Business Plan Competition 2006 India
Importance Of Csr And Business Ethics
1. Importance of CSR and Business Ethics
Corporate Social Responsibility (CSR) and business ethics have grown considerably in developed and developing countries over the past decades. The CSR and Business Ethics are concerned about the caring the human beings and its society. Because of this, CSR has emerged as an unavoidable concerned to the leaders of every nations. Still efficiency could not be gained as targeted.
The growing importance of business ethics and CSR in recent years has helped in “promoting the human rights in China” and it can be important to raise the interest “awareness on corporate, labour, social and environmental practices” as per Backgrounder (2008). This is the reason why the Communist Party enacted the Labour contract Law in 2008 in order to provide minimum protections to workers.
Development of human rights, labour standards, environment and anti-corruption is essential elements in business as stated in the “10 Principles in Business Activities” by the UN Secretary-General Kofi Annan at the World Economic Forum on January 31, 1999.
Corporate Social Responsibility along with business ethics plays significant roles in the success and failure of the business. CSR plays an important role in forecasting and decisions making. Kitzmueller (2008) focus on the CSR as an essential building block of the firm’s strategy. The study further added that the investors based their investment decisions not only on financial but also on social and environmental performance criteria. The importance of CRS is gradually rising day by day and general people are more aware on this issue.
2. Political Perspective of CSR
The need of CSR is rising from the past decades. The people who share the power at top level are gradually taking the issue of CSR in their interest. Each and every responsible people including stakeholders, government are taking the various issues of corporate social responsibilities in a serious way. Political and business people are doing it for their own interest and prospects.
According to UN (2007), “The concept of Corporate Social Responsibility (CSR) aims both to examine the role of business in society and to maximize the positive social outcomes of business activities.” The study further made analysis on the why developing country governments should be interested in CSR. The study made analysis on two reasons for low income countries to engage for Corporate Social Responsibility (CSR). They are “defensive and proactive justifications which are not mutually exclusive”. Defensive justification is more related to minimizing the adverse effect of CSR on local communities, environments and markets. The study further deals on the example of Vietnamese garment and footwear industries on increasing national competitiveness through improved CSR practice. Vietnamese Chamber of Commerce and Industries (VCCI) provide the CSR support trainings on CSR skills and practices as a result the company is able to receive the Corporate Social Responsibility Award 2006. The study gave more focus on the importance of government to provide CSR training to its companies to increase its competitiveness because the foreign investors basically bring the expertise knowledge with them from the abroad. It is necessary for the local companies to compete them.
United Nations Industrial Development Organization (UNIDO) has been working in the field of CSR especially for developing countries. The organization is contributing to make the individual and cluster companies of developing countries to compete with foreign multinational companies in the field of CSR. UNIDO (2006) says, “CSR has frequently been misleadingly equated simply with ‘corporate philanthropy’ and ‘charitable giving’, which in turn are often separate from their core business and without an underlying strategic plan behind it”
There are many cases where that the CSR has failed in recent days. Despite of positive views, there are alternative views that show CSR policies have no real impact on society and people. The political systems and business man are just bringing the new issues to highlight themselves and coming to the media and among the people. The study of Gill (2007) made criticism on CSR as “ill defined”. The study focused on the lack of validity for measuring the CSR. The studies of Doane (2005, cited Gill 2007) view CSR by stating the “political complexities”. The study further states CSR as a “myth” and argues on the corporate moral obligations and licence given to operate the business by the political parties. This shows that the CSR can harm the societies by creating the competition among the business houses. This leads to negative effect on society and corporate governance due to the lack of transparency on “corporate decisions, social activities and policies” as per Crane and Matten (2007).
3. Debates on Corporate Social Responsibilities
CSR holds many issues of debates. Different organizations and environmental rating agencies are keeping more records and track on the issues that the organizations and political parties are making. Most debates are more concerned about the transparency policy of the organizations. CSR has become a tool for defending the competitors.
On the other hand, government is no more proactive like in the past. The study of Ascoli (2009) explains that the government involvement is increased when a global economic crisis took place. The study focused on sign of more “good governance” in CSR practices.
In the words of Ascoli (2009), “Government led CSR promotion faces several challenges” The study states that the effort for promoting CSR for the companies as a volunteering action do not guarantee proper implementation.
It is hard to match the interest between the general public and private organization as the CSR the managers have to focus on attaining a balance between the stakeholders and strategic planning. It is sometimes debated by the organization that the private sector should purely involve in profit maximization and government should only think about the social and environmental issues.
United Nations Industrial Development Organization (UNIDO) has been working in the field of CSR especially for developing countries. The organization is contributing to make the individual and cluster companies of developing countries to compete with foreign multinational companies in the field of CSR. UNIDO (2006) says, “CSR has frequently been misleadingly equated simply with ‘corporate philanthropy’ and ‘charitable giving’, which in turn are often separate from their core business and without an underlying strategic plan behind it”
4. The Responses of Companies to CSR
The ample of studies and research works on CSR show that the companies and politicians are positive towards the CSR. They are forced to adopt the policies of CSR for defensive reason in order to be secured in the market. CSR clearly impacts our corporations, society, and educational organizations. It provides a powerful driver for continual efficiency across the national boundaries.
Each and every activity that the organization does can have the ripple effect. The company should take account of such effects and work for the mutual benefits of the two parties. The Figure 1 shows the detail analysis of Ripple Effect as suggested by Marsden and Andriof (1998, cited Zappla 2003).
The Coca-Cola Company claims that they are concerned about the business ethics and CSR. The company has published the 2006 reports stating that the water use ratio has been decreased than the previous years. The company has given more focus on the environmental issues by stating the use of waste water after proper treatment. The company is also proud to announce the refillable packaging system. For this it has already opened the recycling plant in Austria. During the economic crisis, usually firm are ready to help the people and communities on growth and welfare in the sake of creating future customers. Coca-Cola companies is doing this for creating the values for stakeholders and societies by bring new concept like “Going Green”.
Governmental organizations are increasingly focusing their attention on Corporate Social Responsibility (CSR) practices. According to Maloni (2006), “CSR continues to evolve in practice, and its reach now often extends to supply chain partners including suppliers, customers, and logistics providers.” The study gave the example of failure of CSR adopted NIKE regarding the “sweatshop labor issues and its overseas suppliers.”
5. Conclusion
CSR, due to social activities, much attention is given. It enables political and business people to acquire the targeted result quickly. It has become the tool for future prospects of different groups that facilitates receiving the fame in near future.
In underdeveloped and developed countries the growth of CSR has been widespread in recent times. Despite of the controversies, the political elite of the world are continuingly raising the issue of CSR stating the important implications for economic activities although they fail themselves. They are selling the policies for popularity. A study by Hertz (2001 cited Crane and Matten 2007) and Smith (1990 cited Crane and Matten 1997 ) argued that there is more power in individual choice as a consumer than in their choice in the ballot box and consumption choices are for “purchase votes” in the public control of corporations.
Bibliography
Ascoli k. and Benzaken T., 2009. Public Policy and the Promotion of Corporate Social Responsibility. School of International Relations and Pacific Studies, University of California.
Backgrounder H. A., 2008, IR 2008: Maximizing the Impact of CSR in China, Available from: http://www.hrichina.org/public/PDFs/CRF.3.2006/CRF-2006-3_IR2008-CSR.pdf
Crane, A. and Matten, D., 2007. Business ethics. 2nd ed. India: Oxford University Press.
——–2003. Corporate Citizenship: Towards an extended theoretical conceptualization, International Centre for Corporate Social Responsibility, Nottingham University, Available from: www.nottingham.ac.uk/business/ICCSR
Gill S. L., 2007, Corporate Social Responsibility: Issues and Implementation in APO Member Countries, Asian Productivity Organization, Kuala Lumpur, Malaysia
Kitzmueller M., 2008, Economics and Corporate Social responsibility, Working papers 2008/37, European University Institute, Italy Available from www.eui.edu
Maloni M.J. and Brown E.M., 2006. Corporate Social Responsibility in the supply chain: An Application in the food industry. Journal of Business Ethics, Available from: http://www.springerlink.com
UN (2007) Innnovation Briefs, Available from: www.un.org/esa/sustdev/publications/innovationbriefs
UNIDO, 2006, Position Paper on Corporate Social Responsibility, Available from: unknown
Zappala G., 2003. Corporate Citizenship and the Role of Government: the public Policy Case,
Information analysis and advice for the parliament, 1-32
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