ARGUMENT IN FAVOUR CORPORATE SOCIAL RESPONSIBILITY AND BUSINESS ETHICS
Corporate social responsibility is a concept which describes how a company should conduct itself within society, particularly in relation to different views on what a business is about and how it should act (Mullins, 2005). On the other hand, an ethical code of doing business is defined as “a written, distinct and formal document which consists of moral standards used to guide employee or corporate behaviour” (Pater and Van Gils, 2003).
The key note speaker’s views on corporate social responsibility and business ethics complement the perceptions held by Mullin and Pater & Van Gils as explained above.
Businesses have to consider not only of the financial and economic interests in their decision making but also of the sustainable social and environmental issues. As a result, this paper examines the statements made against business ethics and corporate social responsibility at the conference and presents a case in favour of business ethics and corporate social responsibility.
AGENCY THEORY AND CORPORATE SOCIAL RESPONSIBILITY
It is believed that a business is run by their owners and in situations where owners cannot run the business they hire directors who are accountable to do the job on the owners’ behalf. The directors’ interest in the business must therefore complement the owners (Management Today, 2006). The consequence of this is that directors who are knowledgeable in business environment can manipulate share prices over the short term, to the long-term detriment of shareholders.
The issue is not about giving part of the shareholders’ money to the charity but rather it is in connection with directors who try to exploit the ignorance of shareholders and make money for themselves. According to Friedman (1970), the social responsibility of a firm is about making much money for the shareholders without deception and fraud. Having clear corporate social responsibility commitments will deter managers from manipulating share prices to camouflage the true value of business (Management Today, 2006).
Similarly, Sternberg (1994) argued that business ethics must involve strategies to maximise long-term wealth of shareholders by satisfying the common tests of decency in business transactions. As a result of this, Mullins (2005) emphasised that companies must refrain from cheating, stealing and coercion in their business pursuits and that they should ensure that distribution of profits must be ethically done.
ACCOUNTABILITY TO STAKEHOLDERS
It is very sensible for business leaders to produce reports on their corporate social responsibilities as stakeholders need to know what is going on in the business.
Society is divided into clusters of different stakeholders and by looking at their interrelation with a company they include shareholders, employees, strategic partners, suppliers, NGOs (Falck and Heblich, 2007). The emphasis on stakeholder theory in today’s...