Business Ethics and Corporate Social Responsibility: When Corporate Values Must Be Upgraded a Few Notches
The business realm has always been famous for its competitive and uncompromising environment, as well as the unethical avenues that some businessmen undertake in order to profit within the shortest amount of time.
However, in the XXI century, with the advent of corporate social responsibility (Hanson, 2010, October 1), the emphasis seems to have been shifted onto questioning the moral dimensions of the actions undertaken by the company, as well as the corporate behavior principles adopted in the company in question. Hence the necessity to follow the key principles of business ethics emerges.
By introducing clear and strong business ethics concepts, as well as implementing the principles of corporate responsibility within an organization, a business leader can expect not only a steep rise in the company’s performance and profit but also a considerable enhancement of the employees’ motivation and satisfaction (As You Sow, 2013b).
Even though the principles of ethical behavior in business have been in use for quite a while, there are still debates concerning the definition of the term. In fact, the very concept of ethical behavior in business has been considered an oxymoron for quite long (Crane & Matten, 2010, 4).
According to what Sauser (2005) claims, ethics is linked directly to behavioral patterns; therefore, ethical behavior is “characterized with respect to certain contexts” (Sauser, 2005, 345). Despite the vagueness that the phenomenon of ethical behavior in a business setting is surrounded with, Sauser manages to provide a definition for it, claiming that business ethics is an “extent to which one’s behavior measures up to societal standards” (Sauser, 2005, 346).
Therefore, Sauser basically denies the existence of business ethics as an independent phenomenon and relates it to ethics in general. However, there are other ways to look at ethical behavior. For example, Murphy defines ethical behavior as a pursuit of “ethical excellence” (Murphy, 2009, 245), therefore, focusing on the process instead of using the goal of ethical behavior as the starting point of definition.
It should be noted as well that the concept of business ethics is based on the idea of promoting ethical behavior among employees. Therefore, though not the exact synonym of ethical behavior, the concept of business ethics clearly stems from the latter and is based on its key principles: “Business ethics are moral principles that guide the way a business behaves” (Business ethics and corporate social responsibility: An Anglo American case study, n. d., 25).
As Drucker explained, morality “must be tangible behavior, things everyone can see, do and measure” (Drucker, 1968, 146); therefore, corporate morality must be measured by evaluating ethical behavior standards accepted within a particular organizational environment. Seeing how the phenomenon of ethical behavior is linked directly to the concept of business ethics, one might assume that the two are completely identical.
The given idea, however, would only be pure conjecture and, in fact, would have little to do with reality (As You Sow, 2013a). The truth of the matter is that the relations between the two concepts are a bit more complicated than their reiteration of the same idea.
To be more exact, the principles of ethical behavior pertain to a particular system of moral values, whereas business ethics is based on the aforementioned principles of ethical behavior (As You Sow, 2013).
Indeed, according to Drucker, it is imperative for successful management to have a “strict method and real standards, especially of self-discipline and of ethics” (Drucker, 1968, p. 376). More importantly, ethical behavior, in Drucker’s opinion, “furnishes the ethics of management” ((Drucker, 1968, p. 383).
The cases of Anglo-American and Primark are graphic examples of how important business ethics is for the stability of a company and the performance of the employees. To start with, both cases show in a very graphic manner that the introduction of business ethics and corporate responsibility into the company’s operation and transactions result in a considerable increase in employees’ professional and personal responsibility (CorpWatch, 2013, para. 7).
As it has been stressed above, the given effect owes much to the implementation of an efficient combination of leadership strategies, primarily the use of transformational and charismatic leadership styles in order to provide office workers with a model to follow. The approaches undertaken by the company leaders in order to introduce the concept of business ethics to the staff, though, differed from each other considerably.
Primark’s principle is rather simple, as its concept of business ethics is. As the representatives of the company claim, the complex and often confusing theory of business ethics is narrowed down by the company leader to a relatively simple concept of “doing the right thing” (Providing consumers with ethically sourced garments, n. d., para. 5).
While the given idea might be seen as somewhat broad and vague, in Primark’s case, the company leader makes it obvious that by doing the right thing, he means fulfilling the commitments that a businessman is incumbent on to a society: “Business has a responsibility to society” (Providing consumers with ethically sourced garments, n. d., para. 5).
In the case of Anglo-American Company, though, the notion of business ethics is translated into learning to draw the line between ethical and unethical and only then defining the further course of action: “Acting in an ethical way involves distinguishing between ‘right’ and ‘wrong’ and then making the ‘right’ choice” (Business ethics and corporate social responsibility: An Anglo American case study, n. d., 25).
In contrast to the Primark Company, Anglo-American outlines how far ethical responsibility of a company must stretch, putting the emphasis on environmentally safe : “It should minimize any harm to the environment and work in ways that do not damage the communities in which it operates” (Business ethics and corporate social responsibility: An Anglo American case study, n. d., 25).
When it comes to the practical application of the ethical principles that each of the companies heralds as its key standards for organizational behavior and conflict solving, Primak seems to put more emphasis on securing the legal rights of the company’s employees; the given information allows locating the area of the company’s concerns, i.e., the relationships between the staff and the company’s managers.
While the given strategy is clearly worth admiration and deserves being considered as a prime example for any company to follow, it is rather weird that Primak’s leader avoids mentioning the significance of maintaining ethical relationships with customers.
Thus, Primark makes impressive progress in one aspect of the company’s performance and at the same time, tosses the other aspect of the company’s evolution aside. The Anglo-American Company, in its turn, seems to put the stress on improving the communication between all possible stakeholders.
It is quite remarkable that Anglo-American refused to follow the beaten track of changing the principles of organizational behavior of the staff and decided to start with the reorganization of the environment that the staff works in.
In some way, the given step, though definitely unexpected, is very reasonable, seeing how external factors often predetermine the organizational behavior patterns in the company’s employees.
By comprehending the manner in which the links between “governments, employees, suppliers, communities and customers” (Business ethics and corporate social responsibility: An Anglo American case study, n. d., 26) are created, the company leader becomes capable of controlling these relationships to a certain extent and, thus, shape the way in which the company is perceived by the stakeholders in question.
In other words, promoting the engagement of stakeholders and, thus, the policy of transparency within the company, the owner of Anglo-American manages to implement the ethical principles of the firm.
As the evaluation of the ethical principles of the two companies provided above shows, both have very strong positive aspects to the strategies of ethical behavior that they have chosen for their staff to follow; however, each of the firms also misses out on a number of other issues that need urgent improvement.
For example, both Anglo-American and Primak seem to be doing well in terms of relationships with their customers, even though the approaches undertaken by the companies are strikingly different. As Svensson and Wood explain, it is crucial that companies should learn to “repeat” (Svensson & Wood, 2008, 314) their clients in order to prosper.
In other words, a firm must stay updated on what its customers want, what they think of the company in question, and what their idea of the product supplied by the target company is.
In terms of the given element of Svensson and Wood’s model, both companies seem to be doing relatively good, with Primak clearly focusing on the demands of the target audience, and Anglo-American trying to take every stakeholder into account and, therefore, working on the ties between the company and its clients as well.
For a company of such scale as Primak and Anglo-American, the introduction of ethical principles into the company operations and the relationships with stakeholders has a number of positive aspects.
The first and the most obvious one, the improvement of the companies’ statuses among the clients and gaining the trust of the latter cannot be overestimated, especially when the rivals do not display the willingness to bind themselves by listing their ethical norms.
Another strength that comes with the acceptance of ethical norms and standards for an average company, improvement of relationships among the staff, as well as the ones between the staff and the managers, should be noted.
In addition, since the acceptance of ethical standards is related to the reconsideration of one’s role within the company, it can be expected that employees are going to be more responsible in terms of their performance, time management and professional obligations, such as non-disclosure of company data to any third party.
It should be mentioned, though, that following ethical principle also has negative effects on a company. First, declaring their decision to establish a particular system of ethical principles, a company leader makes his/her enterprise extremely vulnerable to the possible rumors.
Indeed, once the information about possible ethical issues leaks into the target market or an instance of slander occurs, it will be unbelievably hard for a company to restore its reputation and regain its customers’ trust. Another possible problem with planting ethical principles into the company’s setting is to convince the staff to follow them.
It would be rather naïve to assume that every single member of the staff will accept the newly established ethical principles wholeheartedly. As a result, new sophisticated strategies must be adopted in order to convince the staff to accept corporate ethical postulates.
Finally, the goal of adopting ethical behavior should also be considered thoroughly (Machan, 2011, February 12). It is important that a company should not accept ethical principles for the wrong cause: “If being responsible brings 5% more sales, should CR be ignored when another concept brings 10%? Are ethics a matter of figures?” (Perakis, 2009, 63).
Although the reasonability of including ethical principles into the business processes within a company that has not yet become recognizable within the target industry might seem somewhat questionable, the given step will serve as a great booster in the employees’ motivation enhancement and, therefore, contribute to the company’s success in a specific market.
Corporate social responsibility, in its turn, helps employees realize the significance of the corporate values accepted in the company. By making employees responsible for their actions, one will be able to make sure that the staff is motivated enough to excel in their job and, thus, boost the company’s performance impressively.
What makes corporate social responsibility so powerful is that it is employee-oriented and that it allows for both the employee and the employer to benefit, therefore, creating the environment for both to be able to compromise.
As You Sow (2013). About As You Sow.
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