Social responsibility and Ethics in business
Watering or Wasting ?
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Well… They are a very debatable topic, aren’t they?
Now let’s see what experts has to say about them.
According to Friedman, he feels that when companies get involved in social activities, they loss their focus and become inefficient in their course of business.
But according to Carroll, companies must get involved in social responsibilities. If not, government will increase the regulation which will then eventually reduces business efficiency. But he doesn’t mean that companies must prioritize it as number one. Instead, he says that after satisfying its economical (producing & selling) and legal (rules & regulations) responsibilities, companies can then focus on its ethical (condemning child labor) and discretionary (philanthropic activities) responsibilities.
So basically, Friedman and Carroll have some common ground which is to achieve business’s primary objectives.
Social responsibilities in Strategical decision making
When a company is taking a strategical decision like shifting its factory to a lower wage area or introducing a CSR project for children’s education it needs to evaluate how these decisions are going to affect its stakeholders. Stakeholders are of two types, primary stakeholders (like customers, employees, suppliers, shareholders) and secondary stakeholders (like NGO’s, local communities, trade association)
After a thorough analysis and inputs from the stakeholders, a best decision has to be taken.
Don’t worry there will always going to be this one group who is dissatisfied with the decision it’s okay…
As a company we have to arrive at a decision.
Ethics in business
Every company must follow certain ethics in doing their business.
But researches shows that some companies have involved in unethical behavior like cutting corners on quality, misrepresenting financial statement and so. The main reason for their unethical behavior is
- There is no worldwide standard of conduct for business people
For example: What is considered as a bribe in one country may be considered as a normal business practice
- There is difference in values between business people and key stakeholders
For example: People consider marketing of cigarettes and alcohol as unethical but business people consider it just as a product, “let the buyer beware”.
- Pressure to maintain short-term earnings
| Do you know? |
| When doing business with Finland, don’t be surprise if a Finn invites you to a sauna. It is considered as a sign of hospitality and meetings can be continued in sauna too. |
Maintenance of ethical behaviors
There are two ways in maintaining ethical behavior. They are code of ethics and guidelines for ethical behavior.
Code of ethics tells employees how an organization expects them to behave while on job. Example: privacy policies, appearance policies, abide by the law etc.
Guidelines for ethical behaviors are the generally accepted standards of behaviors for an occupation, trade or profession.
These generally accepted standards of behavior are arrived by three approaches.
- Utilitarian approach: Greatest good for the greatest number
- Individual rights approach: Not violating the rights of individual
- Justice approach: Not showing favoritism and discrimination
These approaches can be applied in making strategical decisions.
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Moral relativism
People feel that there is no defined code of ethics and that morality is relative.
Moral relativism means there is no set moral principles and it is only relative to some personal, social or cultural standards.
There are four types of moral relativism
- Naïve relativism: Where person should be allowed to interpret situations and act on his or her own moral values
For example: Harry was caught cheating in a test. His teacher has two options either to punish him or warn him. The decision is completely based on his teacher’s moral values.
- Role relativism: Where person in a particular position will put aside his or her personal beliefs and do what the role requires
For example: Hannah believes that work-life balance is important. But when she is required to do an overtime for a week to complete the project, she would definitely do it because her role calls for it.
- Social group relativism: Where people follow the norms of their peer groups.
For example: Company following the industry best practice
- Cultural relativism: Here morality is relative to a particular culture, society, or community.
For example: When having a business dinner with Indians, people generally avoid ordering beef because Indians consider cows as sacred.
We hope you guys have understood about social responsibilities in strategical decision making and ethics in conducting business.
Ok then before signing off
Love what you do, do what you love…. Bye
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