Business ethics and corporate social responsibility (CSR) can lead to have serious advantages to a business and can impact positively to the growth of that business. In addition, Barry (2000), suggests that organizations have a responsibility towards the community other than earning profits for its shareholders and it is supported by the concept of CSR which has steadily emerged as a social transformation (Carroll and Shabana, 2010). Markus (1989) has elaborated that one of the main assumptions in business is that every company has both social and ethical responsibility and at the same time they should try to implement value for the owner or shareholders of that business. Specifically, in a business, it is required to produce goods and services at an affordable price to consumers to make sure the continuation of the business, while satisfying the expected profits of the investors. However, Ferrell & Fraedrich (1997) argues that it must maintain ethical responsibilities which are defined as actions to be expected as an output of businesses by the community and the rest of the stakeholders such as employees.

The primary target of this blog post is to discuss how the business community or a firm can engage in ethical behavior and CSR and the benefits of practicing ethics and CSR policies. Furthermore, the importance of integrating those concepts into sustainable strategic decisions, policies, and processes of a firm for mutual benefits has been critically discussed.

According to Daft (2001), the unethical nature of a company leads to ruin its reputation and makes it low appealing for its stakeholders. Even though the business ethics and CSR concepts are regularly taken into account interchangeably, each of them has different meanings. Carroll, 1989 argues that the firms which steadily behave with ethics and CSR activities can generate better results in every aspect. Ethics consists of moral standards that guide a certain business community and CSR is considered to be an integrative management practice that tries to create its own responsibility within the firm on its objectives, competencies, and values (Meffert and Münstermann, 2005).Levine (2011) has defined ethics as codes of values and standards that guide a group of people with respect to what is good or bad in firms' conduct and decision making. Ethics is directly negotiated with internal values that come under corporate culture and impact on the decisions related to social responsibilities in the external environment. In this case, the meanings of ethics and values are not similar as ethics will explain how a moral person needs to behave where values are the internal judgments that evaluate how a personal behaves in the real world. Stanwick (2009) suggests that in a business contact, in order to be ethical, it is required to apply the practices of honesty and fairness with respect to their co-workers and the customers and those practices are consist of corporate or professional ethics that covers all the ethics-related problems that can be originated in a business environment. According to Dombin (2012), business ethics is a kind of practices that an organization process in the day today work along with its all the stakeholders such as employee, customers, suppliers and the overall community.

The development and the growth of a firm depend on its strong ethical code of conduct to guide both managers and the employees during their daily routines (Boheram,, 2002).In fact, those good practices will implement the appropriate background in the company to drive the development of HR practices (Buckley et al., 2001).

Mitchell (2001), specifically introduces below matters of ethical behavior in a business context.

·         Develop customer loyalty as it is a primary key to have the long-term success of a business and in case if the customer thinks that they have treated in an unfair way of overcharging they will not give a second chance to correct it. At the same time, the reputation of the firm for ethical behavior can create a good image in the market and provide more chances to attract new customers.

·         Securing talented employees is a must as those people need to appreciate their work and dedication by providing fair compensations and salaries. This leads to having a good chance of retaining valuable human resources within the company.

·         Employees also need to be ethical and they have to be honest in their skills and experience while acting as good team players rather than working as individuals as it is required to have positive relationships among the staff member and at the same time their superiors have to share confidential information with a trust.

·         The firm should try to avoid legal matters as much as possible such as tax payments issues and obeying environmental regulations or labor laws while keeping employees safely first.

 

According to Josephson (1988), there are 3 levels of ethical standards where the law of the country is the minimum bottom line where ethics are defined for the whole community with some actions having permission and some are not. Secondly, organizational policies are available as specific guidelines of the employees or managers to support on the day to day work which acts as a code of conduct. Finally, the moral stance of the workers is at the top-level where they must make decisions without any support from laws or company policies, but the firm's culture can redirect them on supporting such decision making. In order to successfully manage most of the potential ethical decisions with a business organization, they must implement an ethical framework to guide them and it will ensure to avoid dismissing any ethical concerns (Meffert ,2010).

Business operations are hosted in the community and as a return society is expecting a responsible action towards them where firms should try to see beyond their own interests and take care of the community (Broomhill, 2007). A business can have economic prosperity by moving away from its stakeholders and it is required to have a strong relationship between the organization and its key stakeholders such as employees (Bichta, 2003). CSR emphasizes the responsibility of organizations towards the society along with voluntary actions or policies that they can engage in to positively influence the community (Henry, 2009).In fact, it is required to have a corporate goal of earning profit and at the same to show their willingness to spend some of the benefits for non-economic purposes. David (1996) suggests that it is required to have public visibility of CSR actions as it is the responsibility of the organization to work towards society.

According to Rynes(2003), CSR shows signs to the external people who seeking for jobs about the values and norms of that company and if the firms have a good image it will provide a positive signal to the external parties. Hence CSR can be considered as a useful marketing tool for attracting the well-suited staff and also a significant component of corporate reputation (Fombrum,2008). CSR is beneficial for an organization as it can guide the business to meet the objectives and it also changes the policy environment. If a firm thinks to become socially responsible, it will provide benefits such as a strong relationship with stakeholders, attracting talented employees, and risk mitigation due to an efficient corporate governance framework. Furthermore, CSR will create social and environmental value by supporting the firm's objectives, and reducing operational costs, improving understanding with customers. It is, therefore, crucial that organization implement a CSR unit which is primarily responsible for coordinating and integrating all CSR initiatives within the company (Karim,2012).

In this post, the concepts of business ethics and corporate social responsibility and its benefits are addressed based on existing literature concluding that business ethics can lead to the positive employee, customer, and community relations, and at the same time, the firms will receive a better public reputation and greater customer loyalty with strong and healthier community relations which also can accustom to the benefit of firms that are socially responsible.

Check below quote from the famous research of Porter & Kramer (2006) to end this post.

“When employees view their organization’s commitment to socially responsible behavior more favorably, they also tend to have more positive attitudes in other areas that correlate with better performance, such as customer service and leadership from management “.

Please post your comments on the below question

What is the understanding of undergraduate students in Business Schools on the benefits of CSR and ethics to organizations?