Business Social Responsibility And Ethics

BUSINESS SOCIAL RESPONSIBILITY AND ETHICS

Business Social Responsibility And Ethics

How does social responsibility arise? In the pursuit of the objectives of profit optimization businesses consciously or unconsciously forget that they operate in and environment that give them succour ( help given at times of need) without which they will not exist in the first place. Consequently, they aggressively pursue their objectives, often in the face of keen competition, and in the process either forget to put something back into the society that gives them nourishment or in the extreme engage in activities that eventually destroy the society itself. In the latter case, the businesses also unwillingly destroy themselves.

Social responsibility– while an organization id busy establishing goals, objectives, and developing and executing strategies for achieving its slated purpose, it should recognize that it operates within an environment which expects it to operate in such a manner that would not disrupt its very essence. Furthermore, the environment or community also expects the organization to the development of its environment that constitutes social responsibility. A few eclectic definition will sewarg (1975) defined social responsibility as the duty of a business enterprise to ensure that it does not disrupt the life of the community in which it operates. Social responsibility is also defined as “the obligation of decision maker- to take actions which project and improve the welfare of the society as a whole along with their own interest”. (davis and Blomstron, 1975) this definition addresses two key parts of social responsibility:

(1) Project and (2) improve. But it did not say what to do improve on the welfare of the society. The concept of social responsibility is viewed severally as the focus of distraction or is counter to profit pursuit. However, it has been a mistaken view, as such, economic and social concerns of business re seen as opposite ends of continuity. A more appropriate view is that although they may be some clearly distinct economic view of social concern. There is rather a boarder are a in which economic and social concern are consistent with one another. It is an area of mutual concern.

PRE-BUSINESS ERA VS. PRE-INDUSTRIAL ERA:

From historical perspective manager of all organization have always had social responsibities is this meaning of the concept of social responsibilities is significantly different than that in the past. In considering this different, we shall discuss social responsibility between the pre-business and pre-industrial eras:

PRE-BUSINESS ERAS:

About 110 AD, social responsibility was based on two issues:

1. The standard of conduct of managers (code of ethic) which as influence by his own moral judgment, his conscience and other ditacts of the managers, mind. Here the underline, influence, his religions believes and social affiliations

2. Another source of influence as the code of Hamorabi which were laws not sophisticated, they provide that managers activities be regulated to an extend.

PRE-INDUSTRIAL ERA:

Social responsibility of business was also recognized by the Roman Catholic Church during the industrial era. This can be observed in the common laws that were predonominant during this period. The doctrine of “just price and usury” was introduced. The doctrine of just price stated that for every product sold, there is only a just price which no one could alter on the other hand, the doctrine of usuary states that money in itself was barren and cannot yield interest as was expected by traders and lenders. It was also argued that “Time” belong to god not man. So, man cannot demand “interest” on the basis of time. The discussion points out the early pressure on business organization Today, The pressure is even greater and complex, while managers in the past have considered their duties to the purely economical distribution of wealth but the society view it differently. However, they have been changes in management philosophy; these changes have resulted in broader view of social responsibility

CHANGE IN MANAGEMENT PHILOSOPHY– ITS IMPACT ON SOCIAL RESPONSIBILITY.

CLASSICAL MANAGEMENT PHILOSOPHY:

1. Modern management practice as observe started during industrial revolution era was during this period that classical management philosophy developed. By them, the social responsibility of business was oriented to mass production of the product consumers wanted at reasonable prises so, managers were obligated to concentrate on using effectively, their resources at their disposal to pay. If the business achieves the above goals, the stockholders wealth will be maximized, so, the business was not interested in social courses.

2. THE BALANCE INTEREST MANAGEMENT PHILOSOPHY (ACCOUNTABILITY VIEW).

Around 1930, managers started to change their view on the classical philosophy. At this period, managers of large corporations have stated that they were obligated to make decisions in such away as to balance equitably, the claim on the enterprise by the shareholders, the employees, customers, suppliers and the general public. Manager were trustees of these interest if the balancing was done well, it was responded that long-run profit of the corporation will be maximized.

THE SOCIAL- ECONOMIC MANAGEMENT PHILOSOPHY(public view): According to this view, the business enterprise ought to react to total societal environment and not mainly to market. This view is noted in the idea that there is a social contract within which a corporation should function. The society granted corporations various rights and in return expects them, to operate in certain ways.

CASE AGAINST SOCIAL RESPONSIBILITY:

Most notable of the anti-argument of social responsibility has been the classical view held by and economist (Milton Fredman). The view is that management has one responsibility, to maximize profit for owners. This view was argued business people and that these problems should be resolved by the unfettered market system. Managers are seen as employees of the owners of enterprise and are directly responsible to the owners. Since shareholders want maximum profits, the manager should pursue that objective without deviation. If managers spend stock-holders’ money without their consent, that amount to taxation without representation.

CASE FOR SOCIAL RESPONSIBILITY:

The argument for social responsibility is that the society created the business and allowed it to function thereby will not allow it to suffer change so, it must be socially responsible. Another argument is, if business help to build a healthy environment it will be favorable to its operation. This is because people with a good environment, education and opportunity make better customers, employee’s abs neighbors for the business than those who were poor, ignorant and oppressed. Finally, when business assumed social responsibility reduces the pressure of an incident of federal regulation.

THE MEANING OF SOCIAL RESPONSIBILITY:

Social responsibility is a relatively new term. It is the moral conduct that relates to such broad issues as environmental pollution. Discrimination, poverty, unemployment, and inflation. Accordingly, an organization whose practice contribute to inflation, unemployment, increase poverty of minority groups, and the like would be viewed as socially irresponsible as not fulfilling its responsibility to society. An Automobile manufacture who produces vehicle with faulty brakes, a bread baker who kakes bread containing stones or particles of foreign objects or food company whose television advertisement mesmerize young children into compulsively eating its nutritionally deficient cereals are socially irresponsible.

THE MEANING OF ETHICS:

The term ethics and social responsibility refer to value-oriented decisions and behaviour. The word comes from the greek root, ethics, meaning character, guiding beliefs, standards, or ideals that pervade a group, a community, people etc. today, ETHICS is the study of moral conduct among individuals are established and expressed behaviorally. the term such as business ethics,corperate ethics, medical ethics, or legal ethics are used to indicate the particular area of application. But to have meaning, the ethics involve in such must still refer to value –oriented decisions and behaviour of individuals. So far, there is a tendency to think of social responsibility in term of organizations and to think of ethics in terms of individuals, but this is not a useful distinction. In the final analysis. Decisions are made by people and, therefore, individual managers at some level must assume responsibility for every corporate decision, the executive who lies about a competitor’s product, the manuctacturer who markets highly flammable articles of clothing, the industrialist who dumps pollutants into a stream- all behave in an ethically irresponsible way. The only handy way to distinguish business ethics from social responsibility is in term of a decision’s implications for the society as a whole. Businesses ethics are concerned with micro ethics (relating to daily operating decision with limited social impact); social responsibility is concerned with macro ethics (relating to decisions with broad implication for a large segment of society).

CODES OF ETHICS:

There is a need for objectives standards, other than laws and government regulations, to help managers make ethical decisions. When department solely on the subjective standard of individual managers, ethical decisions are unpredictable and subject to all form of perceptual, defensive, and self- serving bias. Most professions have dealt with the need for objective standard by developing codes of ethics by which their members are expected to live. Notable among these are the ethical codes of physicians, psychologists, lawyers and the certified public Accountants (certified chartered Account – UK). A number a private organizations or corporations have also developed such ones for use by their own personnel. examples IBM have business conduct guide lines. All manager of the corporation (IBM) must review this code annually and then certify in writing that they understand it. Ethical codes may evert significant influence over the person to whom they apply, whether or not those persons agree fully with them, because of the penalties involved in noncompliance. An IBM executive knows that failure to comply can lead to dismissal, and professionals are aware of the seriousness of losing their license to practice.

FACTOR THAT RAISE ETHICAL STANDARDS:

The two factors that raise ethical standard the most important are:

1. Public disclosure and publicity and

2. The increased concern of a well- informed public. These factors are followed by government regulations and the education to increase the professionalism of business managers. To make ethical codes effective, provisions must be made for their enforcement. Unethical managers should be made responsible for their actions. This means that privileges and benefits have to be withdrawn and sanctions have to be applied. Although the enforcement of ethnical codes may not be easy, the mere existence of such codes can increase ethical behaviour by clarifying expectations. Another factor that cold raise ethical standard is the teaching of ethics and value in business and other school and universities.

ETHICAL THEORIES:

Managers in most organizations compete for information, influence and resources, the obvious for confusion in selecting the results as well as the activities to the results easy to understand, and the question of what criteria should guide ethical behaviour becomes acute. Three basic types of moral theories have come to play:

1. The utilitarian theory-this theory suggests that plans underlying idea is that plans of action should produces the greatest good for the greatest number of people

2. The Rights: this theory holds that all people have basic rights such as the right to freedom of conscience, free speech etc.

3. The theory of justice: Is demands that decision makers be guided by fairness and equity, as well as impartiality.

Business Social Responsibility And Ethics