Whether or Not to Uphold Business Ethics Essay
Perhaps everyone agrees that businesses perform several possible activities, when striving to achieve their primary aim of making profits. However, the point of contention comes in; on the way the activities are handled and executed. The controversy often regards the question of whether to uphold the law, or adhere to the business ethics. Some argue that, only the law should be upheld; whereas, others advocate for both the law and ethics.
Carroll’s Pyramid Model of CSR
Carroll, a prominent professor, tremendously represented his ideologies using a conceptual model. The professor of business ethics used three-dimensional concepts, to present his thoughts about the roles of an organization (Carroll, 2004, 114). He began by defining the social roles of an organization; followed by noting the social concerns associated with the social tasks; then finally noted the motivation of organizations that respond to social roles.
In his model, Carroll proceeded to list the four primary responsibilities of an organization. Economic responsibility was the first role of a company described by Carroll. He explicated that; a company must fulfill its economical obligations of making profits (Huniche, & Pedersen, 2006, p. 29).
He further insisted that, any activities done by the company must be guided by the motive of making remarkable profits. Most importantly, he insisted that the economic role of the company i.e. making profits is not only beneficial to the company, but also to the society, as well.
Carroll also elaborated the significance of a corporation to respect the rule of the law, in their undertakings. He termed this ideology as the legal responsibility of the company (Goyal, & Goyal, 2009, p. 452). Carroll insisted that organizations should carry out their economic duties within the framework of the law.
Another concept that Carroll used in his model is the ethical responsibility of the company (Meehan, Meehan, & Richards, 2006, p. 386). He referred the concept to the numerous roles that entail doing what is right, fair and does not injure others. Carroll noted that all these roles are not recognized within the framework of the laws; however, they are manipulated and influenced by the community values.
He concluded his model by explicating the philanthropic responsibility of an organization (Theil, 2010, p.194). Carroll noted that charitable roles go far beyond the ethical responsibility since they are done voluntarily. He further explained that, this responsibility entails the unpaid activities done by a company, with the goal of benefiting the entire community.
Carroll’s ideologies never stopped at this point; instead, he proceeded to represent these concepts on a pyramid. He developed the pyramid using the past trends of how businesses practiced these responsibilities. He placed philanthropic responsibilities at the peak of the pyramid; followed by ethical roles; then legal roles; and finally, the economic roles at the bottom (Carroll, 1991, p. 42).
His representation was a reflection on how businesses emphasizes on the economic roles. However, the emphasis decreases from one role to another i.e. from economic roles to the far end of philanthropic responsibilities. Conclusively, he insinuated that economic roles were primary to the achievement of the remaining responsibilities. In addition to that, he also noted that it was extremely necessary for companies to fulfill all these responsibilities, for them to fly high.
Using Carroll’s model to explain my position on the topic
Carroll’s model is a superb model and undoubtedly represents the practical situation on the ground i.e. how businesses prioritize their responsibilities. It is noted in his model that, organizations emphasizes on economic roles; then followed by legal; then ethical and lastly, the charitable roles (Mark, 2009, p.114). However, this does not in any way grant businesses the mandate to carry out their activities, without considering the ethical bit of it.
In other words, I’m in total disagreement with the topic i.e. the idea of businesses complying with the law; while, on the other hand, ignoring its ethical responsibilities. Despite my disagreement, I also think it is reasonable for companies to prioritize legal responsibilities over the ethical roles. This is because of the serious implications to companies, incase they disobey the law. Furthermore, in Carroll’s model, organizations strongly emphasize on legal responsibilities than on ethical roles.
Backing up my position using Carroll’s 4stages of CSR
Carroll’s model consisted of four stages, which can be used to analyze the topic. The stages begin with the economical responsibilities of an organization, which is the most emphasized category (Davidson, 2009, p.22).
This category explains how organizations stress more on making profits, as compared to other responsibilities in the pyramid. In point of fact, the most primary role of a company is to fulfill its economic responsibilities i.e. making tremendous profits (Foster et al, 2009, p. 177). However, to achieve this, companies must perform numerous activities and make several critical decisions.
It is, therefore, imperative for organizations to perform their responsibilities within the framework of the law, and also in an ethical manner. According to Carroll’s theory, organizations emphasize more on legal responsibilities i.e. in comparison to their ethical roles. Therefore, I expect many companies to concentrate more on legal responsibilities rather than the ethical roles. However, this should not be mistaken, as a direct permit for the complete ignorance of ethical roles.
An exceptional illustration, whereby companies only consider the profitability and the legality of their activities; whereas, on the other hand, disregarding the ethical standard, can be noted in the example below. Consider a situation whereby, a public company publishes a misleading economic report, so as to lure new investors.
This is an automatic breach to the societal values, despite the company’s fulfillment of its legal responsibility of publishing its financial reports. This means that the company will raise its finances using a faulty report that does not in any way reflect the financial state of the company.
Despite the company gaining from such a disreputable act, they may later face very serious consequences, incase the public get to know about their disgraceful act i.e. the company could lose its magnificent reputation, name and even the future potential investors. This clearly indicates how significant it is, to uphold ethical standards in institutions or organizations.
The second stage that Carroll explicated in his model is the legal responsibilities of organizations (Crane & Matten, 2007, P. 49). This stage entails how businesses comply with the law as they perform their activities.
Despite the overwhelming inter-association between the law and ethics, there exists some significant dissimilarity within the terms. The difference is determined by codification i.e. laws are codified whereas ethics are not. This, therefore, implies that any violation of codified ethics is punishable by the law; furthermore, some penalties may be extremely harsh depending on the committed offense.
Following this argument, many companies are often cautious i.e. when it comes to upholding the rule of law. This is part of the fundamental reasons that make organizations emphasize on adhering and respecting the law. However, I believe this should not in any way permit organizations, to ignore their ethical roles. I may perhaps agree to the minimal emphasis, but not the entire disregard of ethical conducts.
A convincing illustration on how business uphold the law while, on the other hand, disregard their ethical roles, is presented in the below example. Consider this scenario, whereby a personnel manager in a public company, appoints his or her friends, without considering their qualifications.
According to ethical standards, it is unjust to hire employees based on friendship; instead of merit. This may, negatively, impact an organization especially on it productivity due to the unmerited staffs. Moreover, the company may tarnish its name and image, thus losing societal trust. Consequently, it may lose a number of its customers, which translates to a reduction in sales and also profits. This clearly indicates how vital it is for companies to perform and uphold their ethics.
The third stage entails ethical responsibilities, which explains the roles of companies on upholding community values and social norms. These responsibilities are often not coded; however, it is extremely necessary for companies to uphold them (Stevens, 2008, p. 602). This is due to the societal trust gained by institutions, which is in turn, translates to customer loyalty, followed by massive sales and profits. It is noted that most companies, after doing dishonorable acts, simply deny or cover the act thus may probably end up undiscovered.
This is, therefore, one of the reasons, which influences companies to emphasize on legal roles than on ethical responsibilities. Despite legal responsibilities being more significant, I strongly believe that companies should still not ignore their ethical roles. I further agree to the differences in emphasis on these social responsibilities, but there should be no complete disregard of any of the roles.
An excellent example that may credit my argument can be observed in the following instance; whereby, companies exploit their customers by price commodities exorbitantly, during times of scarcity or due to market monopolization. This is often seen by various companies, in their attempt to make extraordinary profits, by exploiting customers. Unfortunately, this is not punishable by law, since the breached social ethics are not codified.
However, incase the pubic gets to know about the unethical act, the company may lose its impeccable reputation, name, and image, which may result to future loss of customers, thus future massive loss. As noted in this example, upholding ethical standards is extremely significant to companies thus should not be ignored.
The final stage of Carroll’s model is the philanthropic responsibilities of companies (May, Cheney, & Roper, 2007, p. 121). This stage encompasses all the voluntary roles of a company, which are done to promote the well being of the community. It summarizes all the unpaid activities that companies do to improve the welfare of human and the general environment. Companies often put little efforts on this stage, when compared to other stages.
Philanthropic responsibilities are not mandatory to the companies; however, they are extremely significant in building the company’s image and name. For instance, an organization that participates in charitable works such as providing basic requirements to the less fortunate, significantly increase the company’s name and image in the community. A company also wins societal trust while performing such activities thus attracting new customers, which translate to increased sales.
Despite the variability on emphasis, all these responsibilities, tremendously, influence a company’s performance, whether directly or indirectly. Following this observation, I find it extraordinarily crucial for companies for companies to consider and perform all these responsibilities i.e. philanthropic, economical, ethical and finally legal.
Any of these responsibilities should never be ignored, since they all develop and promote companies in various capacities. However, I entirely concur with the notion that, emphasis on these responsibilities may vary depending on their significance to the company. In other words, I entirely disagree with the topic thus I would advise companies, to consider all these responsibilities in their undertakings.
List of References
Carroll, A 2004, managing ethically with global stakeholders: a present and future challenge, a journal of the academy of management executive, vol.18, no.2, pp. 114-120.
Carroll, B 1991, the Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders, a journal of business horizon, pp. 9-48.
Crane, A Matten, D 2007, Business ethics: managing corporate citizenship and sustainability in the age of globalization, Oxford University Press, New York, pp. 49-51
Davidson, K 2009, ethical concerns at the bottom of the pyramid: where CSR meets bop, Journal of International Business Ethics, vol.2, no.1, pp. 22-32.
Foster, G Doherty, B Royce, M Meehan, J Mason, C Meehan, K & Neil, R, 2009, management for Social Enterprise, SAGE Publications Ltd, London, pp. 177-180.
Goyal, A & Goyal, M 2009, Business Environment, FK Publications, New Delhi, pp.452- 454.
Huniche, M & Pedersen, E 2006, corporate citizenship in developing countries: new partnership perspectives, Copenhagen Business School Press DK, Virginia, pp. 29-39.
Mark, E 2009, Put Your Corporate Social Responsibility Act Together, Tate Publishing, Oklahoma, pp.114-117.
May, S Cheney, G & Roper, J 2007, the debate over corporate social responsibility, Oxford University Press, New York, pp. 121-122.
Meehan, J Meehan, K & Richards, A 2006, corporate social responsibility: the 3C-SR model, international journal of social economics, vol.33, no.5/6, pp. 386-397.
Stevens, B 2008, Corporate Ethical Codes: Effective Instruments for Influencing Behavior, Journal of business ethic, vol. 78, pp. 601-609.
Theil, M 2010, Innovations in Corporate Social Responsibility from Global Business Leaders at Panasonic, Thomson Reuters and Nanyang Business School, American Journal o f Economics and Business Administration, vol.2, no.2, pp.194-200.
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