Over the past three decades, business ethics has developed into standards of ethical and moral responsibility, not only in the United Kingdom but also across all regions of the globe. The evolution of business ethics has been as a result of the high demand for ethical or moral behavior in the international and domestic aspects of partnership and business communication. In the corporate and business world, the concepts of business ethics are referred to as the moral principles that guide the behavior of the business (Hawn and Ioannou 2016, p.87). Businesses acting ethically involves giving a clear distinction between what is right and wrong and moving forward to make the right decision. For instance, it means that the businesses should not engage in child labor, entertain bribery, or use processes and materials that are copyrighted illegally (Hawn and Ioannou 2016, p.89). Ethics are guided by the code of behaviors in any corporate setting and are expected to be applied by any business. Based on this understanding, the following discussion is an argumentative essay to justify the analogy that the social responsibility of a business is profit making.
The law is the crucial starting point for any enterprise. In most cases, the top leading businesses always have their principles highlighting the organizational core values and standards. For instance, in the case of Anglo America, the situation is referred to as Good Citizenship (Hawn and Ioannou 2016, p. 89). An enterprise should also follow relevant codes of conduct that guides and cover its sector. Many American and European companies have created the voluntary code of practice that guides and gives regulation on various practices in their respective industrial sector. The codes are always drawn up by the employees, government, local communities and other stakeholders. In line with that, the Anglo American has always played a significant role in the development of initiatives such as that of Extractive Industry Transparency Initiative, The Global Reporting Initiative, and the United Nations Global Compact. Over the years, the Anglo America initiative has contributed to the voluntary principles on human rights and security.
The code sets out practices and principles that ensure companies uphold and maintain the security of its employees and that operation in the volatile countries does not result in adverse impacts upon the local population. Also, the principles provide guidance on how both the public and private security personnel who were assigned the responsibility of protecting the mining operation or oil and gas facilities should be trained, vetted in human rights and thoroughly monitored. Corporate social responsibility is fundamental to any business operation. Thus, businesses should always make it a priority when it comes to protecting the rights of the local population, employees and all citizens in a country through which it operates in. For example, Anglo America aims at encouraging the idea that a company must support all the principles set in place by the Universal Declaration of Human rights.
A majority of companies aspire to make profit in every operation they undertake. With that said, Anglo America recognizes that for the goal of profits to be achieved, it is essential that a business takes into account all the ethical principles as stated in the statement of the corporate responsibility. Therefore, it is evident that despite the fact that providing strong returns for all the shareholders in the company remains the main goal and mission of the business, their objectives cannot be achieved at the expense of social, moral and environmental consideration. Anglo America believed in the theory that a long-term business can only thrive if it takes into account all the needs of the stakeholders, e.g., employees, government, suppliers, customers and local communities. According to the concept of stakeholder theory, it is suggested that a business should create as much value as possible for its stakeholders. The success and sustainability of a business depends on the interest that executives keep regarding the suppliers, customers, employees, communities, and shareholders. Hence, the interests and responsibility should always be aligned with the same direction as the operation of the business.
According to Edward Freeman in his controversial book “Strategic Management: A Stakeholders Approach,” managers in various organizations are not only answerable to the shareholders; an extensive amount of consideration needs to be placed on any individual or group of people who can directly affect or be affected by the operations of the business in achieving its objective. The sustainability of the operation depends on the business`s external and internal environment, for example, a business is unlikely to prosper in an environment that is harsh and unwelcoming. In addition, a business should not just be about making more profits for the stakeholders, but to focus on improving the state of the entire world industries along with driving the value of stakeholders. As an example, a business would only be focused on increasing the number of ads to people around the world most developed countries if its primary focus is money-making. However, advertisement and existence of the guises is not a guarantee that the business will be sustainable for a long period. Customers and other key stakeholders dictate the existence of the business. Hence, it is important for companies are able to retain customers’ loyalty for their own financial security.
Stakeholder theory is tied to the Corporate Social Responsibility (CSR) movement, which is focused on encouraging businesses to be more concerned about the impact of these activities on the society that includes their stakeholders and environment. The concept of CSR is an approach in the business world that plays a role in maintaining a sustainable development by delivering socially, economically and environmentally related benefits to all stakeholders. The way CSR is perceived and implemented varies with the company and country the business practices in. The concept is broad as it entails corporate governance, human rights, health and safety, working conditions, economic contribution and environmental effects. Ultimately, the main concern of CSR is to drive towards business sustainability. For instance, British Petroleum (BP) is a prime example among rival firms who are leading companies in the oil industry that embraces CSR and sustainability during their pipeline construction. BP launched initiatives that were in favor of the use of renewable energy to conserve the environment, preventing unfavorable climate change, corruption and the deterioration of human rights among others. Some companies have achieved remarkable efforts by applying certain unique CSR Initiates. However, it is very difficult for businesses to be on the forefront on all aspects of CSR.
The concept of stakeholder theory and corporate social responsibility aims at creating sustainability for the business. As part of the social responsibility, it is therefore evident that a business that maintains a high profile in CSR and keeping to the terms of stakeholder theory is a well-performing company. Sustainability is the mother of all positive outcomes of a business. For instance, the Coca-Cola Company is a good example in the case of water conservation as part of environmental ethics in 2006. After the court ruled out the company on its excessive use of underground water, the company became a leader in water management by introducing the Global water stewardship initiative. Since then, Coca-Cola has reduced its water consumption by 24% and adopted the rainwater storage mechanism, which has helped build their image in the beverage industry. Thus, if CSR and the principle of stakeholder theory aims at keeping the sustainability of the company, abiding by them and marinating them in an organization may result to more efficient long-term operations which are both profit and value-based. It is critical to note that general stakeholders view the value of the business as more important than the profits made by the company. Without value and good image, organizations are unlikely to attract investors and customers from any part of the world.
The social responsibility of a business is to increase profits is a notion that was brought to the debated papers of social issues in pedagogy by Milton Friedman in the 1970s. Although the article was a non-academic paper published in the New York Times newspaper, it has received a lot of responses from various academicians in the business field as well as the society since its publication. According to Friedman, his sole mission was to debunk the notion that the corporations, including managers who work in them, had the sole responsibility of increasing the overall social welfare. This was to be undertaken with minimal consideration of the law on the issue at hand. In his argument, managers had the moral power to act in the best interest of the shareholders. However, Friedman did not argue that the business should not engage in the activities that improved the social welfare, but in fact, he emphasized that the free market capitalism was itself a key factor in improving social welfare (Wapner and Kantel 2017, p.226). He also noted that companies in most cases would engage in activities that are aimed towards increasing social welfare. Nevertheless, he emphasized that these engagements should only lead to maximization of shareholders` wealth in the long-run. While the arguments made by Friedman have been examined over the years, some of the statements have yet to come to solid conclusions.
Moreover, one of Friedman’s statements mentioned that CSR was a pure and unadulterated socialism. Here, Friedman tried to convince the readers that socialism into an extent evil or unethical. Nonetheless, it is evident that a socialistic approach in the distribution of goods and services has clear positive implications in the business world (Wapner and Kantel 2017, p.226). Generally, the concept that illustrates individuals who relies on the command of the economy instead of letting the market determine who gets more scarce resources is a hybrid of capitalism and socialism. The free market has contributed greatly to creating aggregate wealth in the market, an advantage that is enjoyed by every individual. Therefore, it is important for stakeholders involved in the industry to understand each other, based on good communication and morality in every dealing.
Furthermore, Friedman also argued on the theory that people have a responsibility to make profits and distribute wealth among shareholders. The shareholder then had the sole responsibility of going back to the society for charity factions and other communal donations (Tai 2014, p. 112). He believed that businesses are just legal fictions and thus cannot have moral responsibilities nor be given responsibility for human rights. Though, the argument has no rigor since Friedman never gave a clear distinction between the social responsibility and moral responsibility. While it is true that the institution, including businesses, have no moral responsibilities, it is not justified to state that they possess social responsibility (Tai 2014, p. 115) and therefore, despite the fact that it is upon the shareholders to uphold moral standards of the business, the business too has the responsibility of operating under set standards in the industry. It is through social responsibility that the business will get to abide by the set rules, govern how employees and other stakeholders will be treated and develop rationalization in production, which are all related to the main goal of the business – profit making.
According to the Center for Ethical Business Cultures in the recent members’ roundtable discussion, which is an international perspective of business ethics, every corporation is required to comply with the set international standards of operation in the business world. It is vital to note that many risks associated with compliance arise from the conflict of interest and the company’s strategic plan in most cases. Hence, managers and/or the compliance officers in the business operation are required to have a good understanding of the local culture and business practices in order to identify compliance risk and solve conflicts.
Conflict resolution is a key function of the business. All organizations where people exists are prone to internal conflicts and rivalry due to differences in culture, background, and beliefs. In addition, a conflict is likely to arise when the business operates in a culture that conflicts that of the society of its employees. It is, therefore, the responsibility of the managers and officers in charge to understand and manage the conflicting interest in the organization (Bilbao 2013, p. 384). Generally, managers who understand local culture are usually better equipped in CSR. Also, such managers are more conservative when designing and shaping necessary guidelines to avoid conflict of interest and reduce the risk of non-compliance. Conflict of interest is subtle, common and different from one culture to the other. However, conflict in an organization can be avoided if the stakeholders communicate clearly and propose flexible guidelines that accommodate every single individual in the system (Frynas and Stephens 2015, p. 134). Also, the organization should request for full disclosure and create an auditable process to resolve conflicting issues in every operation. It is thus the responsibility of the business to set clear guidelines and procedures with regards to every stakeholder, which can be easily understood regardless of different interpretation and perception of the values.
Another responsibility of a business entity in its operation is on the ethical decision making. After struggling to come up with simple guidelines that can be easily understood by all in an organization, a business is always confident that all the decision made in each process will be able to meet the competency levels of the society. A basic model has to be followed which takes account two realities for an effective and ethical decision-making to be made in a business (Zhezak 2013, p.124). First, every employee should be regarded as important in the decision-making process in the normal operations of the business. Secondly, for the decision maker to be confident in the soundness of every decision made, each stand taken should be tested against the values and policies of the organization. In the decision-making process, the first step is always to define the problem and determine why a decision is needed for a desired outcome (Zhezak 2013, p.126). The way the problem is being defined shapes the business’ understanding of its cause and where the solutions will be derived from. The second step involves setting up relevant assistance, support and guidance. The resources in this step includes the business stakeholder giving various opinion based on the values and policies of the organization (Zhezak 2013, p.126). The third step then involves the manager and the decision panel coming up with available alternatives for the problem based on the collective opinion and ideas.
An ethical organization should always consider as many solutions as possible without discriminating and/or giving priorities to any kind. The fourth stage is the evaluation of the alternatives according to the identified problem based on the negative and positive consequences of the alternatives provided. A keen evaluation based on facts is therefore necessary in order to find the best possible solution. Thereafter, the managers are tasked with the responsibility of making the decision and implementing it before evaluating its relevance to the general and problem at hand. A business should aim to make minimal mistakes in decision making as it signifies commitment and role of the business. In ethical decision making, there are always three factors involved – the ethical intensity of the decision, the ethical principle used to solve the existing problem and the moral development of the manager. During the preconvention level, decisions are always made at a personal base, but at the conventional level, the decision must conform to the societal expectations. Hence, an ethical decision is that which takes into account the concerns of parties involved. It is crucial to note that a decision that is discriminative is unethical and results in more harm than good.
In conclusion, managing business ethics takes the notion that ethical and unethical conducts are formerly as a result of how the system is designed and aligned within an organization to monitor and control certain forms of behaviors. The system, therefore, determines how various people follow their predispositions to uphold cooperation and uprightness, assuming every person wishes to behave ethically. For example, the Information and Communication Technology (ITC) Companies have made an extensive progress over the years to control and manage ethical challenges regarding the internet censorship. The firms came up with a global network initiative that was a leading program in the entire industry in 2007. The program was aimed at building an effective framework for protection against the freedom of speech. In business, ethics is an ongoing phenomenon that managers and all stakeholders should always be prepared to understand. The codes dictate the best actions to be taken, and each business is required to set its own guidelines to meet the set codes of conduct. Thus, a business should not only work towards smooth operations and profit making but also ethical considerations and in this respect, the highest-level code of conduct should be maintained for sustainability and societal benefits.