Though Corporate Social Responsibility is a concept that is affiliated to voluntary actions on the part of businesses, still, in the current times there has been a soaring pressure on the businesses to extend positive contributions to the societies and communities in which they operate, and at a minimal limit the negative impact of their business activities (Fall 2003, p. 205). The governments the world over have been formalizing the salient aspects of Corporate Social Responsibility, particularly those that are related to environment. One salient attribute of the Corporate Social Responsibility is the need on the part of the businesses to affiliate to the ethics prevalent in the socio-economic context in which they operate (Smith 2008, p. 183). Thereby any viable idea of Corporate Social Responsibility is complete without affiliating to business ethics. Hence, the pivotal question is that does allegiance on the part of businesses to the concept of Corporate Social Responsibility also contributes to the framing of business ethics? Do businesses and firms that abide by the dictates of Corporate Social Responsibility also stick to the societal and economic notions of business ethics? Though many a times people tend to hold the concept of Corporate Social Responsibility and business ethics in the same context, yet, the fact is that Corporate Social Responsibility and business ethics happen to be two different concepts (Gilbert 2008, p. 110). The primary objective of a business is to garner profits for its shareholders and owners. However, the onus of generating profits does not mean that a corporation could do anything to facilitate these pecuniary motives. Therein comes in the concept of Corporate Social Responsibility and business ethics. Many a times the concept of Corporate Social Responsibility and ethics is used interchangeably (Kline 2005, p. 239). The thing that needs to be understood is that the term Corporate Social Responsibility pertains to the acceptance on the part of a business of certain salient social obligations. For instance it is not binding on the part of a business to extend employment opportunities to the physically challenged and other sidelined sections of the society. Still if a business extends employment to the physically challenged people, it constitutes the recognition of a social obligation on the part of a business and comes within the ambit of Corporate Social Responsibility. However, when one considers the concept of business ethics, things get a little confusing and difficult When it comes to business ethics, it is not merely about the recognition of certain salient social obligations on the part of a business (Joshi 2012, p. 148). Business ethics are not a concept that the businesses could adhere to on the basis of voluntary initiative, but rather they pertain to the actual conscience of a business (Marcoux 2006, p. 51). The ethical behaviour on the part of a business pertains to recognition on the part of that business as to what is good and right. Inculcation of an ethical behaviour on the part of a business pertains to a formal recognition on the part of a business as to what it can do, and what it cannot do because it happens to be unethical. Business ethics ascribe to a commitment on the part of a business to do only those things that are deemed to be ethical and that facilitate the well being of all the associated stakeholders. Thereby, if Corporate Social Responsibility is the acknowledgement on the part of a company of certain salient social obligations, ethics constitute the very character and conscience of a company (Marschke 2008, p. 108). For instance there are things that are good for the society, but are not good for business and this is where the notion of Corporate Social Responsibility comes in. On the other side there are things that are good for a business, but are not good for the society and there in comes the concept of business ethics. The thing that needs to be understood is that the corporations can adhere to the ideals of Corporate Social Responsibility, while doing things that are unethical (Sims 2003). For instance Enron happened to be a corporation that was considered to be a champion of corporate social responsibility and community engagement. Yet, the company while being true to the dictates of Corporate Social Responsibility, simultaneously indulged in fraudulent and unethical activities and Enron Scandal is an apt example of the fact that the corporations could engage in unethical behaviour while engaging in Corporate Social Responsibility (Keller 2002). The other example that comes to mind is that of Parmalat that engaged in community welfare and donated large funds to restore old frescoes at Parma Cathedral, certainly a valid gesture in tandem with the dictates of Corporate Social Responsibility (Stanwick & Stanwick 2013). However the very same business resorted to unethical behaviour by diverting huge sums of money from the publically held Parmalat to the businesses owned by the Parmalat family. Once the difference and verity between Corporate Social Responsibility and business ethics is recognized, one does need to ask whether the concept of Corporate Social Responsibility could provide ideas and ways for the framing of business ethics. Are there any overlapping elements between the pragmatic concept of Corporate Social Responsibility and the more ideological notion of business ethics? The limited way in which the concept of Corporate Social Responsibility is interpreted by businesses and academicians, does not contribute much to the overall understanding regarding business ethics (May, Cheney & Roper 2007, p. 8). In that context the concept of Corporate Social Responsibility turns out to be a merely new way of referring to business-society relations. Thereby to facilitate a confluence between Corporate Social Responsibility the companies and businesses need to take a broader view of Corporate Social Responsibility (McManus & Webley 2013, p. 32). In that context coming out with a definition of Corporate Social Responsibility that takes the notions of ethics in its ambit is becoming more of a challenge. The businesses are increasing viewing the statutory provisions regarding Corporate Social Responsibility as a compromising of their capacity to act while the governments around the world feel that the corporations are not doing enough to take care of their responsibilities that come within the ambit of Corporate Social Responsibility. The debate over a viable definition of the Corporate Social Responsibility began at the beginning of the 20th century and the businesses are still vague about a definition of Corporate Social Responsibility that is considerate of ethical obligations. In a saner perspective, Corporate Social Responsibility pertains to a commitment on the part of the businesses to act in a more ethical manner, and to add to the economic development in the societies and communities they operate in while bettering the quality of life of their workers and the communities and societies in which they operate (Skare & Golja 2013). Hence Corporate Social Responsibility is an obligation that the businesses are expected to take care of in the environments in which they operate and function. Corporate Social Responsibility is about a responsible and ethical way of doing business. In that context though ideally speaking the businesses does not need to be pressurized to take care of their Corporate Social Responsibility associated obligations, yet many a times some businesses have shown that they need to be pressurized to act in a more ethical manner and to take onus of their Corporate Social Responsibility associated duties and obligations (Ludescher & Mahsud 2010). The pressure to behave in a more open and ethical manner is exerted on the businesses by a range of stakeholders like the media, consumer groups and the governments agencies to behave in a more responsible manner amidst the environments in which they act and function (Ludsecher & Mahsud 2010). In that context it does need to be mentioned that globalization has immensely empowered the multinational corporations and businesses and has made the developing and third world economies very vulnerable to the unethical practices on the part of businesses (Drori, Meyer & Hwang 2006). For instance the way the businesses work and operate in the developed economies like the United States of America or the UK happens to be quiet different as compared to the way they operate in developing economies like China and India. In that context the Corporate Social Responsibility related obligations could facilitate the framework for a more ethical behaviour only if the concerned bodies of opinion like media, consumer groups and governments make it a point to make it mandatory for the multinational and local businesses to be more considerate towards their environmental obligations and towards the communities and societies in which they function (Huang 2012, p. 641). With the increase in awareness of the masses in both developed and developing nations, people today evince a great interest in the way businesses operate and as to whether they are caring of their ethical and moral obligations or not. For instance the recent Primark scandal where the company procured goods from the overseas suppliers that employed children and immigrants and made them work amidst risky and hazardous circumstances, it was the pressure exerted by the consumer awareness groups and the media that pushed the Primark to embrace its ethical commitments and to blacklist the suppliers that used child labour and low paid immigrants to manufacture the goods that were supplied to Primark (Hickman 2009). Corporate Social Responsibility involves being concerned about the mandatory and vital obligations like allowing the employees to work amidst the conditions that are safe, healthy and comfortable, extending contributions and help to the local organizations and groups involved in community welfare, taking care to protect the surrounding environment from the bad effects of the production associated activities undertaken by the businesses, and to play a proactive role in the welfare and betterment of the communities amidst which the businesses operate (Martin, Petty & Wallace 2009, p 11). Thereby in an idealistic context, Corporate Social Responsibility does help in framing of an ethical way of doing business. Especially more so in the developing nations where the governments lack the means to provide the basic amenities to the people, the businesses can do much within the ambit of their Corporate Social Responsibility to promote ethical business practices and to operate in a manner that is safe, ethical and environment friendly. When it comes to corporate social performance, companies need to take care of two salient aspects of their business; one pertains to the quality of management of a business both in the area of the associated processes and people, and the other as to the magnitude and nature of impact that a business has on the society in which a business operates (Fitzpatrick 2013). In the current times the thrust for ethical and responsible behaviour does not merely emanate from within the businesses, but in the current times the outside stakeholders do take much interest in the way businesses operate and as to how committed they are to their ethical responsibilities (Theaker 2004, p. 89). Thereby it would not be wrong to say that the Corporate Social Responsibility has emerged to be an unavoidable aspect of the process of wealth creation, which if managed in an ethical and responsible manner should not only enhance the profitability of the businesses, but also adds to the development and well being of the societies in which businesses operate. In that context, corporate social responsibility does help in the framing of business ethics because it is primarily about integrating economic, environmental and social considerations in the associated decisions making processes and structures of a business. A responsible approach towards Corporate Social Responsibility is about dedicating resources and efforts towards the task of caring about social, environmental and business obligations. It is about soliciting the inputs and cooperation of the shareholders and the internal and external stakeholders for the more professional management of the associated risks and ushering in an element of credibility and responsibility into the businesses (Gupta & Sharma 2009). The other way in which the corporations could facilitate the framing of business ethics is by ushering in an attitude of transparency in the way they act and behaves. The corporations evincing a serious approach towards Corporate Social Responsibility simply do not afford to ignore the need for transparency and accountability because they not only happen to be the valid precursors of an ethical approach, but rather also happen to be the catalysts that drive sustainability performance (Smith 2008). The very commitment of being accountable and open towards Corporate Social Responsibility obligations like carbon emissions, community impact and employee turnover not only make the businesses think hard as to whether they are taking care of their Corporate Social Responsibility obligations, but also facilitate a more committed and dedicated affiliation to business ethics and morals. The other thing is that a commitment to the Corporate Social Responsibility imperatives of accountability and transparency accrues multiple benefits to the corporations like a positive and healthy brand image, the trust of the associated internal and external stakeholders, which could go a long way in countering reputational risk in the moments of crises. Being open about their policies, procedures and outcomes makes the companies more committed to the ethical prerogative of being responsible for what they do and the decisions they take. For instance take the example of BP which instead of being open about its environmental initiatives spent huge sums of money in building a green image (Smith 2010). However, once it became public that BP’s actual commitment to the cause of renewable energy is negligible it harmed the company much in terms of accruing a negative brand image (Smith 2010). Though Corporate Social Responsibility and business ethics tend to be two different things, yet in practical terms they happen to be the two sides of the same coin. The measures taken by the businesses to cater to their Corporate Social Responsibility obligations, automatically sets in a business environment that makes way for the framing of business ethics. An extensive understanding of an approach towards Corporate Social Responsibility broadens the world view of companies and businesses and makes them more committed to the imperative of acting and behaving in a manner that is ethically valid and sound. 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