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Ethics and corporate performance
Role of social responsibility in business ethics
The relationship between Corporate Social Responsibility and Business Ethics
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Recommended: Ethics and corporate performance
Corporate social responsibility plays a major role in business ethics. It is the idea that a company should be ethically responsible towards society and the environment. It involves going beyond the law requirements and furthering the social good. Corporate social responsibility can involve activities such as ethical marketing, donating to charity, and taking green initiatives (Johns et al. 23-24). Firms partake in socially responsible roles for several reasons, whether it is driven by morals or as a strategic competitive advantage. The Stakeholder Theory of the firm presented by R. Edward Freeman best represents the notion of how and why a corporation should be socially responsible. While it may not be perfect, it proves to be stronger than either Milton Friedman or Joseph Heath’s model. Although Friedman’s Stockholder theory addresses an important relationship, he does not justify the manager’s obligations to the shareholder. Heath, on the other hand does, justify the model’s motives and morals but it remains quite vague regarding how a corporation actually fails the market. Freeman’s model provides strong moral obligations as well as strong motives; managers act on behalf of stakeholders and should therefore feel obligated to engage in ethical practices.
The first model I would like to discuss is Joseph Heath’s Market Failures Model. The market is said to fail when there is not an efficient allocation of resources (“Investopedia explains 'Market Failure'”). Heath says it fails when “the competitive market fails to produce a Pareto-efficient outcome” (123), which occurs when someone improves his or her situation without making any else worse off. A corporation fails the market if it leaves others in a worse condition in order ...
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...ness In Ethical Focus: An Anthology. Ed. Fritz Allhoff, Anand J. Vaidya. Peterborough, Ont.: Broadview, 2008. 69-78. Print.
Friedman, Milton. “The Social Responsibility of Business Is to Increase Its Profits.” Business In Ethical Focus: An Anthology. Ed. Fritz Allhoff, Anand J. Vaidya. Peterborough, Ont.: Broadview, 2008. 65-69. Print.
Heath, Joseph. “Business Ethics Without Stakeholders.” Business In Ethical Focus: An Anthology. Ed. Fritz Allhoff, Anand J. Vaidya. Peterborough, Ont.: Broadview, 2008. 110-130. Print.
Johns, Gary, and Alan M. Saks. "Organizational Behaviour and Management." Organizational Behaviour: Understanding and Managing Life at Work. Boston, MA: Pearson Learning Solutions, 2014. N. pag. Print.
"Law of Fiduciary Obligation." The Canadian Encyclopedia. N.p., n.d. Web. 5 Feb. 2014.
"Market Failure." Investopedia. N.p., n.d. Web. 05 Feb. 2014.
To supply the wants and needs of a consumer, society entrusts wealth-producing resources to the business enterprise.” (Santayana, George. Is The Tyranny Of Shareholder Value Finally Ending? So before we go into greater detail on the different perspectives related to social responsibility, one might question the meaning of social responsibility. It is generally agreed that social responsibility is defined as the business obligation to make decisions that benefit society.... ...
Langton, Nancy, Stephen Robbins, and Timothy Judge.Organizational Behaviour: Concepts, Controversies, Applications. Fifth Canadian Edition. Toronto: Pearson Canada, 2009. 141, 574-84. Print.
Robbins, S. P., & Judge, T. A. (2007). Organizational Behavior (12th ed.). Upper Saddle River, New Jersey, United States of America: Pearson Prentise Hall.
Seawell, Buie 2010, ‘The Content and Practice of Business Ethics’, Good Business, pp. 2-18, viewed 22 October 2013, .
Ciulla, J. B., Martin, C. W., & Solomon, R. C. (2007). Is "The Social Responsibility of Business... to Increase Its Profits"? Social Responsibility and Stakeholder Theory. Honest work: a business ethics reader (pp. 217-253). New York: Oxford University Press.
Lawrence, A. T. & Weber, J. (2011). Business and society: Stakeholders, ethics, public policy (13th ed.). New York: McGraw-Hill/Irwin
In recent years, companies are becoming socially responsible and now stakeholders almost expect a company to have CSR policies. Therefore, in twentieth century, corporate social responsibility (CSR) became an important development in public life (Barnett, ND).Corporate social responsibility is defined as “the ways in which an organisation exceeds the minimum obligations to stakeholders specified through regulation and corporate governance” (Johnson, Schools and Whittington, N.D cited in March, 2012). Stakeholders can be defined as “those individuals or groups who depend on the organisation to fulfil their own goals and on whom, in turn, the organisation depends” (Johnson, Schools and Whittington, N.D cited in March, 2012). There are many purposes for this essay, the first purpose is to descried the key principles of corporate social responsibility and explain their importance for stakeholders. Secondly, is to show how far this company follows those principles in order to be accountable to at least three of its stakeholders. In this essay, three stakeholders, environment, customers and employees will be evaluated respectively and the key principles of the stakeholders will be examined.
McShane, Steven L.; Von-Glinow, Mary Ann: Organizational Behavior 6th Ed. Copyright 2013. McGraw-Hill Irwin. New York, NY.
Friedman, M. (1970). The Social Responsibility of Business is to make Profit. New York Times
Social responsibility allows for the market system to be centrally controlled by forcing shareholders to unwillingly contribute to social responsibility. While this idea of social responsibility may help companies in the short run, it will ultimately hurt them in the long run. Each person has their own values and responsibilities and “society is a collection of individuals and of the various groups they voluntarily form” (55). Businesses, as Friedman understands, are separate from this society since individuals are the only ones who can hold values and responsibilities. Subsequently, businesses are freed of the need to embed social responsibility into their practices and should focus only on creating the largest profit possible for their shareholders
McShane, S.L., Olekalns, M. & Travaglione, A. 2013, Organizational Behavior: Emerging Knowledge, Global Insights 4th ed., McGraw-Hill, Sydney.
The article “The Social Responsibility of Business is to Increase its Profits” is written by a famous economist Milton Friedman. Friedman in this article implies that shareholders are the main drivers of the corporations and he believes that it is to them corporations must be socially responsible to. The goal of any corporation is to maximize profits and return the portion of these profits to shareholders for investing in the corporation. The shareholders can themselves decide which social causes to take part in rather than assigning a corporate executive to decide on their behalf. Friedman argues that a corporation must have no social responsibility to society because its only concern is the increase profits for itself and its shareholders.
Ivancevich, J., Konopaske, R. & Matteson, M. (2011). Organizational Behavior and Management. NewYork, NY: McGraw Hill.
Friedman, M., (2007). The Social Responsibility of Business Is to Increase Its Profits. In W.
George, J.M. & Jones, G. R.(2005). Understanding and managing organizational behavior (4th ed.). Boston, MA: Pearson Custom Publishing.