BUSN 6011 Ethics and Corporate Social Responsibility

Question One

Corporate Social Responsibility (CSR) can be defined as a business model that is self-regulating as well as helps an organization to be socially accountable to the public, the stakeholders (both internal and external), as well as to itself (Crane et al.  2017). Organizations are conscious as well as aware of the type of effect they are creating on all elements of society such as social; economic; and environmental, through the effective practice of corporate social responsibility which is also alternatively known as corporate citizenship. When companies engage in CSR activities it often means that in their business course, they tend to operate in ways which help to enhance the environment as well as society, in contrary to contributing in a negative way that only causes harm (Ali, Frynas and Mahmood 2017).

Organizations who have a CSR model within their overall business framework is often in conflict with the profit motive of the business. This is a criticism from the perspective of an ethical dilemma concerning the business. The cost of corporate social responsibility is often a huge obstacle for organizations which is why the criticism points to how the CSR model is an exercise in futility. Businesses are owned by shareholders, as well as executives and managers are hired to maximize profits for these shareholders who invest in their business (Carroll 2016).

However when these executives and managers use the money that has been invested by the shareholders to create benefits for the society, instead of focusing on generating more revenue and making profit, they are essentially going against the rules of the business as well as their chief responsibilities (Ali, Frynas and Mahmood 2017). The ethical dilemma in this sense is that, the management of an organization has a professional as well as as fiduciary duty to the shareholders of the company, and the corporate social responsibility model opposes this in a direct manner as the responsibility of the management to their shareholders is to maximize the business profits (Xia et al. 2018). Thus, there is a consensus among many business owners as well as general public as they hold a stake in a specific business that the corporate social responsibility only causes harm to the profit motive and aspect of any business. This is mostly true for all small as well as medium sized enterprises and is also true for some large organizations as well (Ali, Frynas and Mahmood 2017).

Although there is a need for corporate citizenship, the business’s need to maintain and enhance their profits and revenue with every possible chance they get is more vital (Barnett, Henriques and Husted 2020). This not only includes the base goal and aim of the business but also the underlying reason upon which the business intents to build its future. The executives and managers are at a risk of losing their jobs and get replaced by people who target profit and growth of the business and not benefit for the society (Barnett, Henriques and Husted 2020). They may also be accused of stealing the property of others as CSR activities will be carried out through the company money, which means shareholder investment. Including corporate social responsibility into any particular business will also most definitely violate the fundamental business principles as well as values (Barnett, Henriques and Husted 2020). As most corporate citizenship projects are left incomplete or cannot be completed it does not yield much benefit also contributes to a large scale expenditure from the company so that they can promote the CSR projects.

The corporate social responsibility activities mostly target the society and environment alongside enhancing the brand image of the company (Rhou and Singal 2020). The recent crises events such as the Covid-19 pandemic required several investments on the part of businesses so as to promote good corporate citizenship which created a problem in several companies in relation to cost and CSR budgets. Therefore, it can be said that one of the significant criticisms of corporate social responsibility from an ethical perspective is the conflict that it creates with the primary business motive of creating money and profits for themselves (Gillan, Koch and Starks 2021).

The second criticism in regard to corporate social responsibility from an ethical perspective is the reason why most businesses conduct it. Several businesses use corporate social responsibility and corporate citizenship activities as a way to increase their public relations and brand image of the corporation. Several critics who believe this criticism and creates further discourse on it also points to the fact that majority of the corporate citizenship activities are just corporate “green washing” and simple public stunts that help to entice the public and potential customers (Pisani et al.  2017). Green washing primarily means the companies and organizations that misstate or exaggerate the total effects of their societal or environmental actions as well as also promote services or products that may be defined as “eco-friendly” but in reality are not so much friendly to the environment. When corporations target corporate citizenship activities to generate more benefits and advantages that are related to profit for themselves and the business and its shareholders they are essentially engaging in unethical activities in the name of socially responsible behavior (Pope and Wæraas 2016).

Companies often use the corporate citizenship model and various CSR activities to hire, recruit and attract the best talent pertaining to management and also hope to establish strong partnerships with diverse communities so as to increase their organization’s influence on the politics and legislation of a region. Corporate social responsibility may also allow various corporations to distract the legislators as well as consumers and the public from the need to regulate the companies more tightly so that they can regulate them and their activities better (Geuther and Turvey-Welch 2018). Another example that can be considered here which helps to justify this criticism further is that several companies who spend the most on advertising and marketing money so that they can boast about all the small and large measures they will be adopting against the crises of climate change and global warming to the public is not just a plain public stunt but is also ironic considering these companies are associated with the industries such as automobiles or fossil fuels which contribute to the most pollution and generation of greenhouse gases (Gillan, Koch and Starks 2021).

The self-serving assertions made by the businesses of the concerns related to global warming and climate change are often simple campaigns tagged under “corporate green washing” and the primary intent of these campaigns are to distract the public and governmental authorities from the dire need for the societies to come up with more measures that are effective in nature through the methods of business regulations as well as taxation. Corporate lobbying is a concept that is closely related to corporate social responsibility and public relations and involves the protection of freedom of speech for the business organizations. Although the ethical issue with corporate lobbying is that the businesses receive an amount of power that enables them to bend regulations and laws to their own will and advantage (Gillan, Koch and Starks 2021).

Since corporations and businesses are much more wealthy than ordinary public, they have the power to participate in political campaigns and create benefits for themselves accordingly. Although this ethical criticism of corporate social responsibility mostly depends on the ethical nature and culture of the organization or brand as a company that focuses on developing activities and programme for the benefit of the environment and society with the sole intent of helping works under a CSR model that intents to provide benefits and returns for the community without any ulterior business motive for profit (Gillan, Koch and Starks 2021).

Question Two

Stakeholder theory can be defined as a concept of capitalism that lays its emphasis on the interlinked connections between a business along with its customers, employees, suppliers, investors, societies, and many more. All of these components hold a significant stake within the organization.

One significant philosophy of corporate social responsibility from the stakeholder model includes the stakeholder’s role in the corporate social responsibility of a particular company. A stakeholder can be described as a group or an individual who has the power to affect or get affected by the organization’s achievement of their objectives as well as goals. The most common individuals and groups who are considered to be stakeholders mainly include consumers or customers, employees, the government, investors or shareholders, as well as the society and community at large. There is also a wide consensus on the fact that the environment is also one of the significant stakeholders of any particular businesses. As most of the activities conducted within these organizations include the use of various natural and non-renewable resources as part of the more vital production process, the total transformation of the overall landscape because of the heavy extraction of raw materials or storage and disposal of waste materials and products (Safae and Omar 2019).

This leads to many people believing that the environment in itself is an important additional stakeholder within a particular company or organization. One of the chief business function is to serve their stakeholders in any way they require. This is also known as stakeholder responsibility. As time progresses, more businesses are carrying this responsibility to a step further through identifying and coming up with various ways so as to address the global issues so that the world can be made into a better place (Antonelli, D'Alessio and Cuomo 2017). Companies all around the globe are being requested by their consumers as well as stakeholders to support primary concerns related to environment and community. It also focuses on addressing several demanding issues that is generally found within a nation, this also includes elements concerning the environment as well as monetary advancement (Antonelli, D'Alessio and Cuomo 2017). Organizations and companies are working progressively with the stakeholders and partners so as to comprehend their main concerns and perspectives on different social, ecological, financial issues, and corporate administration as well as to address and join those concerns and perspectives into the company’s chief basic forms of leadership. The stakeholder approach to business came up win the mid-1980s (Crane et al. 2017).

Therefore, it can be said that stakeholders have critical roles and responsibilities in relation to corporate social responsibility. The community and environment is the platform for which corporate social responsibility activities are designed and implemented. Consumers and customers as well as suppliers of any given business such as Starbucks in Malaysia decide on what relation they will hold with the particular brand on the basis of their corporate citizenship activities and model followed.

 In this regard an example can be provided in the context of Starbucks Malaysia as they have a high performance in relation to their corporate responsibility or corporate social responsibility. During the Covid-19 pandemic in Malaysia, Starbucks initiated several activities for promoting heath and resources for the community as well as vulnerable groups. They try to deliver all the needs of their stakeholders including equal employment opportunities, health care, commitment to social, environmental, and governance disclosures. They are also highly committed to disability and access inclusion. They have created several programme and campaigns so as to address the unprecedented impact of Covid-19 in Malaysia. The campaign of “Goods for Good” is targeted at the frontline emergency and medical staff in Malaysia so that they can be thanked, rewarded as well as celebrated for their sacrifices. They have also donated the proceeds from merchandise sale to provide mental health as well as nd psychological support (MHPPS) through consultation sessions (Binsawad 2020).

The second philosophy is based on the researches of several researchers who have opined that an organization must create value not only for its shareholders but also for its stakeholders. Therefore, the Stakeholder Theory in the context of organizational management as well as business ethics is responsible for addressing the values and morals that are required for managing an organization. This is another philosophy that can be related to corporate social responsibility (Li, Liu and Huan 2019). In the contemporary era, businesses are growing their awareness regarding their role towards their stakeholders, particularly the employees as well as the customers, and also their role and contribution towards the organization. This builds up the interconnection between corporate social responsibility as well as the stakeholder theory (Albasu and Nyameh 2017). This is because of the critical description of corporate social responsibility which is stated by various researchers. According to this concept, every organization has a responsibility towards the immediate environment that they are operating in and this includes the shareholders, the stakeholders, the environment, the society, the suppliers as well as manufacturers, and many more. The organization is accountable for them and they are required to fulfill these responsibilities in exchange for their contributions as well as roles (Hahn and Kim 2016).

One of the main roles of CSR is to contribute to the triple bottom line of the organization that includes the economic, social as well as environmental performance of the company. Therefore, all of these aspects include the contributions of the stakeholders. On the preliminary level, the first responsibility of the organization is to offer jobs to the employees. Therefore, opening up opportunities for income and contributing to the economic growth of the nation is one of the crucial responsibilities of organizations (Gatti, Seele and Rademacher 2019). In this case, the employers are required to provide a safe environment for the employees to work in and also ensure that they are being paid adequately in exchange for the contributions of the employees. They must not be discriminated against as well as also must be provided with the job security that they require. A business is also responsible for society. Therefore, apart from providing income opportunities to the members of the society, the business also offers products and services that are needed in society (Aksak, Ferguson and Duman 2016).

The customers offer business and profits to an organization. Therefore, it is the responsibility of the business to ensure high quality pre purchase and post purchase customer management in order to ensure that they are catered to in terms of their needs and requirements. They hold accountability for their stakeholders and are responsible for protecting their needs and rights. The company must build its value among its stakeholders as a part of its CSR activities. This philosophy of CSR clearly states the fact that businesses are not just established in order to make profits, but they are also responsible for creating value and holding responsibilities (Sendlhofer 2020).

For instance, in Malaysia, IKEA focuses a lot on gender equality and inclusivity within the organization. The organization provides equal opportunities for employment to the citizens of Malaysia. This is a way of supporting the local communities of the nation in terms of uplifting their minority groups. As a part of their corporate social responsibility, the organization also incorporates training and development initiatives in order to develop their personal and professional skills.

Reference List

Ali, W., Frynas, J.G. and Mahmood, Z., 2017. Determinants of corporate social responsibility (CSR) disclosure in developed and developing countries: A literature review. Corporate Social Responsibility and Environmental Management, 24(4), pp.273-294.

Carroll, A.B., 2016. Carroll’s pyramid of CSR: taking another look. International journal of corporate social responsibility, 1(1), pp.1-8.

Xia, B., Olanipekun, A., Chen, Q., Xie, L. and Liu, Y., 2018. Conceptualising the state of the art of corporate social responsibility (CSR) in the construction industry and its nexus to sustainable development. Journal of cleaner production, 195, pp.340-353.

Barnett, M.L., Henriques, I. and Husted, B.W., 2020. Beyond good intentions: Designing CSR initiatives for greater social impact. Journal of Management, 46(6), pp.937-964.

Rhou, Y. and Singal, M., 2020. A review of the business case for CSR in the hospitality industry. International Journal of Hospitality Management, 84, p.102330.

Gillan, S.L., Koch, A. and Starks, L.T., 2021. Firms and social responsibility: A review of ESG and CSR research in corporate finance. Journal of Corporate Finance, 66, p.101889.

Pisani, N., Kourula, A., Kolk, A. and Meijer, R., 2017. How global is international CSR research? Insights and recommendations from a systematic review. Journal of World Business, 52(5), pp.591-614.

Pope, S. and Wæraas, A., 2016. CSR-washing is rare: A conceptual framework, literature review, and critique. Journal of Business Ethics, 137(1), pp.173-193.

Aksak, E.O., Ferguson, M.A. and Duman, S.A., 2016. Corporate social responsibility and CSR fit as predictors of corporate reputation: A global perspective. Public Relations Review, 42(1), pp.79-81.

Gatti, L., Seele, P. and Rademacher, L., 2019. Grey zone in–greenwash out. A review of greenwashing research and implications for the voluntary-mandatory transition of CSR. International Journal of Corporate Social Responsibility, 4(1), pp.1-15.

Hahn, Y. and Kim, D., 2016. Corporate social responsibility: A comparison analysis. Asian Journal of Business Environment, 6(4), pp.13-17.

Li, Y., Liu, B. and Huan, T.C.T., 2019. Renewal or not? Consumer response to a renewed corporate social responsibility strategy: Evidence from the coffee shop industry. Tourism Management, 72, pp.170-179.

Albasu, J. and Nyameh, J., 2017. Relevance of stakeholders theory, organizational identity theory and social exchange theory to corporate social responsibility and employees performance in the commercial banks in Nigeria. International journal of business, economics and management, 4(5), pp.95-105.

Geuther, C. and Turvey-Welch, M.R., 2018. Communicating e-resource management needs to library stakeholders: Theory and praxis. Serials Review, 44(3), pp.176-181.

Antonelli, V., D'Alessio, R. and Cuomo, F., 2017. Beyond Stakeholders Theory: Financial reporting and voluntary disclosure in Italian SME according to a System dynamics point of view. Economia Aziendale Online-, 7(4), pp.285-304.

Safae, L.E.I. and Omar, T.A.O.U.A.B., 2019. The New Public Management and Stakeholders theory applied to the territorial intelligence. International Journal of Scientific Research and Management, 7(2), pp.978-985.

Binsawad, M.H., 2020. Corporate social responsibility in higher education: a PLS-SEM neural network approach. IEEE Access, 8, pp.29125-29131.

Sendlhofer, T., 2020. Decoupling from moral responsibility for CSR: employees' visionary procrastination at a SME. Journal of Business Ethics, 167(2), pp.361-378.

Crane, A., Henriques, I., Husted, B.W. and Matten, D., 2017. Measuring corporate social responsibility and impact: Enhancing quantitative research design and methods in business and society research. Business & Society, 56(6), pp.787-795.

Crane, A., Henriques, I., Husted, B.W. and Matten, D., 2017. Measuring corporate social responsibility and impact: Enhancing quantitative research design and methods in business and society research. Business & Society, 56(6), pp.787-795.

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