The Ethical Necessity/Imperative Companies yield to social pressures for change and ethical duties by giving token concessions to its stakeholders under the name of “social responsibility” or by the owners doing philanthropic activities. These concessions are but partial, if not artificial, commitment to ethical responsibility, and only a fraction of companies do these. There remains a lack of genuine initiative to “ethicize” business institutions. But why is there a need for a greater, real ethical responsibility? Position: Companies and business people should be ethical Point 1: Being ethical in business strengthens the systems and relationships that support and sustain it Individuals, through corporations, have the right to amass wealth, but morality dictates that they do so ethically.
With good reputation, it helps firms to create competitive advantage in the business environment. Thus, instead of focus on short-term profit maximizing or costs saving, firms should be stakeholder-oriented. A firm which is stakeholder-oriented focuses on the need of their stakeholder such as employees, customers, society and others who have a direct economic link to the firm (Habil, n.d.). Businesses that are socially responsible will avoid actions that may cause detrimental to stakeholders. They have greater concern on stakeholder well –being.
Lack of truthfulness by managements on all sides. According to the King 111 report and the Sarbanese Oxley Act, 1) the board should ensure that the company is, and is seen to be a responsible corporate citizen. According to the (IOD: 2009) the success of the company can be measured using various yardsticks that include financial performance as well as the impact of the company on the economy, society and the environment. Thus, according to the King III the company should protect, enhance and, invest in the welfare of the economy, society and the environment. The King III emphasised the fact that being a good citizen for the company imply formulation of an ethical relationship of responsibility between the company and the society within which it operates.
Utilitarianism is a teleological ethical theory based on the idea that an action is moral if it causes the greatest amount of happiness for the greatest number of people. The theory is concerned with predicted consequences or outcomes of a situation rather than focusing on what is done to get to the outcome. There are many forms of utilitarianism, having been introduced by Jeremy Bentham (act utilitarianism), and later being updated by scholars such as J.S. Mill (rule utilitarianism) and Peter Singer (preference utilitarianism). When referring to issues of business ethics, utilitarianism can allow companies to decide what to do in a given situation based on a simple calculation.
Businesses today need to be ethical in the way they operate. Remuneration, being a corporate governance issue, should be dealt with wisely since directors in the modern business world are expected to act as good corporate citizens. According to some research, high packages are justified as they do reflect the performance of those directors. Levels of remuneration should be adequate to attract, retain and motivate directors of the quality required to run the company successfully. However, directors should not be paid in excess of the adequate levels necessary for this purpose.
Sustainability has become more and more important to the business and the community, the needs of sustainability reporting have been increased also. John Elkington coined an accounting framework in 1997, which called triple bottom line reporting (Vivian 2012). Generating profit is the traditional goal of the business, with triple bottom line reporting, the business not only need to present the economic value of the company, but also the environmental and societal issues (Timothy and Hall 2011). In order to comply with the community expectation, the company should use the most relevant and common indicators, such as Global Reporting Initiative, to provide a good triple bottom line reporting to the public, because it is easier for them to compare
It involves emphasize transparent, trust, responsible personal, and organizational marketing policies. Not having any ethic will damage consumers and other stakeholders. Therefore, it is equally important for both small to large companies but it does differ from one another. Just like how, generally speaking, the term “ethics” refers to the way people relate in a moral manner toward others in all of their various interactions, marketing ethics refers to the application of this morality in reference to the way companies conduct businesses with their consumers and other related parties. Marketing ethics may also refer to the manner in which a business presents its products to consumers generate more sales and make more profit.
It acts as a motivating factor. Making local donations and framing the messages in a more positive manner will increase the effect of cause related marketing. Reference 7: Cause marketing has become a unique and popular promotional tool for brand promotion in the past decade. Consumers get a feel that they are making a difference and the brands are getting benefitted by increased sales and publicity. A study is made which relates the size of the donation to the product price and also how the company quantifies the donation.
CSR is closely linked to "sustainable development", in which there is an argument that a company in carrying out its activities must base their decision not solely based on financial factors such as profits or dividends but also must be based on social and environmental consequences for now and for the long term. Business ethics and corporate social responsibility are two issues that are often overlooked by business people because it is in this article will discuss how business ethics relationship with corporate social
Adopting the CSR principles involves costs. These costs might be short term in nature or continuous outflows. These costs might involve the purchase of new environmentally friendly equipment, the change of management structures, or the implementation of stricter quality controls. Since being socially responsible involves costs, it should generate benefits as well in order to be a sustainable business practice. A corporation could not continue a policy that constantly generates negative cash flows.