Business today face increasingly complex, and often competing, motives and incentives in their decision making. In a recent Business Week/Harris Poll survey of the general population, 95 percent of respondents agreed with the following statement: “U. S. corporations should have more than one purpose. They also owe something to their workers and the communities in which they operate, and they should sometimes sacrifice some profit for the sake of making things better for their workers and communities.
” In an era of intense global competition and increasing media scrutiny, consumer activism, and government regulation, all types of organisations need to become effective and adept at fulfilling these expectations. As a trendy term, by comprising all those expectations, todays’ organisations social requirements are called as Corporate Social Responsibility (CSR). Many companies are trying, with varying results, to meet these diverse responsibilities they now face.
Satisfying those responsibilities is a never-ending process of continuous improvement that requires leadership from top management, involvement from employees, and good relationships across the community, industry, market, and government. Companies must properly plan, allocate, and use their resources in order to satisfy the demands placed on them by investors, employees, customers, business partners, the government, the community, and others. The subject of social responsibility is not just contemporary: it is insistent.
‘Social accountability’, ‘the responsibilities of business’, ‘the unacceptable face of capitalism’, ‘industrial democracy’: these and many other expressions have become in-phrases used widely in speeches by businessmen, politicians, trade union leaders and by other people in our society who are looking for evidence of change. As in most instances where existing practice is challenged by critics and reformers, the term ‘corporate social responsibility’ has been given several meanings and emphases by those who have written on the topic.
The common ground lies in the perception of a relative shift from government to companies as the source of social improvement and the means to promote specific items of social welfare. The World Business Council for Sustainable Development in its publication “Making Good Business Sense” by Lord Holme and Richard Watts, used the following definition. “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”
The same report gave some evidence of the different perceptions of what this should mean from a number of different societies across the world. Definitions as different as “CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government” from Ghana, through to “CSR is about business giving back to society” from the Phillipines.
Many people believe that businesses should accept and abide by four types of reponsibility – economic, legal, ethical, and philanthropic – which are collectively known as corporate social responsibility. To varying degrees, the four types are required, expected, and/or desired by society. Furthermore, those responsibilities must be fulfilled simultaneously so that organisations can claim to be realising the core meaning of CSR. First of all, business have a responsibility to be economically viable so that they can provide a return on investment for their owners, create jobs for the community, and contribute goods and services to the economy.
The economy is influenced by the ways in which organisations relate to their stakeholders, their customers, their employees, their suppliers, their competitors, the community, and even the natural environment. For example, in nations with corrupt businesses and industries, the negative effects often pervade the entire society. Transperancy International, a German organisation dedicated to curbing national and international corruption, has conducted research on the effects of business and government corruption on a country’s economic growth and prospects.
The organisation reports that corruption reduces economic growth, inhibits foreign investment, and often channels investments and funds into “pet projects” that may create little benefit other than high returns to the corrupt decision makers. Thus, although business and society may be theoretically distinct, business has the opportunity to have a real economic impact on many people. Secondly, companies are required to obey laws and regulations that specify what is responsible business conduct. Society enforces its expectations regarding the behaviour of business through the legal system.
If a business chooses to behave in a way that customers, special-interest groups, or other businesses perceive as irresponsible, these groups may ask their elected representatives to draft legislation or regulate the firm’s behaviour, or they may sue the firm in a court of law in an effort to force it to “play by the rules. ” For example, many businesses have complained that Microsoft Corporation effectively had a monopoly in the computer operating system and Web browser markets and that the company acted illegally to maintain this dominance.
Their complaints were validated in 2000 when US District Judge Thomas Penfield Jackson ruled in a federal lawsuit that Microsoft had indeed used anticompetitive tactics to maintain its Windows monopoly in operating-system software and to attempt to dominate the Web browser market by illegally building its Internet Explorer Web browser into its Windows operating system. Microsoft, which vehemently denied the charges, appealed that decision. The election of George W. Bush and a court of appeal’s ruling to overturn Jackson’s decision shifted the focus to settlement talks, away from an earlier suggestion to break up the company.
However in the first quarter of 2004, Microsoft has been fined $200 million for their unethical and illegal action. Thirdly, beyond the economic and legal dimensions of social responsibility, companies must decide what they consider to be just, fair, and right – the realm of business ethics. Business ethics refers to the principles and standars that guide behaviour in the world of business. These principles are determined and expected by the public, government regulators, special-interest groups, consumers, industry, and individual organisations.
The most basic of these principles have been codified into laws and regulations to require that companies conduct themselves in ways that conform to society’s expectations. Many firms and industries have chosen to go beyond these basic laws in an effort to act reponsibly. The Direct Selling Association (DSA), for example, has established a code of ethics that applies to all individual and company members of the association. Because direct selling, such as door-to-door selling, involves personal contact with consumers, there are many ethical issues that can arise.
For this reason, the DSA code directs the association’s members to go beyond the legal standards of conduct in areas such as product representation, appropriate ways of contacting consumers, and warranties and guarantees. In addition, the DSA actively works with government agencies and consumer groups to ensure that ethical standars are pervasive in the direct selling industry. The world Federation of Direct Sellling Associations (WFDSA) also maintains a code of conduct that provides guadiance for direct sellers around the world, in countries as diverse as Turkey, Argentina, Canada, Finland, Korea, and Poland.
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