Ethics concepts and applications

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:

Stakeholder's expectations

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).

Corporate Ethics

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 significant element. These values can be used to gauge how a firm is responsible or irresponsible toward business operations. The behavior of the firm shaped by its culture will determine the ethics in activities like quality of products and services, engagement of customers and workforce, and advertisement. The type of culture may affect the CSR either positively or negatively (Sabir & Malik, 2012).

Advances in Communication Technology

Communication is the bridge that connects an organization to its stakeholders. The information is acquired and the feedback relayed. Even though technology has eased the way information is exchanged, it is important to note that the advancement in technology has also led to the change in the content-form that communicates with the stakeholders and the public in general. Their activities are hence being monitored closely. The Organization's blog and social media accounts play a major role in ensuring that the required information reaches the target group through the use of the internet. The public therefore will only view the organization as being positive or negative depending on their stand concerning the CSR. The CSR, in addition builds the image of the company (AnyangoOoko, 2014).

The activities of the organization also always receive numerous comments directly with these advancement in technology from the customers thereby influencing the company's activities and culture toward socially responsible behaviors. The public opinion on a particular organization is today considered critical and act promptly with a view of satisfying the customers. The public can receive a company's information from various reliable and independent sources apart from relying on emails, letters, brochures, and annual reports (AnyangoOoko, 2014).

Organizational Stakeholders

The question "Responsibility to whom?" makes it difficult for many managers to come to terms with the corporate social responsibility. There are many sectors in a company's environment in relation to task. The organizations that have adopted the CSR view both external and internal environment as a part of the stakeholders. Stakeholders are people or group within or without the organization but interested in the organization's performance. Their interests with the organization are diverse and each one of them respond differently to the needs of the organization. A typical example is the Wal-Mart that is very aggressive when it comes to bargaining tactics with its suppliers for the sake of customers. This is only true with the suppliers who view it as a CSR as it benefits customers with suppliers being more efficient. Others also argue that this tactics of aggressiveness is unethical and not socially responsible because they cause the American companies to retrench workers, outsource from countries with low labor and, in extreme cases, close down factories. According to one of the suppliers, Wal-Mart sells clothes at a cheaper price that the U.S. companies could not outdo, even if the company were to pay nothing to its workers. Stakeholders are greatly affected by the performance of the organization as well as the stakeholders can also affect the success and performance of the organization (Daft & Marcic, 2006).

Stakeholder groups also influence the organizations. The primary stakeholders include customers, suppliers, investors, shareholders. Without these groups of people, the organization may fail to thrive. It is the managerial productivity that serves the interests of the suppliers, and shareholders using the available resources to make profits. The workers should be paid, well supervised, and the jobs they do should give them satisfaction while for customers, quality, product safety, and availability of goods and services are their main concern. In case of any dissatisfaction in one of the stakeholders, the viability of the company is in danger (Daft & Marcic, 2006).

Government and the Community

The community and the government are also significant stakeholders. The majority of the corporations are established under legal charter and licenses with which they operate. They must operate within the limits of environmental protection, safety laws, antitrust regulations formulated by the government. The local government and quality of life for residents, natural and physical environment are all members of the community. On the r other hand, Special interest groups (SIGs), which is another stakeholder comprises of associations, consumerists, professional associations, and political committees. The social activists realize and exploit the power of the internet in organizing the stakeholders and putting pressure on corporations demanding them to respect human rights and environmental concerns. For instance, the As You Sow foundation (AYS), has been using the internet to mobilize investors, and convince shareholders to participate in social reforms (Daft & Marcic, 2006). Persistently, the SIGs is one of the biggest shareholders that companies have to face. Today, the primary concern is about the damage to the environment as regards the practices adopted by businesses and the consequences on nature and environment (Daft & Marcic, 2006).

The organizations that are socially responsible have a good knowledge on how their actions influence the stakeholders and therefore tend to be more philanthropic and invest for the sake of the stakeholders. As an example, consequently, Bristol-Myers Squibb Company plays a very crucial, effective role in funding health facilities in Texas, Florida, and California, hire peer health counselors alongside peer educators, to help fight the type 2 diabetes among the Hispanic population (Daft & Marcic, 2006). In the present time, organizations have found themselves facing constant attacks from the activist. The forms of these attacks are varied while their implications are manifold and with far-reaching consequences. Again, the activism of the Social and environmental associations have significant influence on the company's CSR activities. As the activists always have support from other groups, it becomes difficult for the organizations to evade cooperating with them (AnyangoOoko, 2014).

The Ethic of Sustainability and the Natural Environment

In 1970, the first ever Earth Day celebration, where the majority of the mangers disregarded the environmentalists, by considering them extremists, was held. The managers could not see the need for environmental concern even though today it is a very critical topic for all industries. If a company does not want to be left behind, it must join the rest in environmental issues. Different phrases are used to denote the company's commitment to environmental obligations. The companies use a legal approach in doing the right or required activities. Obviously, in essence, the company and the managers have shown very little concern about the environmental issues (Daft & Marcic, 2006). The next approach is the market approach, which represents a growing concern about the environment with a view of satisfying the customers.

It does not necessarily mean that when a company provides environmental friendly goods or services, it does so because the management is strongly committed to environmental issues, but because of the pressure and demand by the customers. The stakeholders approach requires that the companies try to respond to the environmental needs of its shareholders like the community, special interests groups and business partners. Some of the companies that are partnering with the Environmental Defense in an attempt to reduce the greenhouse effect include; Shell, Ontario Power Generation, and Alcan Aluminum. The customers are the ones causing the movement by pressuring these companies alongside the communities where these industries operate. The environmental groups and government are together causing the companies to respond to gas emissions in the environment (Daft & Marcic, 2006).

Lastly, there are also organizations that are really trying to find the most appropriate way of managing the Earth's resources. The sustainable development is an idea that is widely being introduced globally to help in such matters. By definition, Sustainability is the economic development that creates wealth, and satisfies the needs of the present generation with keenness to the future generation's environmental affairs. They should also find ways to ensure that the environment that is not polluted, exploited unreasonably or depleted of its resources, and that they will hand down a clean environment to the coming generation. Mangers now integrate environmental and social concerns into every policy they formulate, any strategic decisions make, and all the procedures that would support sustainability and finally evaluate its progress toward the goals and objectives of sustainable development (Daft & Marcic, 2006).

Even though there has been impressive advancements, very few companies in the U.S. have implemented these sustainability principles. This is evidenced in their rejection of the implementation of the ISO 14001, which is an international environmental management system with the aim of enhancing the sustainability agenda. Policies, procedures, and systems must be put in place by firms in order to register as ISO 14001-compliant. This is aimed at reducing the organization's destructive effect on the natural environment. Creating wealth goes hand-in-hand with environmental preservations according to the principles of sustainability. A typical example is the Zip Car. They rent cars but do not involve paper work in their dealings. Along the same lines and towards concern for environmental issues, private car usage reduces emissions and at the same time reducing load on the country's transit (Daft & Marcic, 2006). '

The fight for a competitive edge

When a company is at its strategic level, there are high chances that it will realign its strategy to match the requirements of good business practices. This will give it a competitive edge resulting into its long-term success. Food companies are putting more efforts to ensure their customers are healthy, automobile firms strive to find an environmental safer forms of mobility, while pharmaceutical industries also struggle to incorporate health maintenance practices alongside their businesses and treatment of illnesses traditionally (Zadek, 2007).

The need for collective action

At times corporations have to elevate collective action to address societal issues. At times such issues are directly linked to a company's strategy. For example Diageo, SAB Miller and other top brewers are cognizant of that fact that many more countries will enact restrictive legislations if the brewers do not come together and help move the entire alcohol industry towards not only responsible marketing but also responsible practices by the customers. Among different activities, these firms have also included educational programs to promote drinking responsibly. Similarly, energy corporations come out strongly against how governments use the money that they pay in the form of royalties for oil and gas explorations. For instance, in Great Britain, most energy companies strongly support the UK's Extractive Industries Transparency Initiative that advocates governments to file the total funds they acquire from resource mining. Some corporations look much further ahead and consider meta-strategy: the future part of business in the communities they operate in (Zadek, 2007).

Societal Learning

Most individuals didn't think tobacco could be harmful to their health. Just a couple of years ago, obesity was widely thought to be a blend of genetics and unhealthy choices-positively not a responsibility of food corporations. Nowadays, ageism is not seen as CSR issue an argument that is consistent with the existing laws-yet in these days of fast changing demographics, it soon will be (Zadek, 2007). The trap, then, is for corporations to have the capacity to foresee and respond to society's changing cognition of specific issues. The task is overwhelming, given the unpredictability of the matters as well as stakeholders' unstable and sometimes under informed expectations about business' capacities and obligations to tackle societal problems. Numerous common advocates, for instance, trust pharmaceutical corporations should make life-saving drugs for the poor that can be sold at reduced prices; all things considered, the drug companies can bear the cost of it more than patients can do. The pharmaceutical industry has guaranteed throughout the years that such value limits would interfere with its research and improvement efforts. In any case, today, medication companies are investigating the manner through which to sustain research and development while pursuing value reductions in poor countries and how to coordinate the anticipation of sicknesses into their models of treatment (Zadek, 20007)

A Danish firm Novo Nordisk has made tool to assess societal learning. This tool was developed with the aim of solving issues at the core of the company's business; animal testing, hereditarily adjusted organisms, and access to sedate. The drug maker's methodology can be adjusted and utilized by any company confronting any issues which are frequently initially recognized through a company's associations with non-conventional sources of information, for example, activists. According to one of the company's senior director who manages its nongovernmental organizations, he sees (owing to this tool) the future for the market, the products and the business (Zadek, 2007).

Mutual Advantages of Collaborative Social Initiatives

Social initiatives are those that utilize a collaborative approach. In a competitive business environment, each partner will only benefit when the other one brings with it resources and other assets in a case where it cannot attain it on its own. These combined benefits gives the company an advantage to acquire, generate and build new systems from these capabilities hence generating innovative ideas to rapidly change the environment (Pearce & Doh, 2005).

Collaborative social initiatives help the companies to benefit from one another. Both of them may not be well organized to tackle the challenge on its own but each can contribute valuable resources like employees, professional services, talents, time, resources, organizational skills and knowledge. The participants exchange ideas, which are attractive due to their diversity and are important to both, not-for-profit and corporate partners (Pearce & Doh, 2005).

The essential proofs are in place that shows how corporate social activities are of great benefit exceeding reputation. Some participants also argue that they can be important tools to be used in attracting, developing and retain the managerial skills and talents. The PricewaterhouseCoopers' Project of Ulysses is a program that builds leaders from which a team is sent to the developing countries where they are expected to apply their professional skills and knowledge in economically challenging environments. They work collaboratively with intergovernmental agencies and community-based organizations. The PwC works in eight-week projects in; poverty-stricken communities, areas that are prone to conflicts and environmentally polluted regions. The Ulysses is a program designed in response to poor professional service delivery by firms. In addition, they also identify, train and come up with new, strong and intellectual leaders who are capable of transforming company structures (Pearce & Doh, 2005).

The need to address long-term challenges

The more observable instances of social challenges that usually demand attention in the coming years include; hunger, inadequate housing, poor quality education, ill health and environmental degradation. An organization's long-term obligation to any of those problems suggests that the issue is at the core of the organization; the organization ought to then build competencies to enable it to implement CSR policies while investing in those outputs. The importance to identify simple projects and shorter-term endeavors that can be completed via direct input from the company has also been noted. Dealing with hunger is a creditable objective, however it is too huge a goal for any single company to make any significant change (Pearce & Doh, 2005).

Avon Products Inc., the company that sells cosmetics and other beauty products provides a fine example of a long-term responsibility/commitment to a persistent and long-term problem. In '92, the corporation's Foundation, started a CSR project they named Breast Cancer Crusade in the UK. The project has, in the last two decades, expanded to over fifty nations. The money for the project is collected via sales of Avon products and other events organized by the Company, including charity walks.