A commercial business operates by increasing or maintaining profits. However, one of the agency costs is the excessive pre-requestive. This expense allows the contractor to get more, but does not affect the well-being of investors. Shirking of the company’s top management also creates agency costs, as it reduces the productivity of management and creates additional costs for the founders. Therefore, the earnings of other employees may decrease in this regard. In such a situation, a business must consider the ethics of its behavior.
Corporate business requires companies to take full responsibility for how the achievement of their goals affects the world around them. Consumers, investors and employees of companies are aware of the possibilities of modern corporations (Bansal et al., 2021). In this regard, it is necessary to direct them not only to making a profit, but also to improving the life of society as a whole and developing human capital responsibility. The enterprise is obliged to carry out actions aimed at improving the condition of society, and not at its deterioration (Hoffman, 2018). The implementation of corporate social responsibility of the organization also includes responsibility to employees: the provision of an additional social package, which includes the formation of a pension system, medical insurance and recreation.
The ethical attitude includes the sensational case of Wells Fargo, one of the largest US banking holdings. In 2016, about 2 million credit cards issued without the knowledge of customers were discovered, the bank was fined $ 185 million, and the management fired about 1,000 employees. Investors were dissatisfied with the fact that the bank had ceased to be reliable and lost confidence in the eyes of customers, and the public considered the real culprits of what had happened not to junior employees, but to top managers of the company. The profits of the company demonstrated a decline during this period.
On the other hand, Nike is deeply convinced that it is possible to implement more sustainable practices in all areas of the company. To reduce the carbon footprint of Nike.com in the US, in 2020 the sports giant announced a partnership with environmental investment fund EFM. With the help of Nike, the foundation was able to plant more than 100 square kilometers of forest plantations to absorb carbon from the Earth’s atmosphere. Proper management and professional tree care increase the amount of recycled substances on Nike plantations by 30%. At the same, the revenue of the company kept on almost the same level as during the previous years due to increasing costs. However, the business maintained a reputation in the eyes of its customers.
In conclusion, currently, many companies pay considerable attention to compliance with the principles of corporate social responsibility. This is based on the fact that it is the observance of the principles of social responsibility that allows enterprises to improve their performance, both economic and social performance. On the one hand, corporate social responsibility is seen as an essential element of the competition strategy. On the other hand, corporate social responsibility is a consequence of the ethical behavior of an organization in the market, which is associated with the attitude towards the subjects of the external and internal environment or with an approach that takes into account three main areas (ecology, economics, sociology) as a factor of sustainable development.
References
Bansal, P., Grewatsch, S., & Sharma, G. (2021). How COVID‐19 informs business sustainability research: It’s time for a systems perspective.Journal of Management Studies, 58(2), 602-606. Web.
Hoffman, A. J. (2018). The next phase of business sustainability.Stanford Social Innovation Review, 16(2), 34-39. Web.