Term Paper: Corporate Social Responsibility Ethics and Morality

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Corporate Social Responsibility

ETHICS AND MORALITY

In each society, corporations and companies have to answer to two aspects of operations; the quality of their management, this being in terms of people and processes and the nature of and quantity of their impact on society in the various areas. Corporate Social Responsibility has been defined much more in terms of philanthropic model whereby in the United States, on making profit and fulfilling their duties to pay taxes, a company contribute a certain portion of this profit to charitable causes. The definition of Corporate Social Responsibility according to the World Business Council for Sustainable Development in its publication "Making Good Business Senses" by Lord Holme and Richard Watts, is a business's continuing commitment to its behaving ethically and contribute to economic development and at the same time improving the quality of life of the workforce and their families as well as of the local community and society at large.

Importance of Corporate Social Responsibility

Moskowitz (2008) wrote that due to a rise in corporate scandals and the tightening of standards of carbon emissions in the past decade, investors have been forced to evaluate the environmental, social and corporate governance risks within their businesses. This has in turn forced businesses to respond to the demands placed on them by their investors and re-examine the way they do business from the reduction of emissions and conservation of energy to practicing fair trade and standards of labor (Moskowitz, 2008). According to the DEG Investitions publications, there are various motives behind organizations taking part in corporate social responsibility. It is viewed as part of corporate strategy whereby it is out of a sense of ethical responsibility for the future and also enforces the issues that come with it in their subsidiaries. A good example is IPSK which is an investment company whose parent company is the Aga Khan Group which pushes vigorously for corporate social responsibility. Another contributing factor to reasons behind organizations engaging in corporate social responsibility is due to the erosion of public trust in corporate management due to financial scandals like the ones that enveloped Enron in the United States of American and Parmalat in Italy (The Economist Intelligence Unit, 2005, p.10).

Globalization is another reason whereby governments and companies are asked to be more accountable by anti-globalization groups such as Earth First. This forces corporations and governments alike to adopt CSR as an insurance policy to protect themselves from outside pressure for such groups (The Economist Intelligence Unit, 2005). The Economic Intelligence Unit (2005) CSR is seen as a way of dealing with competitive pressure (p.10). Companies adopt CSR practices which in turn puts pressure on those which have not done so to do so. It is also seen as a better way for corporations to gain an upper hand on their competitors and rivals due to the view that having a CSR program can create a better brand image (The Economist Intelligence Unit, 2005, p.10).

Corporate social responsibility plays a number of roles in community development directly or indirectly. Corporate social responsibility enables the negative consequences as a result of industrialization to be shared. This is in relation to increasing conscience-focused marketplaces necessitation more ethical business processes (Ismail, 2009, p.204). Ismail further writes that by partaking in corporate social responsibility is that it makes the ties that a corporation and a community have become stronger. By doing this, the roles that a corporation plays in a social system are viewed to be beyond that of merely providing employment and production of goods and services. This ensures that the two entities stay in peace and harmony (2009, p.204-5). Corporate social responsibility also helps in getting new talent as an organization that has a reputation for taking part in corporate social responsibility can take an advantage of its status to strengthen their appeal as an attractive employer by making their commitment part of their value proposition for their future employees (Ismail, 2009, p.205).

CSR plays an important role in protection of the environment whereby initiatives aimed at reducing their environmental footprint. A company takes the view that financial and environmental performance can work together to achieve company growth and social reputation. Having this attitude in mind helps corporations by making the employment value proposition like "going green" gain traction (Ismail, 2009, p.205). CSR also helps in transfer of technology in that the closer the ties a corporation has with a community; the more likely transfer of technology is to take place (Ismail, 2009, p. 205). Transfer of technology coupled with CSR processes enables a community to gain in various aspects of product development and marketing such as having products of better quality and prices as well as concerned with the well being of the people. CSR is also important in that it is for human right corporate sustainability whereby by partaking, a corporation, as a primary agent driving globalization can help ensure markets, commerce, technology and finance advance in ways benefiting economies and societies everywhere (Ismail, 2009, p.206).

CSR also enables a corporation take their social roles seriously for years often under the banner of corporate sustainability. By having a CSR program, a corporation helps in data gathering for other public organization function. Ismail gave an example whereby Intel and IBM in the United States assisted under-staffed police departments with information gathering and processing by installing cameras with video processing abilities in areas thought to have high occurrences of crimes. Intel also conducted initiatives to educate local communities on how they can use technology in crime prevention or in detection of who committed the crime (2009, p.205). CSR programs are viewed as a tool for poverty alleviation. Ismail gave another example of Bersamamu, a reality television in Malaysia sponsored by Syarikat Faiza Sendirian Berhad (SFSB) which is a local enterprise-cum-philanthropist that responds to the government's appeal to helping communities that are impoverished to improve their livelihoods (Baker, 2003). SFSB gets assistance from TV3 which is a local media company and helps in publicity and audience support. The program focused on the reality of poverty, helplessness and misfortune that the people faced in their daily pursuit of survival. In purchasing SFSB products, a buyer was able to make a donation to the broadcasting agency's fund. CSR also encourages interdependency between the community and the corporation as in the long run it creates sustainable development. An example is how the Shell Foundation was involved in the Flower Valley in South Africa and Marks and Spencer in Africa. These projects give aid to local organizations as well as impoverished communities and thereby leading to sustainable community development (Ismail, 2009, p.206).

The Problem of Implementation in Corporate Social Responsibility

The problems that bring about difficulty in the implementation of CSR projects include the projects not being context or country specific. Specific countries may make it difficult for firms to implement the best CSR ideas. Some countries may have conflict issues which result in projects not taking off. An example is the Chevron Texaco development work in Delta State in Nigeria being halted due to the inter-ethnic fighting in 2003 (Frynas, 2005, p.588-9).

There may be failure of the company to involve the beneficiaries of CSR. The World Bank and Oxfam regard participation and self-help as the best routes for organizations to take when offering development assistance. The World Bank deems it necessary for the community being helped to partake actively in the process of helping itself. In this way, the community will find an interest in the project being set up. Most corporations make the mistake, while implementing projects, of limiting or completely doing away with the involving the beneficiaries. The best thing they usually do is to award contracts to other small companies that are based locally (Frynas, 2005, p.589).

Lack of human resources may contribute to the failure of a company's projects. The human resource in this case is the one required for planning and executing of genuine developmental schemes. This in turn makes it necessary for the company or corporation to address certain of the shortcomings possessed by their human resource force in terms of development. An example given by Frynas (2005) was in Nigeria where Shell's SCD unit was able to head-hunt some NGO personnel and senior UNDP member of staff with expertise in development (p.591).

According to Frynas (2005), the beneficiaries' attitude towards the company and its employees can contribute to a project failing to take off. This mainly refers to the social attitudes of the organization's staff when it comes to the decisions they make. For instance, company directors and asset managers usually have a managerial background and can therefore deal with managerial challenges and it is with this attitude that they approach CSR (Crane, McWilliams & Matten, 2008, p.371). With the presence of corporate will and the possibility of the CSR challenge to be reduced to distinct technical tasks, corporations can perform CSR tasks to a high standard. For instance, when BP wanted to reduce carbon dioxide emissions, there was… [END OF PREVIEW]

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