Benefits of Corporate Responsibility and Business Ethics
ETH501 Business Ethics Module 4 Case 4
Trident University
Abstract
The terms "business ethics" and "corporate social responsibility" are used differently by various organizations, companies and media. Other related terms include: sustainability, governance, corporate responsibility, stakeholder engagement, corporate citizenship, and environmental, social and governance (ESG) performance. All of these terms relate to how a company or organization interacts with a various stakeholders including shareholders, employees, the environment, civil society and the community in general. "business ethics" it relates to the conduct of an organization with its internal stakeholders and business partners. Business ethics deals with how ethical issues are addressed within the culture of the organization. Corporate Social Responsibility refers specifically to relationships with external stakeholders such as representatives of the community and environment and often relates to businesses role in society.
Business ethics and social responsibility are two concepts many individuals believe go hand in hand for companies in the business environment. Business ethics are the moral principles a company uses to ensure all employees act in an acceptable manner when completing business functions. Social responsibility is typically an ideological theory that governments and the general public hold, believing that businesses should not conduct themselves in a manner counter to cultural or societal norms. The marriage of these concepts occurs when companies institute a written code of ethics to prove that the company only acts in its best interest so long as it does not damage the company’s social responsibility. Ethics can mean many things to different individuals and businesses. What one business deems as acceptable behavior, another may see as unethical or inappropriate. While many different types of ethics exist, the common good approach most closely connects business ethics and social responsibility. Common good ethics is a Greek philosophy that says that all individuals should follow or use the ethical traits that do the most to advance the common good of society. While this ethical approach can apply to different regions or nations, a basic set of ethical traits include honesty, integrity, transparency, and accountability. These traits ensure that owners, managers, and employees do not act in their own self interest, but uphold societal values as the guiding force for the company’s operations. Large organizations and publicly held companies often use corporate governance to promote business ethics and social responsibility. This governance creates the framework of policies, procedures, and guidelines for all individuals financially invested in a company. Outside stakeholders who do not have an investment can also benefit from corporate governance. Large organizations and publicly held companies typically face more scrutiny pertaining to business ethics since they command large portions of a region or nation’s economic resources. These companies must try to provide benefits to local communities and increase the living standards of as many people as possible, and they must be careful not pollute the surrounding environment. While business ethics certainly play an important role in the business environment, it is possible for governments and individuals to demand too much social responsibility from companies. While companies should not abuse or misuse natural and economic resources, companies cannot pay for all the needs or wants of individuals. Some governments, individuals, or special interest groups can try to force companies into paying more money to improve society than the company can afford. This can result in lower business profits and the inability to pay for future, more
