For my purpose here, I would like to examine the case for which the two views of Corporate Social Responsibility (CSR) are positioned in. One of these viewpoints is that CSR is practiced ethically in businesses simply because it is the right thing to do, through being moral and just by following a Values-based management system. The other perspective on CSR is that it is simply a ‘do-gooder’ ploy, and that it is only practiced within firms to impress society and those around them.
For the duration of the following essay, both viewpoints will be discussed and analysed to then predict which view is more valid, acceptable, and realistic in today’s society. In order to do this, we first need to expand upon the interpretation of what managing for sustainability means in this context. Often viewed as a new management tool, sustainability recognises that while “corporate growth and profitability are important, it also requires the organisation to pursue societal goals, specifically those relating to sustainable development – environmental protection, social justice and equity, and economic development. (Wilson, 2003 p. 1) In other words, an organisation cannot hope to achieve long term prosperity for all of its stakeholders without recognising that it is operating within a society which will scrutinise and judge it upon its moral and social actions. Wilcox (2007, p. 2. 7) takes this further in the notes by highlighting that all organisations are embedded in societies and communities. So from this information, is it simply expected from businesses to act socially just, through it becoming a social norm of recent? or is it just that because so many firms practicing this to ‘do-gooder’ ploy to look good, that now all businesses are practicing it as well? There are two specific opposing views of Social Responsibility; known as the Classical View and the Socioeconomic View. The ‘Classical View’ sees that a businesses’ one and only social responsibility is to itself, to maximise its profits. The ideologist that supports this is theorist Milton Friedman. Although he does think businesses should be socially responsible, he does not believe that it is the core role for businesses to abide by. Instead, he argues that the main reason for a usinesses’ operation to exist is for the return on investment for the shareholders of a particular business. He also argued that businesses should not spend their own money on attempting to be socially responsible, as that only causes money to be taken from dividends (leaving shareholders with a smaller portion of the initial return) or the money coming from consumers paying extra due to the higher price of their product. In brief, he asserts that “the only responsibility businesses have towards society is to pursue the interests of the owners of the business – the shareholders”. Quoted in Wilcox, 2007 p. 2. 11). Whilst other advocates of this school manipulate some of the contentious statements adhered to by Milton, I personally find this line of thought to be antiquated by today’s standards. What worked in business even twenty years ago, will no longer stand up to the intense scrutinisation of the media, and the messages that it can now convey to many of the primary and secondary stakeholders involved. The ‘Socioeconomic View’ explores the theory that a businesses’ role is to not only maximise profits, but to focus on convalescing society’s welfare as well.
It argues that a businesses’ CSR is to not only shareholders through maximising profits for them, but also to the society as a whole. An example of this would be James Hardie Industries. They did not fulfil their CSR duties during a major scandal during the majority of the 20th century, involving past employees attempting to sue the company. This is due to the business attempting to escape compensation claims made by previous builders for the company, who had worked with products that have exposure to Asbestos, a harmful dust.
This Resulted in workers experiencing sickness and even death through developing a combination of cancerous diseases such as Asbestosis and Mesothelioma. (Chia, Synnott, 2009) In the media spotlight, James Hardie Industries did not react in the appropriate way, but instead were unethical and tried to escape from compensation claims that exceeded what they were prepared to pay for, not being a Socially Responsible firm. This resulted in the businesses’ reputation to be nonexistent anymore, as all trust was diminished with the brand, after bad publicity ruined the large Australian company’s image.
If the company listened to Public Relations professionals in the initial stages when the claims were firstly being made, giving advice to accept the blame and be socially responsible, they could have simply avoided the negative media attention and still have a positive reputation. Instead, the company lied and tried to escape claims by establishing a parent company situated in the Netherlands, as it was in this place that they could attempt to leave victims without their compensation. Even though the business was not involved in illegal activities, they were still being socially irresponsible.
There is a line where the law and CSR meet, and even though some ethical issues are not protected by the law, the business can still be perceived in a bad light by the outside world. Where then does business ethics fit in with this view of CSR? An organisation cannot hope to achieve sustainability without having a firm ethical structure in place within its culture. As Wilcox puts it “the quality of the organisational ethical climate has also been demonstrated to influence the ethical behaviour of managers, and indeed, other employees. ” (p. 2. 9) The outcomes of following this stance is further highlighted by the impact that this may have on the organisation being able to position itself as an “employer of choice” alongside of the positive implications that this has upon human resource management. Whist this demonstrates that it would be a case of corporate suicide not to adopt an ethical approach to business sustainability, (and this has been demonstrated in recent times by businesses such as HIH and the Australian Wheat Board), we cannot discount that sometimes the legal systems that are put in place to ensure corporate compliance, sometimes fail.
It is only throughout the conversion to becoming a CSR based business that a firm can possibly experience sustainability in the long term. These two opposing theories have many differences within one and other, the most evident being that of their time frames (short term vs. long term), their purpose (to make profits vs. to make profits whist giving back to society and acting as responsibly as possible), and their primary concern (shareholders vs. stakeholders and the environment). It is evident from these opposing theories that businesses can pick and choose which practice they would like to undertake.
However, when companies choose the wrong practice for them, it is filled with risk and is at their own peril. Taking this a step further, we can compare CSR with Political Correctness (PC). Strictly adhered to today as a means for the human population to move forward and evolve as a species, being PC is part of everyday living. So too then, should CSR be adopted by businesses. Metaphorically speaking, CSR is Darwinism for business. Values-based management (VBM) involves the implementation of the ‘socioeconomic view’ when it comes to types of CSR views.
It has become apparent that businesses that adopt a VBM system are those who succeed financially in the long term; ‘Managers of these companies are choosing to adopt CSR – corporate executives generally respond to shareholders’ expectations because failing to do so will hurt the company’s market performance and by extension will hurt executives’ remuneration’ (Petersen, H. 2009 p. 2) It has become distinguishable that businesses who do not uphold CSR values and ethics are those who fail, due to the unappealing perception that this may create for the general public.
This then obviously affects the firms’ revenue, as the wider community would not want to purchase the specific company’s products. In this instance, VBM is not so much a ‘do-gooder’ ploy, as; ‘Values-based management serves as an essential first step toward building a high growth organization in which individual performance improves, and heightened individual achievement drives economic success’ (Anderson, C. 1997). Through a business putting VBM into practice, they are creating a business that operates ethically, and morally correct.
Through doing so, over their business lifetime they will not have to overcome certain problems that other businesses who do not adapt this system have to defeat. ‘Values-based management lays the foundation for the development of mission and subsequent corporate and individual plans and goals by enabling managers to address and resolve unavoidable dilemmas’ (Anderson, C. 1997). Businesses who do not adopt a VBM system into their everyday practices will find themselves having to resolve these certain ‘dilemmas’, such as James Hardie Industries, as discussed previously.
As elucidated before, this company chose not to follow a values-based management system, and because of this, the business failed. If the company were to make the right ethical choice however, they could possibly have survived their problems to do with Asbestos victims. The values adapted in businesses should be (but sometimes in this case are not) followed consistently so avoid dilemmas such as those stated previously, with component such as these; ‘Values like integrity … doing the right thing, not the quick, cheap or convenient thing – but the right thing.
Values like humility … taking our jobs, families and communities seriously – but never ourselves. Values like leadership – doing what you say you’re going to do. And values like respect – providing opportunity by treating people fairly and with dignity’ (Eskew, M. 2005) It has become apparent that through this example and the references quoted, that VBM is not a ‘do-gooder’ ploy, as it actually assists a business in its own survival, through choosing the right ethical path that follows with success. Companies can and do seek to profit from doing things that are deemed negative by society, such as making people unemployed, damaging the environment, behaving in corrupt or underhand ways, and selling products which harm people” (Pruzan, P. 1998). This dishonest practice that some businesses undertake when choosing not to follow a VBM system is seen as deceiving and unjust, however firms sometimes can manage to escape the blame created by themselves.
Even though they can still uphold the law while being socially irresponsible, they are not following ethical and just practices. Using the James Hardie Industries quandary example once again, they still followed the law, however managed to escape compensation payments through fleeing and relocating themselves overseas. They managed to escape their problem, however over the long run it caught up with them when the business failed due to creating themselves a dreadful perception by the media and public eye.
In this case in point, establishing a VBM system is once again not a ‘do-gooder’ ploy as by not being socially just and responsible as a firm can create a negative image for the business, thus having the business end in fail through a remarkable collapse. Through my own personal opinion, establishing a VBM system within a firm is not a ‘do-gooder’ ploy. Through being an ethical and responsible business within society, the firm can anticipate succeeding in the areas of finance and public acceptance. Without these two key goals for a business to achieve, the business simply cannot exist overtime without failing.
By being a socially responsible business, wether it be through acting ethically; giving back to the environment, not undertaking corrupt activities, upholding the businesses’ values, acting within the law, being honest and not misleading, a firm can expect to succeed in their industry through the ways that they contribute to the society as a whole. However when firms do not act in a ‘do-gooder’ manner, it is understandable that their company is likely to fail overtime due to not being able to overcome their problems and weaknesses, created through being misleading and corrupt in the first place.
REFERENCES – Wilcox T, 2007 Managing for Organisational Sustainability, The University of New South Wales, Sydney – Wilson M, (2003) “Corporate sustainability: What is it and where does it come from? ” Ivey Business Journal Online, March-April, vol 67, no. 4 – Donaldson T, (1996) “Values in tension: Ethics away from home” Harvard Business Review, 74 (5):48-62 – Solomon RC, (2004) “It’s Good Business”, in Shaw WH, and Barry V, (Eds) Moral issues in Business, Wadsworth, Belmont, pp 35-44 – Chia, J. & Synnott, G. (2009) An Introduction To Public Relations: From Theory to Practice.
South Melbourne, Victoria: Oxford University Press. – Petersen H, Vredenburg H. (2009) “Morals or Economics? Institutional Investor Preferences for Corporate Social Responsibility” Journal of Business Ethics. November 15, 2009; 90(1):1-14. Accessed May 5, 2010. – Anderson C. “Values-Based Management” Academy of Management Executive November 1997; 11(4):25-46. Available from: Business Source Complete, Ipswich, MA. Accessed May 3, 2010. – Eskew M. “Leading with Conviction: Values-Based Management For Today’s Turbulent World”. Executive Speeches. April 2005; 19(5):26-29. Accessed May 4, 2010. Pruzan P. “From Control to Values-Based Management and Accountability” Journal of Business Ethics. October 1998; 17(13):1379-1394. Accessed May 6, 2010. ESSAY OUTLINE TEMPLATE Issue: Social Responsibility: Do you think values-based management is just a ‘do-gooder’ ploy? Explain. Key Definitions: Social Responsibility, Values-Based Management, Values. Central argument: That Values-Based Management is not just a ‘do-gooder’ ploy, but that establishing this system is the only way that a business can succeed in the long term, through following their values system and being ethical.
Premises (+ evidence): Subheading 1: Managing for Sustainability 1. The businesses perspective and interpretation. Recognising that an organisation cannot hope to achieve long term prosperity for all of its stakeholders without recognising that it is operating within a society which will scrutinise and judge it upon its moral and social actions. (Journal article) 2. Questioning wether it is a social norm, and if it is expected from businesses in today’s society. (Previous evidence, arguing) Subheading 2: Opposing views on Social Responsibility and Ethics 1.
Classical View: arguing that the main reason for a businesses’ operation to exist is for the return on investment for the shareholders of a particular business. (Direct quote and journal article) 2. Socioeconomic View: arguing that a businesses’ role is to not only maximise profits, but to focus on convalescing society’s welfare as well. It argues that a businesses’ CSR is to not only shareholders through maximising profits for them, but also to the society as a whole. (Example-James Hardie Industries, journal articles) 3.
An organisation cannot hope to achieve sustainability without having a firm ethical structure in place within its culture. (Journal article, examples- HIH, AWB) 4. The comparison between the two views on social responsibility, and how the wrong adaption of one of these views can be fatal for a business. Subheading 2: Values Based Management 1. Businesses that adopt a VBM system are those who succeed financially in the long term. It has become distinguishable that businesses who do not uphold CSR values and ethics are those who fail, due to the unappealing perception that this may create for the general public. Multiple journal articles) 2. Through a business putting VBM into practice, they are creating a business that operates ethically, and morally correct. Through doing so, over their business lifetime they will not have to overcome certain problems that other businesses who do not adapt this system have to defeat. (Multiple journal articles and Example – James Hardie Industries) 3. Establishing a VBM system is once again not a ‘do-gooder’ ploy as by not being socially just and responsible as a firm can create a negative image for the business, thus having the business end in fail through a remarkable collapse. Multiple journal articles and Example – James Hardie Industries) Conclusion: Establishing a VBM system is not a ‘do-gooder’ ploy, as without this they cannot expect to succeed, especially when it comes to finance and public acceptance. Firms that do not adopt this system are most likely to fail overtime due to not being able to overcome their problems and weaknesses, created through being misleading and corrupt in the first place. (Reflection on quotes, journal articles, etc. )