Today economists and managers can observe the frequent development of the tendency according to which the strategies of the business organizations are predominantly based on the principles of social responsibility and ethics.
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Thus, there are more and more situations when the leaders of the companies and managers should work out such strategies which can satisfy the interests of the firm and of the other part, including workers, employees, and consumers, and present such a solution which can be considered as beneficial for the company.
Is it possible to develop such a strategy which could contribute to all the sides of the conflict or a definite problematic situation? Many researchers and economists discussed this question and worked out a range of theories which follow rather different key points for solving the problem.
Chiquita Brands International Inc. has experienced the ethical problem connected with the situation in Columbia. To choose the most appropriate variant for solving the problem, it is necessary to analyze the advantages and disadvantages of certain strategic theories.
The notions of social responsibilities and ethics in business are associated with that impact which the activities of the company have on the environment, or on its consumers, workers and employees (Wheelen & Hunger, 2007).
The problem connected with Chiquita Brands International Inc. involved the interests of the company and its employees in Columbia who could become at risk to suffer from illegal actions of the local paramilitary organization.
The question was also complicated with the fact that following the requirements of the organization, the company could also break the ethical principles of the society, and it was risky for the company’s further progress, but such actions could follow the interests of the company’s workers and employees.
To choose the most appropriate variant which could satisfy the interests of the company and of the employees, it is significant to pay attention to such theories as the agency theory provided by Friedman, the stakeholder theory worked out by Freeman and Jones, and the stewardship theory developed by Donaldson and Davis. These three theories follow different approaches to the problem.
Thus, the agency theory by Friedman is considered as rather controversial because it refuses the support of the ethical principles connected with the employees’ interests. Friedman accentuates that one responsibility of business is the increase of the benefits and profits without paying much attention to the ethical issues (Friedman & Friedman, 1990).
The stewardship theory developed by Donaldson and Davis concentrates on the moral necessity and social responsibility of the company’s leaders and managers to act strictly according to the ethical principles using any ways that means to act always right (Kao, 2007).
The stakeholder theory developed by Freeman and Jones can be considered as the compromise between these two theories because the main task of the company is to satisfy the employees’ and the firm’s needs (Phillips & Freeman, 2003; Hill & Jones, 2006). Thus, it is necessary to find the balance and provide the alternative solution to the problem.
Chiquita Brands International Inc. should not pay to the local paramilitary organization in Columbia. According to the principles of the social responsibility and ethics in companies, the fact of the payment to the organization will break the ethical norms both of the society and of the company.
However, it should use its resources effectively and implement definite measures in order to increase the level of the security for the employees without using the help of the special companies.
Friedman, M. & Friedman, R. (1990). Free to choose: A personal statement. USA: Mariner Books.
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Hill, C. W. L., & Jones, G. R. (2006). Strategic management: An integrated approach. USA: South-Western College Pub.
Kao, R. W. Y. (2007). Sterwardship-based economics. USA: World scientific Publishing.
Phillips, R. & Freeman, R. E. (2003). Stakeholder theory and organizational ethics. USA: Berrett-Koehlel Publishers.
Wheelen, T. L., & Hunger, D. L. (2007). Strategic management and business policy. USA: Prentice Hall.