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Corporate Responsibility Management

Essay by   •  April 4, 2011  •  Research Paper  •  3,985 Words (16 Pages)  •  2,047 Views

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Introduction:

Before a constructive dialogue can take place, we first need to reach an understanding about corporate responsibility management. The main purpose of this paper is to examine the various categories that are associated with corporate responsibility management and to review all inquires for highlighting some of the issues and challenges confronting in this field. Over the past decade, globalization of the market brings tremendous thrust for companies to think beyond mere profit making. The study and practice of the international business revolves around a central concept of value creation and distribution: how organizations transact within the global context to create value through resources transformation and exchange, and how the outputs of this activity are distributed.

There are many types of corporate responsibility, but in this paper three types of corporate responsibilities will be discussed: corporate social responsibilities, environmental, and ethics. The corporate social responsibility covers a wide range of issues such as plant closures, employee relations, human rights, corporate ethics, community relation and environment (Moir, 2001). Today companies in this world market facing a greater threat from environmental issues. In this paper we will go through some of the major issues and what solutions or theories companies are adopting to overcome those issues. The last but not the least, we will go over the ethical responsibilities of the companies in multinational enterprises.

Corporate Social responsibilities:

The need for companies to undertake activities that respond as social responsibilities has been discussed in literature for decades. They identify the primary role of companies to produce goods and services the society wants and needs. However, there is an inter-dependent relation between the business and society. This indicates that corporate social responsibility is that business society which is interwoven rather than having distinct entities (Moir, 2001). The notion of corporate social responsibilities appeared first in the beginning of the twentieth century in the United States. It was initiated by wealthy business-persons, who believe that firms should not only be concerned with profit-making. The emergence of this idea is also due to the imbalance created by growing power and size powers. These developments gave rise to two main principles: the charity principle and the steward principle (Ans, 1999). The charity principle is based on the idea that more fortunate people help unfortunate people. The second principle steward or trustees is based on the idea that managers who own private firms may be able to act in the general interest rather than just serving their shareholders.

After the Second World War and the Great Depression the interest in social responsibility diminished. So from the second half of the century there is great debate on Corporate Social Responsibility. In the past two decades, the discussion on CSR is influenced by the stakeholder theory. The stakeholder approach is a device to understand the firm in its environment, meant to broaden the vision of the management of its roles and responsibilities beyond the profit maximization to include the non-stockholding groups (Mitchell, 1997). There is no question on what kind of entity can be a stakeholder: person, group, organization, institution, societies and even the environment. There is an increasing concern about the firms to examine their social responsibilities. The corporate social responsibility covers a wide range of issues such as: employees, customers, environment, and community. Whether or not business should undertake the CSR, it depends upon the economic perspective of the company that it is adopted to and there pressure to perform towards society.

Literature (Mcwilliams, 2001) (Moir, 2001) suggests that the stakeholder theory of the firm is used on the basis to analysis those groups to whom the firm should be responsible. Stakeholders are typically divided into two sections: primary and secondary stakeholder. According to Clarkson (1995) the primary stakeholder is one without whose continuing participation the organization cannot survive. The categories for primary stockholders' are investors, employees, and customers. On the other hand, the secondary stockholders' are those who influence or effect, by the organization, but they are not engaged in transactions with the corporation and are not essential for its survival. The major issues in corporate social responsibility are which stockholder to include and on which group should be addressed.

The other theory which represents corporate responsibility is Social Contracts Theory. Moir (2001) describes society as a series of social contracts between members of the society and society itself. In the context of CSR, an alternative possibility for the business to act in responsible way was not because of its commercial interest, but because the business itself is the part of how society implicitly experts business to operate. Which be the part of commercial benefit for the business to enhance their reputation, but also link their profitability and maintaining legitimacy (Suchman, 1995).

The firm can be described as a series of connections of stakeholders that a manager of the firm attempts to manage. The managers should have the appropriate strategies that allow the firm to achieve its goals, in what ways the satisfaction measures were reached to the diverse stakeholders, and to make sure that their collaboration is transferred into an increase in wealth for the company. The organization should make it balance among the different stakeholders, who pursue their own particular interest. The company continuously receives a series of favorable contribution from all the stakeholders in different ways. There are two kinds of stakeholders: voluntary and involuntary. The voluntary stakeholders contribute directly to the firm and except to receive benefits as a result, whereas inventory stakeholders who may be negatively affected by such things like pollution or congestions. In short the firm has to identify their contributions and later elaborate its own balance in respect of each stakeholder. The balance must be created which makes the firm survives in the medium and long term (Lorca, 2004).

Reece (2001), states that globalization has reached a stage where the collective impact of commerce may be largest economic and social force on the planet. Where the forces of business and the activist portion of the civil society always fails to reach the common grounds on the serve of the global impact. According to John the central issues are found in the dislocation of life, the inequitable distribution of the wealth created

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