Corporate social responsibility, which is also referred to as sustainable responsible business or corporate conscience, is a self-regulation mechanism incorporated into the central part of a business. It concerns itself with monitoring and assurance of active obedience with: ethical standards, the general law and the international customs that govern business and non-business activities within an organization.
Ethics on the other hand, are the decisions and behaviors of an individual or organization that are considered morally fitting. Johnson and Turner (2009) in their study stated that, “ethics and corporate responsibility are matters for all firms whether they operate internationally or not”. The basis of this reasoning is the acceptance of the unavoidable ‘truth’ of relativism in relation to ethics and social responsibility (Iyer, 2000).
Validity of statement
Taking into consideration what has been mentioned above, an argument presents itself and with it, the question: how valid is the statement of that study?
According to the aphorism “Nemo dat Quod non abeit” which literally means that it is impossible for one to give what they do not have; it follows that, an organization in a third world country may have integrated Corporate Social Responsibility into their mission statement , but lack the capability of following through due to lack of resources. Furthermore, “going global” brings with it new challenges (Iyer, 2009).
Taking a case study example of Bolaji, Nigeria, organizations cannot leave the Corporate Social Responsibility dynamic in the hands of the government because governments in third world countries seldom fulfill the expectations of the people that elected them in.
“The contemporary third world government need to put in place a working infrastructure that will engender business activities”. (Petkoski and Twose, 2003, p.16) After this is done, the corporate players can then be called upon to give back to the community.
Application of theories
In order for organizations to be able to effectively and efficiently adhere to the stipulations and guidelines of ethics and Corporate Social Responsibility, several theories need to be applied. More specifically, rights and justice theories need to be taken into consideration.
Organizations should recognize that their employees and other internal (and external) stakeholders have privileges and rights that go beyond national boundaries and cultures. Managers should be guided by fundamental human rights when making decisions that have ethical constituents (Suder, 2008).
Further, justice theories stipulate that economic goods and services should be distributed in a just manner. However, when an organization is engaging in social responsibility and the unequal distribution of goods and services has been viewed to work to everyone’s advantage, then this may be considered as an exception.
Corporate governance and its implications to managers
When we take a look at the Nigerian Banking system and its Corporate Social Responsibility aspects, we see that it would be necessary for management, more so of the Central bank (as the key player in the economy), to restructure.
This would be aimed at comprehensively dividing the roles of management from the management of fiscal policies ultimately creating a more effective social, environmental and economically viable banking system.
Drawing from this example we see that, management has the responsibility to clearly outline the corporate structure so as to identify who will be held accountable for the implementation of Corporate Social Responsibility.
Management code of ethics
In order for an organization to effectively conduct itself in the required manner, management should adhere to contemporary code of ethics (Cavusgil, Knight and Riesenberger, 2008). These ethics encompass responsibility, respect for people’s rights and dignity and integrity.
Management code of ethics focus on four broad areas:
Managing the organization which involves creating and sustaining a positive work environment, managing the business by maintaining a viable business venture, managing people through maintenance of commitment and engagement and being mindful of human rights and lastly, managers managing themselves effectively so as to avoid bringing about stress related issues.
The code of ethics is meant to guide the management and ensure that the organization fulfills its overall commitments with respect to ethics and Corporate Social Responsibility.
Codes organizations must take to make profits
Corporate Social Responsibilities are grounded on opposing objectives with the ultimate goals of an organization of profit maximization. However, management should aim at finding the balance between the two objectives. An organization should always strive to adhere to the set out ethical standards because this ultimately increases business efficiency.
Being mindful of the environmental and social aspects external to the organization ensures that the presence of the organization is felt in the society. Giving back to the community that enabled your rise to success goes a long way in ensuring that an organization maintains its business.
When all this is tied together, we see that adhering to ethics and Corporate Social Responsibilities brings business back to the organizations and facilitates profit generation.
“On the macroeconomic level, participation in international business allows firms to achieve economies of scale that cannot be achieved in domestic markets”. (Czikota, Ronkainen and Moffett, 2008) It is, therefore, imperative that the ethics adhered to be of international standards.
“While the work of Smith, Ricardo, and Mill went far in describing the flow of trade between nations, classical theory was not without its flaws”. (Ajami and Gorddard, 2006, p.50) The Friedman doctrine implies that; as long as an organization is operating within the law, then its only social responsibility should be to continue maximizing its profits.
“Basically, he argues that managers as agents owe the owner of the corporation, the stockholders, a duty to pursue their interests”. (Crane, 2008, p.138) This is quite misleading because there should be a balance between sole profit making and integration of social and environmental objectives.
Cultural relativism suggests that companies should adopt the ethics of the cultures in which they find themselves operating in. This assumption stands to be corrected because in the contemporary world, diverse cultures should all be accommodated.
Lastly, the naïve immoralist argues that a manager should carry him/herself in the manner in which he/she sees the managers of other nations carrying themselves. This implies that, if the managers of other nations are not adhering to the ethical norms, neither should the manager of the multinational firm. This is a very misguided approach considering how stiff the competition is in the global marketplace (Hill, 2005).
Ajami, R.A. and Goddard, G.J., 2006. International business: theory and practice. 2nd ed. Armonk, NY: M.E. Sharpe.
Cavusgil, S.T., Knight, G.A., Knight, G. and Riesenberger, J.R., 2008. International business: strategy, management, and the new realities. Upper Saddle River, NJ: Pearson Prentice Hall.
Crane, A., 2008. The Oxford handbook of corporate social responsibility. Oxford Handbooks Online.
Czinkota, M., Ronkainen, I.A. and Moffett, M.H., 2008. Fundamentals of International Business. Gillingham: Wessex Publishing.
Hill, C.W.L., 2005. International business: competing in the global marketplace. 5th ed. New York, NY: McGraw-Hill/Irwin.
Iyer, G.R., 2000. Teaching international business: ethics and corporate social responsibility. New York, NY: Routledge.
Iyer, R., 2009. MBA Fundamentals International Business. New York, NY: Kaplan Publishing.
Johnson, D. and Turner, C., 2009. International Business: Themes and issues in the Modern Global Economy. 2nd ed. New York, NY: Taylor and Francis.
Petkoski, D. and Twose, N., 2003. Public Policy for Corporate Social Responsibility. Washington, DC. World Bank.
Suder, G.G.S., 2008. International business under adversity: a role in corporate responsibility, conflict prevention, and peace. Northampton, MA: Edward Elgar Publishing.