Abstract
This report aims at finding out whether practicing strong business ethics and good corporate social responsibility has an impact on the operations of the business. In essence, these two concepts provide a coherent framework that is used to explore the relationships within the business and the communities in which they are operating. The findings indicate that companies with strong business ethics and social responsibility have increased efficiency hence greater performance.
In addition, businesses organizations with increased ethical and social responsible practices have enhanced customer satisfaction, which in turn add more value to the company shareholders. In this sense, socially responsible behaviors take into consideration ethical behaviors being practiced by the firm. The two concepts encompasses all those practices that the firms undertake to increase efficiency in the management of resources as well as enhancing good relations with customers, employees, as well as shareholders.
Introduction
Corporate social responsibility together with strong business ethics remains critical to the company growth and development. Most businesses agree that promoting good ethical standards and social responsiveness is one of the key successes (Starcher, 2010). The reason is that social responsibility and strong business ethics have direct influence in the company efficiency, reputation, as well as the employees’ relationships.
Incorporating strong business ethics as well as social responsibility in the company mission and vision statement is the beginning of promoting these values in the company general conduct and practices (McWilliams & Siegel, 2000). In addition, the human resources must design and put programs in their employment procedures and train employees the importance of having strong business ethics.
Several research findings indicate that having strong business ethics and practicing social responsibilities promote trust among the company stakeholders, which in turn increases employees’ efficiency and productivity. Strong business ethics also promotes efficient and effective use of the company resources (Miller, 2011).
The relationship between corporate social responsibilities has also been found to be direct. This means that companies practicing social responsibilities have good reputation. Good reputation results in increases profits as well as long-term benefits to the company. Moreover, good reputation increases public confidence on the company and its products and services leading to increased sales (Miller, 2011).
The relationship between ethics and social responsibilities and business processes
Businesses are currently integrating the needs of all their stakeholders into their corporate strategies. Incorporating the interest of employees, customers and shareholders into the corporate strategies is beneficial to the firm not only in the general growth and expansion but also in the profit generation (Starcher, 2010). The management task is to seek an optimal balance while responding to the diverse needs of various groups and constituencies affected by decisions that are being made.
That is not only customers and investors, but also other stakeholders including suppliers and communities in which the firm operates (Starcher, 2010). Through the consideration of societal actors, the assumption is that the enterprise has a social responsibility. The interest of the stakeholders provides key dimensions of social responsibility that managers must take into consideration in order to remain relevant in the modern market place.
The ethics/CSR and the customers
The most important dimension is how the firm social responsibility practices affect its relationship with its customers. According to Ballou, Godwin, and Shortridge (2003), attention is now being shifted from producers to consumers. In fact, putting customer first is the norm of today’s business practices (Ballou et al., 2003). The researches indicate that a practice that emphasizes on the customer satisfaction ensures lasting relation and enhances company performances.
Asocial responsibility that enhances the needs of the customers distinguishes the company and leads to its success. Successful companies always built long-lasting relations with customers through the emphasis on the customer needs and offering quality and reliable services. That is adopting ethical and a socially responsible practice that takes into account customer perspective is critical to the company success.
Ethics/CSR and employees
Socially responsible companies are doing extra to provide meaningful work to their employees, and help their employees develop and realize their potential. Such businesses make every effort to reward their employees with fair remuneration as well as providing favorable work environment. In addition, such companies cultivate respect in their work environment.
In fact, socially responsible management and HR policies often includes employees empowerment, better dissemination of information throughout the company, increased balance between work, family affairs and leisure (Ballou et al., 2003). Moreover, socially responsible management and human resources policies enhances greater diversity in the workforce, incessant skills development and training, concerns with the employability as well as job security for all employees.
An ethical behavior that enhances profit sharing as well as share ownership increases the employee’s motivation and productivity and decreases turnover (Amir & Lev, 2003). There is also increasing evidence that practices that offer higher quality of life and more meaningful work impact directly on the firm’s profits through enhanced productivity. In addition, it enhances greater innovation among employees, higher reliability and quality as well as more skillful and committed employees at all levels (Ballou et al., 2003)
Ethic/CSR and investors
Developing good relations with shareholders add more value to the firm. Therefore, a practice that enhances this relationship is critical for the continuity of the firm. Visionary companies have adopted these core values in their business strategies. Further, successful companies must show beyond returns and be environmentally and socially responsible. Such companies show the need to invest for future growth and sustainability of their businesses (Amir & Lev, 2003).
Moreover, putting moral consideration on investment decisions results in sustainability of the company. Companies investing in ethical and socially responsible behaviors normally last longer and contribute into building more and just societies and at the same time not compromising on the returns on their investments (Amir & Lev, 2003). In addition, considering shareholders in major business decisions is important for the continuity of the company.
Recommendations
Firms should practice ethical behaviors and socially responsible practices that enhance their efficiency in the use of resources. The reason is that adopting the concepts of ethics and social responsibility increases both financial and procedural performance.
Moreover, ethical behaviors and social responsibility practices increases the firm’s reputation and consumer confidence in the firms products thus enabling firms to realize greater revenues. In addition, such attributes also enable firms realize lower downstream and upstream costs. Other benefits associated with ethical and social responsibility practices include reduced cost of debt and equity capital lowering risks to the firm.
Conclusion
Firms have no choice but to behave responsibly, ethically in order to enhance their performances, and to be financially stable. Moreover, to remain relevant in the market place firms must practice corporate social responsibilities and behave ethically.
The benefits of financial and operation performances are associated with being identified as ethically and socially responsible corporation. Generally, investing in ethical and socially responsible behaviors normally last longer and contribute into building more and just societies and contributing more on the returns on investments
References
Amir, E. & Lev, B. (2003). Do financial analysts get intangibles? European Accounting Review, 12(4), 635-659.
Ballou, B., Godwin, N. & Shortridge, R. (2003). Firm value and employee attitudes on workplace quality. Accounting Horizons, 17(3), 329-341.
McWilliams, A. & Siegel, D. (2000). Corporate social responsibility and financial performance: Correlation or misspecifications? Strategic Management Journal, 21(5), 603-609.
Miller, L. (2011). The high-performance organization. European Business Forum, 6(2), 73-79.
Starcher, G. (2010). Towards a new paradigm of management. European Business Forum, 32(6), 23-46.