Sample Ethics Paper on Organizational Ethics and CSR

According to the economic theory, the main objective of a firm should be to maximize profits. However, some stakeholders believe that the objective is not sufficient on its own. They argue that firms should also undertake socially responsible activities. Corporate social responsibility refers to the voluntary roles that organizations play to maximize long-run beneficial impacts on society by incorporating social and environmental interests in their business. CSR conveys different meanings to different organizations. To some, it means the legal responsibilities or liabilities meted upon the organization, to others, it means being ethical in their dealings while others equate it to charitable contributions and improving the quality of life of the local community and the society at large. Corporate social irresponsibility, on the other hand, refers to the organization’s failure to act responsibly through actions such as polluting the environment. Firms are also committed to minimizing corporate social irresponsibility. Corporate social responsibility/ irresponsibility is a growing phenomenon in the corporate world and with its growth comes the debate on whether CSR as part of the business is beneficial and in line with the profit maximization objective of the firm.

Profit maximization is inarguably the driving force of all the decisions of a firm. While some stakeholders believe that corporate social responsibility is a distraction to the profit maximization goal of the firm, there are those that argue that participating in social activities contributes to the positive social transformation while also benefiting the firm. Such benefits include creating a good image for the firm when the firms operate in an ethical manner. Failure to do this may lead to boycotts which leads to a fall in sales and loss of customers. For organizations in less developed markets, participating in CSR differentiates it from other organizations and enables them to access larger markets. Moreover, implementing a CSR policy sets standards for the organization which employees are expected to follow. Doing so makes the workers identify any potential risks during the operations thus reduces mitigation and legal costs for the firm. Apart from the numerous benefits that CSR brings to the firm, the society also derives a wide range of benefits. When the company follows CSR policies, all defects are eliminated at the production stage and consequently, customer satisfaction is increased. Responsible behavior by corporations may also influence society to do so. For instance, protecting the natural environment may inspire the locals to take care of the environment too by planting trees or disposing of waste properly. Increasing numbers of organizations that participate in CSR also promotes the welfare of the organization (Vlachos, Panagopoulos & Rapp, 2013). Organizations develop infrastructure, social amenities and also medical camps that are beneficial to society.  Benefits of corporate social responsibility are far reaching to both the society and the organization and so firms should not ignore it in a bid to maximize profits because CSR and CSI determine the firm’s profits.

Although CSR and CSI is a noble concept, organizations sometimes lack incentives and guidance to make socially responsible decisions. As a consequence, CSR ends up having more downsides than benefits (Księżak, 2017). For instance, employees may end up enduring harsh working conditions, the company may end up compromising its product safety standards to lower production cost thus losing the loyal customers. Also, companies focus so much on buying society’s goodwill and ignore the main goal which is promoting the society’s welfare. Moreover, participating in CSR brings conflicts between the shareholders and the management because allocating capital to CSR instead of research and development put the organization competitive disadvantage with its competitors.

Despite its challenges, CSR is beneficial to both the company and society. The organization benefits financially through working for the good of the people at the same time gain goodwill and respect. The society, on the other hand, receives better amenities and services which improves their standards of living. Therefore, organizations should not ignore their responsibility to stakeholders because doing so may indirectly cost them their profits.

 

 

 

References

Księżak, P. (2017). The Benefits from CSR for a Company and Society. Journal of Corporate Responsibility and Leadership, 3(4), 53. doi: 10.12775/jcrl.2016.023

Vlachos, P., Panagopoulos, N., & Rapp, A. (2013). Feeling Good by Doing Good: Employee CSR-Induced Attributions, Job Satisfaction, and the Role of Charismatic Leadership. Journal of Business Ethics, 118(3), 577-588. doi: 10.1007/s10551-012-1590-1