Ethical Responsibility of Corporate America
Many organizations strive to increase their profit margins by doing everything possible (including unethical practices) to increase their revenues. Nevertheless, the past three decades have seen some organizations embracing CSR (Corporate Social responsibility). This idea has become significantly important to almost every organization that seeks to increase revenues. Corporate social responsibility is also referred to as community responsibility, stewardship, corporate sustainability, corporate responsibility, accountability and corporate ethics among others. In essence, CSR enable organizations to bring in people and the environment into their decisions, strategies and plans (Anyango Ooko, 2014).
In this paper, the use of the term corporate social responsibility will mean a set of actions by enterprises that are geared towards meeting the legal, ethical, economic, and discretional responsibilities that the stakeholders expect them to fulfill. They should undertake the economic obligations of producing profits, and meeting the consumption requirements of the people; legally, they are expected to fulfill the economic duties, and mission within the legal boundaries; the firms’ ethical obligations are to follow the moral of good conduct defining behaviors in society while the discretionary concerns are non-mandatory actions expected by the stakeholders (Anyango Ooko, 2014). The foundation of CSR is compliance with the laws and regulations that show commitments and duties of an organization. The values, strategy, operations, and decision-making entails the environmental, social and economic concerns of the public and different stakeholders of an organization. The organization must be transparent, and accountable while creating wealth, improve community and enhance good health (Anyango Ooko, 2014).
The Corporate Social Responsibility (CSR) and Corporate Governance (CG) management system aims at defining, understanding, and improving the balance between ethical practice and business. The organizations must show their competence to both the stakeholders and investors. Again, they are required to comply with the requirements of emerging CSR and CG agendas. Moreover, the managers and the directors of the organization should operate their enterprises in a more profitable way and still be responsible for their decisions. The greatest challenge ever for most organizations is to find solutions that sustainably address their TBL (Triple Bottom Line), that is, environmental, economic, and social aspects of their performance based on the discussions with their stakeholders (Castka, Bamber & Sharp, 2005).
Holding businesses responsible for CSR
It is known that many companies do not implement CSR simply because they consider it waste of money and resources. Additionally, the organizations that claim to follow it consider it a burden too, and they invest little financial resources just to abide by the government requirements. Nevertheless, some environmental aspects may compel organizations to venture into CSR activities to survive in the competitive business world and remain relevant. In addition, failure to comply increases the risk of business disruption (AnyangoOoko, 2014).
The environment within which the organization operates is interrelated. It comprises of governments, investors, employees, insurers, shareholders, financial institutions among others and it is fair for a business to give back to the public where it operates. This is the sole objective of CSR. The need to conduct an environmental assessment forces businesses to start CSR projects. Opportunities and threats are appraised against the indicators of strengths and weaknesses in the global business arena. The environmental analysis takes into consideration, the changes in both, internal and external environment. The CSR therefore, forms the basis for this assessment. A firm that just focuses on increasing its profit margins would not have the kind of success that organizations that contribute to the society’s well-being and build their prosperity by streamlining their organizational strategies and functionality to environmental, ethical, economical, and social sustainability. Such organizations that have CSR policies are the ones that survive the challenges of business world eventually (AnyangoOoko, 2014).
Factors that affect the implementation of corporate social responsibility
Many studies have been done on the importance of CSR to the economic stability of organizations. However, today, scholars have shifted their attention to the stakeholders of corporate governance (CG), ethics, trust, and CSR accountability in the economic conduct. Many experts argue that not many studies have been conducted to investigate why a company would act in socially irresponsible manner. Moreover, most studies only investigate the link between the financial performance and CSR showing on how CSR impacts financial performance instead of finding out the drivers of corporate governance and corporate social responsibility (AnyangoOoko, 2014).
There is still room to research on the reasons as to why the adoption of the CSR differs from country to country contrary to focusing mainly on what shapes CSR. In addition, CSR has gained much attention from the multinational and multidivisional managers and chief executives across the globe. The demand by stakeholders, the standards, and norms of business, and regulatory bodies for CSR also differ across the nations. Stakeholders including communities and societies demand ethical, economic, legal, and discretionary responsibilities from firms. Communities and societies have general expectations of social legitimacy from the government (AnyangoOoko, 2014).
There are three levels that is, individual, societal and organizational, and two approaches in which the CSR is categorized. To start with, individual level examines ethical attitudes, ethical decision-making, and characters like the how values and attitude towards environmental and social stewardship relate. Secondly, the organization level is concerned with decision-making, leadership and strategy, corporate governance, organizational behavior and management of stakeholders among others. The most significant aspects of business ethics and CSR literature include ethical culture, code of good conduct, the type of business, sanctions, size of the organization and rewards. The third is the social level, where the issues relate to the growth of the community and its development, human rights, policy and regulations, social sustainability development, public concern and well-being, as well as culture and humanity (AnyangoOoko, 2014).
Normative and prescriptive are the two approaches applied to CSR and business ethics. The normative approach outlines philosophically-based moral duties and normative rules, and prioritizes moral values while the empirical approach describes and shows how behaviors influence the process of ethical decision-making (Anyango Ooko, 2014).
There is too much pressure on the executives to take part in the social responsibility without interfering with their duties that enhance the value of the shareholders. Presently, the executives whose primary focus is on maximization of profits faces strong criticism as they try to overcome the violent antagonistic protests of the current time (Pearce & Doh, 2005). The following factors affect the CSR:
The stakeholders’ concerns about the firm depend largely on the size of the firm. This also affects the level of association between the firm and the organization. Stakeholders closely monitor big companies like the smelting and chemical production industries since they are considered more dangerous to the environment and natural resources. On the contrary, small businesses have been not empowered to look into these matters of social responsibility. The size of the organization, therefore, defines the extent of its corporate social responsibilities involvement (AnyangoOoko, 2014).
The risk levels, share profit performance, and profitability are directly influenced by superior environment. The public companies are required to give a report concerning social risk assessment and plans on environmental incorporation in their strategies for investments. With this in place, customers and stakeholders feel encouraged to continue partnering with the company in its attempt to realize its goals and objective (Anyango Ooko, 2014).
The organizational ethics also have a great impact on the CSR. This is because the morality of the business is tied with the values of ethics in the way a company does business. The society expects a firm to have certain characteristics that demonstrate its moral behaviors in carrying out the business. The firm should listen to its stakeholders whenever there is a complaint concerning immoral labor practices as well as environmental policies. Similarly, ethical motivation acts as guide to the organization to do the right things on their own, without any pressure from both the customers and the government (AnyangoOoko, 2014).
The values, beliefs and norms of organizations identify them with the environment it operates in. Corporate ethics influence the corporate social responsibility of an organization. This is a major motivator for organizations to engage in CSR activities. The implication is that their own business ethics and moral obligation organizations influence it to give back to the stakeholders (AnyangoOoko, 2014).
Contrarily, there is an assertion by some studies that a company will only take part or adopt the CSR principles if it is commercially profitable, and its agendas are socially inclined. In addition, conforming to the social performance expectations of a given society leads to the achievement of social responsibility. The nature of the organization or its management influences the firm to indulge in the CSR in the business environment, because corporate social responsibilities are apparently charitable and optional. Sometimes an organization may decide to undertake a proactive action on the issues of ethics without any unnecessary pressures to act as it is flexible (AnyangoOoko, 2014).
To add on the same, the culture of the firm that is, assumptions, values, and beliefs held by its members is a…