Professional business and ethics

Is corporate social responsibility a way to cover exorbitant charges?

Since 1950, CSR has changed its roles in terms of meaning and practices and now its role is defined with respect to business and society. In this perspective, it is important to say that CRS is interested in solving business and society problems through raising ethical standards.  In other words, CSR play a significant role of ensuring the well-being of the community, stakeholders, employees and customers. It does this through employing diverse activities and initiatives. CSR uses a complex structure to develop the community through positive perspective and practice. Corporate Social Responsibility in organization play a  significant role  in maintaining development  through ensuring that  the organization is enjoying legal, economic, ethical and social benefits.  It is the role of organization to ensure that through the approach of CSR, stockholders, environmental groups, employees and customers comply with the law. Generally, CSR focuses on business ethics and presents an ethical judgment based on behaviors of   organizational members. CSR bottom line is using a multidisciplinary approach to develop the business, the civil society and the government and   to ensure that the three entities are in a better position.

For many decades, CSR has played a significant role in business development and growth. Apart from making profit, CRS has the role of considering business ethics and more important maximizing the shareholders profit (Hopkins, 2007). An important point to note is that CSR not only concentrates on economic and legal responsibility but also on ethical roles. In economic responsibility, CSR strives to meet the society’s demand and within the business it operates on profit-oriented basis and creates a clear mission of economic gain.  It also has the legal role of ensuring that the business is complying with laws and regulations so that it can create a positive reputation in the society. In order to meet the economic objectives, corporate complies with the legal responsibilities through manufacturing   perfect and legal products. Ethical responsibility means that the business should not focus on economic interest but should implement equity, respect and fairness in making decision (Hopkins, 2007). According to Harmony (2012) CSR program is set to meet environmental, governance and social needs and each category in this case reveals the role and responsibility of CSR. In environmental cases, CSR ensures that there are sustainability programs related with products, pollution and safety.  In social setting, CSR have special programs which are related with community welfare, diversity, employee rights and relations. In governance initiative, CSR ensures that the organization’s board of directors complies with rules and regulations and they show fairness, transparency and accountability.  Corporate governance works together with organization in ensuring CSR quality reports.  Harmony (2012, asserts that CSR is positively related with Corporate Financial Performance. The relationship is explained by two theories namely instrumental and stakeholders’ theory. The former asserts that effective financial performance is achieved as a result of stakeholders’ satisfaction. In addition, the shareholders desires is achieved when the corporate executives maximizes the organization efficiency. This means that stakeholders value the CSR since it determines the financial performance through meeting their desires. Next, the stakeholder theory asserts that CSR should first meet the need of stakeholders in order to maximize the organization’s value (Harmony, 2012).

 It is important to argue that CSR play a significant role in organization and particularly in financial performance. It is accountable and follows ethical standards following that managers supports the role of CSR and asserts that CSR programs contributes to organization’s competitive advantage hence creating the  organization reputation (Hopkins, 2007). In a transaction which involves outside companies and CSR, stakeholders enjoy higher financial performance as a result of CSR commitment, less scrutiny and investor loyalty.  CSR programs ensure that customers meet their needs and they feel a sense of self esteem as they are much valued. The most important point to note is that customers have self-actualization as they are provided with personal benefits which motivate their self-purpose of working in the community.  As a result of higher customer base, organization with CSR programs enjoys the benefits of competitive advantage (Hopkins, 2007). Other important role with CSR is sales maximization through increasing the customer base.  According to Hierarchy of Needs theory by Maslow, customers not only need quality product but also company’s reputation and quality CSR initiatives.  Thus, higher customer base helps the company to increase revenue and maintain the competitive edge in the global market.  Harmony (2012) goes on to demonstrate how CSR plays role in organization and asserts that there is a relationship between corporate social performance and employers attractiveness. The author asserts that a test through Quasi-experiments design was done and business students were asked to rank companies with respect to their normal status or profile. Then, they were asked to rank them with respect to the CSR programs. The findings showed that the undergraduate students would seek job in companies with CSR programs. This is because, both job seekers and employees like companies which complies with human rights, ethical standards and governance rules (Harmony, 2012). Such company improves employees’ performance, increases productivity and financial performance.

 

Prasnikar asserts that CSR in organization play importance roles associated with   social and environmental issues.  It offers accounting and consulting services with a purpose of minimizing adverse issues, improving reputation and investigating the payoff in different investments.  In business, it acts as the strategy of public relation in improving profitability (Prašnikar, 2006).  Other important point is that CSR has a responsible behavior as a result of creating socially responsible investing (SRI). SRI works together with investors by providing them with funds hence improving the financial profile on social indexes. The author asserts that the evidence as to why companies value CSR in financial performance and other roles is explained by different theories. First, the game theory asserts that firms try to maximize the political cost as a result of governmental investigations, company’s products and more.  In this case, CRS exposes the positive features of the company for the purpose of improving self-interest (Prašnikar, 2006). In addition, the stakeholders’ theory asserts that company builds a strong relationship with key stakeholders so that they can benefit financially. The legitimate theory also asserts that organization must comply with the society law and follow the right behavior. In setting its goals and objectives, it must value the society system in order to avoid legal and economic sanctions towards organizational legitimacy.  In this case, CSR discloses business information to the society so that they can define it as good or bad corporate citizen (Prašnikar, 2006).

 

According to Ismail (2009), CSR   positive behavior is explicit in community development as it ensures that there is cooperation and community welfare in the society.  CSR have initiatives for empowering community individuals through providing them with the necessary skills of bringing changes. They are empowered on utilization of resources and creation of social groups for building a strong community. In this process, community developers ensure that there is social justice and strong power structures in order to remove the impediments which affect life (Ismail, 2009). CSR provides opportunity, education and equality through showing accountability and commitment. In addition, CSR employs important strategies and process of sustaining community through creating social infrastructure and economic development in the community.  In other words, it is argued that CSR reinforces positive behavior by ensuring that community enjoys the organization benefit. In community development, the main purpose is to eliminate the detrimental and deplorable issues which affects the community and improves the society so that community can live in a solidarity community. In community development, CSR follows the universal principle which is directly related with human rights (Ismail, 2009). It ensures that the society benefits from finance advance, technology and market environment. It has the common goals of maintaining equality and combating corruption. It also connects community with corporation through providing funds for sustainable development. By helping the community, CSR creates a strong organization reputation and the positive status helps the organization in paying much commitment in creating profitability (Ismail, 2009). In addition, the responsible behavior motivates employees in improving performance. They holds a  positive attitude that customers are valued and should be given great services  and so  it is their responsibility to have the best interest.

 

 

Utilitarianism theory

With respect to utilitarianism theory, CSR play a significant role in economic development   and more importantly in profit maximization. In history of business ethics, it was found that it is important to have responsibility over the economy and in this case, utilitarian theory was applicable in business ethics since in the first place corporation was defined as wealth creation which could be achieved through social activities (Renouard, 2010).  The theory was derived from instrumental theories which concentrate on public control, personal responsibility and local community. The utilitarian theory holds two important factors which are gaining competitive advantage and employing altruistic behaviors which are socially recognized. The utilitarianism theory is divided into two groups which are social costs and functionalism. The former is related with the idea that CSR is involved in socio-economic system and in this case, they theory states the corporation should   improve social co-operation through complying with social rights and duties (Renouard, 2010). The latter, which is the functionalist theory, asserts that the corporation is an economic system and its main objective is making profit.  In this case, CSR ensures that there is equilibrium in the economic system and that the firm should create profitable environment which will benefit both investors and stakeholders (Renouard, 2010).  

Utilitarianism theory applies to CSR because first of all, it is important to note CSR means that the organization not only focuses on economic responsibility but also societal responsibility. CSR in its business operations goes beyond the economic responsibility and integrates in social roles where it involves employees, local communities, customers and other entities (West, 2004).  In order to meet the needs of all the entities, ethics is an important component   in executing the responsibility. Since it is clear that CSR focuses on positive behavior and follows the moral principle in business operations such as financial performance, utilitarianism theory focuses on the wrong and the right acts. The theory presents the main idea that the results on action are determined by whether the action is positive or negative. The theory   also asserts that the morality in an action has the main purpose of improving life by eliminating bad things and improving good things (West, 2004). The theory makes CSR actions explicit in that in business context, it ensures the well-being of the organization and community and prevents the negative issues which may bring adverse effects on their lives. CSR rejects unethical issues and focuses on ethical things which will create a meaningful life.  The rule of the theory focuses on utility maximization as it asserts that beneficial results can be achieved through complying with the rules.  It is also important to note that the theory pays intention on individuals and asserts that there should be “equal consideration on interest” (West, 2004).   In addition, people should follow the policies with impartial perspective and eliminate the self-interest.  Other important point is that the theory focuses on Act utilitarianism which means that   all actions should follow the principle of utility which is related with right action. It also focuses on rule utilitarianism which means that actions should follow the moral rule in order to produce more utility (West, 2004). The theory is applied in CSR since there is evidence that CSR follows moral and ethical issues in conducting company and society role. In normative perspective, there is a connection between financial performance and social performance in that CSR values the human dignity and protects the human rights.

Conclusion

CSR play an important role in developing economy and society. It acts beyond the legislative requirement to meet the prevailing expectations of community members.  In business operation, CSR reinforces fairness and equality and ensures that individuals live in a solidarity community.  Government acts as an external stakeholder and helps CSR in carrying out effective practices.  It ensures that there are ethical standards in business transaction and that the organization follows the regulatory structure. Focusing on utilitarian theory, CSR focuses on the right thing in order to produce positive results. The theory focuses on moral rules in human nature. It asserts that in order to maximize utility, people should follow the values of moral code and this is achieved through good actions. In addition, it asserts that people should focus on moral rules in order to produce beneficial results. Focusing on the CSR role in organization and community development, it is important to conclude that theory applies to CSR as it follows moral rules in moral codes and hence produces positive results.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference

Harmony Palmer J. (2012). “Corporate Socila Responsibility and Finacula Perfomance: Does it Pay to Be

Good?”.

 

Prašnikar, J. (2006). Competitiveness, social responsibility and economic growth. New York: Nova Science

Publ.

 

Ismail Maimunah (2009). CORPORATE SOCIAL RESPONSIBILITY AND ITS ROLE IN

COMMUNITY  DEVELOPMENT: AN INTERNATIONAL PERSPECTIVE. The Journal of

International Social Research Volume 2 / 9 Fall 2009

 

Hopkins, M. (2007). Corporate social responsibility and international development: Is business the

solution?. London: Earthscan.

 

West, H. R. (2004). An introduction to Mill's utilitarian ethics. Cambridge [u.a.: Cambridge Univ. Press.

 

Renouard Cecile (2010). Corporate Social Responsibility, Utilitarianism, and the Capabilities Approach.

Journal of Business Ethics. DOI 10.1007/s10551-010-0536-8