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An organisations corporate social responsibility policies including business ethics and their impact

The effects of globalization and its impact on the transition from the industrial to the digital era are explored. Although the behaviour of business organizations has always had a profound worldwide impact, with the decline of the nation state economic power has, for the first time, eroded political power.

Simultaneously, the undergoing revolution in contemporary information and communication technologies has significantly empowered the customer. Responding to enhanced customer awareness and sensitivity to business and social responsibility issues -coupled with consumers' increasing ability to react- companies in the digital age may be expected to develop even stronger cultures of corporate social responsibility, proactively seeking to increasingly honour their moral obligations to society in the 21st century.

Business Ethics and Corporate Social Responsibility: Conceptual Definitions The concepts of business ethics and social responsibility are often used interchangeably, although each has a distinct meaning. The term business ethics represents a combination of two very familiar words, namely "business" and "ethics".

The word business is usually used to mean "any organization whose objective is to provide goods or services for profit" Shaw and Barry,p. One of the most important organizational elements highlighted by this definition is that organizations are indeed open systems, i. The fact that business organizations are open systems means that although businesses must make a profit in order to survive they must balance their desire for profit against the needs and desires of the society within which they operate.

The word ethics in the term business ethics comes from the Greek word ethos meaning "character or custom" Shaw and Barry, op. Ethics has been defined in a variety of ways, inter alia, as: Based on these conceptualizations, the definition of business ethics adopted here comprises "the moral principles and standards that guide behavior in the world of business" Ferrell and Fraedrich, opcit, p.

  1. Mastering the New Role.
  2. Organization Theory and Design. Although the behaviour of business organizations has always had a profound worldwide impact, with the decline of the nation state economic power has, for the first time, eroded political power.
  3. Although the behaviour of business organizations has always had a profound worldwide impact, with the decline of the nation state economic power has, for the first time, eroded political power. To be competitive in the new economy companies must offer products and services that are specifically customized to meet the needs of individual consumers Daft, 2001, p.

Corporate social responsibility is a multidimensional construct comprising four subsets of 1 economic; 2 legal; 3 ethical; and 4 voluntary philanthropic responsibilities Carroll,pp ; Ferrell and Fraedrich, ibid, p. The economic responsibilities of a business are to produce goods and services that society needs and wants at a price that can perpetuate the business and satisfy its obligations to investors.

Thus social responsibility, as it relates to the economy, encompasses a number of specific issues including how businesses relate to competition, shareholders, consumers, employees, the local community and the physical environment.

The legal responsibilities of businesses are simply the laws and regulations they must obey. It is the bare minimum required of business organizations by society in return for allowing them to obtain the inputs they need from the environment, transform inputs into outputs and dispose of outputs -- in the form of goods and services acquired an organisations corporate social responsibility policies including business ethics and their impact consumers in order to satisfy their individual needs and wants.

The legal dimension of corporate social responsibility thus refers to obeying local, national and international law regulating competition procompetitive legislation and protecting: Ethical responsibilities are those behaviours or activities expected of business by society -- yet not codified in law. Although there would appear to be little disagreement about the need for organizations to act responsibly toward the wider society and the natural environment in which they operate, organizations themselves have adopted a wide range of positions regarding corporate social responsibility.

One step removed from social obstruction is social obligation, whereby the organization does everything that is required of it legally but does nothing more. A firm that adopts the social response approach generally meets its legal and ethical requirements and sometimes voluntarily even goes beyond these requirements in selected cases. Finally, the highest degree of social responsibility that a firm can exhibit is the social contribution approach.

Firms adopting this approach view themselves as citizens of a society and, as a result, proactively seek opportunities to contribute. A Theoretical Framework Economy has been defined as "a systematic way of describing how goods and services are exchanged among members of a given community" Aldrich,p.

The earliest economies were agricultural in nature and centered on producing, exchanging and consuming products derived from the natural world.

  • The legal dimension of corporate social responsibility thus refers to obeying local, national and international law regulating competition procompetitive legislation and protecting;
  • Traditionally, national governments in industrialized countries tended to focus on economic growth and full employment via creating a business environment characterized by a fairly low degree of uncertainty;
  • It is the bare minimum required of business organizations by society in return for allowing them to obtain the inputs they need from the environment, transform inputs into outputs and dispose of outputs -- in the form of goods and services acquired by consumers in order to satisfy their individual needs and wants;
  • In the digital environment the balance of power shifts inexorably from the manufacturer to the consumer;
  • Strategies for Managing in the Digital Economy;
  • The emergence of industrial economies, following the Industrial Revolution, was characterized by a drive of business organizations to produce goods for mass markets.

In agricultural economies land and labour were understandably the most important factors determining economic and business success.

The emergence of industrial economies, following the Industrial Revolution, was characterized by a drive of business organizations to produce goods for mass markets.

In the industrial era capital and labour were by far the most important ingredients of success, leading to a hundred years of astonishing economic progress: The close link between economy and the nation state constitutes one of the most prominent features of the industrial era, with political power significantly surpassing economic power Coyle, ; Schwartz and Gibb, Traditionally, national governments in industrialized countries tended to focus on economic growth and full employment via creating a business environment characterized by a fairly low degree of uncertainty.

The most successful type of organization in this environment was the "make-and-sell" organization, namely the organization that was able to accurately predict what the market should demand, made the product and then went out and sold it Tapscott, Lowy and Ticoll,p.

  • Council on Economic Priorities;
  • Responding to enhanced customer awareness and sensitivity to business and social responsibility issues -coupled with consumers' increasing ability to react- companies in the digital age may be expected to develop even stronger cultures of corporate social responsibility, proactively seeking to increasingly honour their moral obligations to society in the 21st century;
  • In the new economy technology becomes the dominant factor of wealth generation "rather than land, labor and particularly capital", whereas "information and its proper management through information technology are making the difference and separating the winners from the losers" Aldrich, , pp;
  • Based on these conceptualizations, the definition of business ethics adopted here comprises "the moral principles and standards that guide behavior in the world of business" Ferrell and Fraedrich, opcit, p;
  • This implies that "businesses in the digital age must employ product development processes that interact dynamically with customers; that they perform a more constant-and precise- monitoring of overall market trends; that cycle times get dramatically reduced; that raw materials are procured rapidly and in a cost-effective manner; and that distribution methods that suit the customer's, not the company's convenience are put into place;
  • Consumers are nowadays informed and use this information to wield power over companies.

The dominant business-strategy adopted by make-and-sell organizations was internally-driven and management-centered -- i. Moreover, due to the fairly high degree of environmental predictability, enhanced emphasis was placed by organizations on stability, efficiency and hence rigid bureaucratic organizational cultures stressing that "shareholder value is the only value that matters" Schwartz and Gibb, opcit, p. Being a consumer in the industrial era meant "having very little direct power over what goods were available" Aldrich, ibid, p.

Globalization and Society's Changing Expectations of Business Recently, however, society's perception of corporate social responsibility issues has commenced to change in response to globalization. The term globalization is perhaps one of the most widely used and least precisely defined concepts in contemporary business.

According to Schwartz and Gibb the term 'globalization' does not refer to a single process but "serves as shorthand for several related processes", namely: Thus, society's perception of corporate social responsibility seems to undergo a phase of fundamental change. A variety of forces -geopolitical, socio-economic, demographic and technological- appear to influence society's changing expectations of business. First, the recent collapse of several communist regimes, such as the former Soviet Union, around the world has led to the development of a new integrated global business environment with market economies being the clear winner Tapscott,p.

Second, new problems are emerging -shaking up existing assumptions about our world- including: Profound technological change always involves economic upheaval and the impact of computerization is likely to prove of equal or even greater importance than that of electrification Coyle,xi.

Moreover, genetic engineering technologies being explored today raise more complex issues of scientific and social responsibility than corporate decision makers have ever faced Schwartz and Gibb, p. The population of the industrial nations is ageing rapidly. The proportion over 60 in the industrialized countries that make up the OECD is predicted to rise from less than a fifth in to a third in Coyle, opcit, p.

While in one half of the modern industrialized world, continental Europe, more than a tenth of the population of working age is currently unemployed -- and mass unemployment is here to stay as technology is making more and more workers obsolete ibid, pp xi, xv and The combined effect of rapid technological progress, ageing and unemployment exerts an unbearable pressure on the kind of welfare state almost all the Western European nations have had in place since World War II, an organisations corporate social responsibility policies including business ethics and their impact the proportion of population that pays tax - both of working age and still employed - is continually thinning.

A shrinking world, radical technological advancement and the unavoidable end of welfare resulted in enhanced uncertainty and at the same time led to a realization that "problems are increasingly global and demand solutions that presuppose a framework of values acceptable everywhere" Kidder and Cleveland, Cultures around the world thus converged towards adopting some core values, comprising: These universally shared values led to establishing international principles regarding the ethical responsibilities of contemporary business to society -the Caux Round Table CRT Principles of Business- endorsed by the overwhelming majority of the world's nations Schwartz and Gibb,p.

Last but not least, new relationships are currently emerging among the traditional social partners. A major development in this respect has been a significant shift in NGO strategy. For years non-governmental organizations NGOs focused on changing national government policies, while later they expanded their focus to include intergovernmental or supranational organizations such as the United Nations, the Organization of American States and the European Commission Schwartz and Gibb, opcit, p.

Recently however NGOs have begun paying increased attention to the general subject of business and social responsibility, moving away from the traditional "NGO-government" relationship toward a dynamic "NGO-corporate" relationship.

Business Ethics and Corporate Social Responsibility in the New Economy Just as the industrial economy gradually evolved from the agricultural economy, so the industrial economy is currently giving way to the emerging digital economy. In the new economy technology becomes the dominant factor an organisations corporate social responsibility policies including business ethics and their impact wealth generation "rather than land, labor and particularly capital", whereas "information and its proper management through information technology are making the difference and separating the winners from the losers" Aldrich,pp.

In the digital environment the balance of power shifts inexorably from the manufacturer to the consumer. To be competitive in the new economy companies must offer products and services that are specifically customized to meet the needs of individual consumers Daft,p.

This implies that "businesses in the digital age must employ product development processes that interact dynamically with customers; that they perform a more constant-and precise- monitoring of overall market trends; that cycle times get dramatically reduced; that raw materials are procured rapidly and in a cost-effective manner; and that distribution methods that suit the customer's, not the company's convenience are put into place.

In short, the free flow of information made possible in the digital age will put the customer at the center of business priorities and strategies" Aldrich, opcit, pp. It is built around dynamically linked sub-processes and relies on economies of scope rather than economies of scale. The people in a sense-and respond environment are empowered and accountable, and spend their time producing customized outcomes in accordance with an adaptive business design" Tapscott et al,p.

Sense-and-respond organizations are thus customer-driven, process-focused and employee-involved Zenger et al,p.

Due to the considerable increase in uncertainty, enhanced emphasis is being placed on flexibility, change and hence adaptive, entrepreneurial cultures stressing that "customer value is the only value that matters" Daft, pp and At the same time -responding to society's changing expectations of business- a growing number of companies seem to take pride in corporate citizenship, committing themselves to social responsibility.

SA involves auditing companies by independent assessors on a wide range of issues, comprising: Organizations meeting the standard earn a certificate attesting to their "social accountability policies, management and operations" ibid, p.

Business Ethics and Corporate Social Responsibility in the e-Economy: A Commentary

Concluding Remarks Business behaviour has always had a significant worldwide impact - in the eighteenth, nineteenth and twentieth centuries, and even before then. In the industrial era however political power generally surpassed economic power since governments were able to control their national economies Coyle,pp 18 and The effects of globalization, though, have led to a considerable erosion of power traditionally exercised by national governments.

In view of the decline of the nation-state "it has become government, as well as corporate, policy to let the market decide" Schwartz and Gibb, p. The role played by public opinion in shaping corporate behaviour is, of course, not new. What is new is the empowerment of the customer in the new economy, as a result of the undergoing revolution in information and communication technologies.

Consumers are nowadays informed and use this information to wield power over companies. Responding to enhanced customer information -coupled with consumers' increasing ability to react- companies may be expected to develop even stronger cultures of responsibility, proactively seeking to increasingly honour their moral obligations to society in the 21st century.

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  3. Moreover, genetic engineering technologies being explored today raise more complex issues of scientific and social responsibility than corporate decision makers have ever faced Schwartz and Gibb, p.

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