EXAM QUESTIONS ON BUSINESS AND SOCIETY
1. To what extent are companies justified in claiming that they are good corporate citizens?
The key goal of any business enterprise is to maximize profits and minimize cost. The management must safeguard the social welfare of the employees. In addition, the company must respect the social and cultural values as well as providing quality products and services to the consumers. Therefore, corporate citizenship is the understanding of all stakeholders in a company or business enterprise that it has social responsibilities to the employees, the surrounding society and the consumers, who indirectly influence the company’s performance in regional and global market. (Carroll & Buchholtz, 2003). Another category of stakeholders that influence the performance of a business enterprise are the shareholders who have invested their capital in anticipation of a good rate of return.
Chartered management Institute (CMI) experts emphasizes that it is essential for a company to conduct have organized corporate social responsibility(CSR) practice that enhances equality on all stakeholders to ensure they receive returns equivalent to their proportion of invested capital. The following are the key elements that guide a company to achieve corporate social responsibilities practices include:
A company needs to define its social and economic objectives about the demands to both the employees and the shareholders. The best strategy for a company to achieve its corporate citizenship is to organize the internal and external aspects of the company. The internal aspects include better remuneration of the employees and production of quality of goods and services. On the other hand, external aspects include the economic and financial expectations of shareholders, the legal obligations as stipulated business act and the social responsibility of the surrounding environmental of the society.
Corporate social responsibility Management System
The management system entails organizing a reputable group that would steer forward the company’s social and economic objective. In addition, the management can seek external information on how other companies are managing their corporate social responsibilities.
Corporate Social Responsibility (CSR) reporting
The management should implement the CRS plan, evaluate both achievements and demoralizing factors and reporting to the stakeholders. The internal and external aspects concentrate on the profitability, quality of products and services, social welfare of employees, the shareholder's earnings and the surrounding society. (Carroll & Buchholtz, 2003).
Engagement of Stakeholders and Communication
The stage harmonizes all the previous stages to enhance consistency in the company. The management should engage with the stakeholders in portraying the steps they have taken and the benefits that they have gained. Additionally, the management should conduct feasibility study on the potential stakeholders to partner with for the continuity of the business.
The key concepts that define a company’s extent of corporate citizenship include:
For a business enterprise to fulfill the conditions of a corporate citizen, it is obliged to adhere to the legal conditions pertaining to the establishment and operation of an enterprise. They include registration if the company under the company’s Act, payment of tax, payment of custom duties, receipt of a certificate of incorporation, and renewal of business permits.
A successful business is assessed based on its level of profitability. The company should account for pay all its expenses and retain a significant amount of profits. The net profit should be able to guarantee the shareholders a certain proportion equivalent to dividends. Additionally, the company should produce high quality products and services and withstand the competitive force of rivals by retaining and expanding the extent of market share.
Philanthropy includes the social responsibilities to participate in programs that benefit the society and enhance the human welfare of the citizens. Some of the philanthropic duties include providing financial assistance to education institutions, provide medical equipments and free clinics, and engage the society on approaches to improving on the quality of goods and services in a manner expected by the society.
A successful company should adhere to acceptable code of conduct that upholds the human welfare of the employees, the stakeholders, consumers and the society. Good ethics should uphold fairness and equal justice for all relevant parties. The company should uphold the acceptable norms by the society and ensure that the company did not compromise its standards. Moreover, good ethics should be morally acceptable in order to enhance integrity and accountability in the company and safeguard strive of the enterprise as a going concern.
2. Describe the four techniques of neutralization and explain their implications for business ethics
The concept of neutralization was first mooted by two theorists; David Matza and Gresham Sykes who were researching on juvenile delinquency. During their research on juvenile delinquency, they deduced that people are conscious of their moral obligations and the extent to which the law requires them to adhere to the standards .Similarly, the theorists argued that, despite the set legal and moral obligations, people understand that they are obliged by their consciousness to act morally and accept the wrongs they commit. Therefore, they devise mechanisms to convince themselves that they had performed their best to control the situation under the prevailing circumstances and, therefore, had no moral responsibility to commit a crime. This concept was realized in the criminal context when juveniles tried to exonerate themselves from their criminal acts. However, the same emotional technique has been applied in the business context by employees and the management who defend their inability to achieve the company’s set goals despite having all the necessary resources. The techniques of neutralization are refutation of injury, condemnation of the condemners, and denunciation of the victim and denial of responsibility
Denial of the victim
The wrong –doer may accept that he was responsible for the action that happened to the victim. However, in self-defense, the offender may convince the accusers by arguing that it was right for the victim to deserve the offence. The offender’s argument stands in the light of self –consciousness and claims that his or her actions were circumstantial, and the victim would not be exempted from the harm or injury. Consequently, the victim’s circumstances are transformed into an offender. This intelligence of the offender is not exceptional in the business sector when employees execute vengeance against the company’s management and claim that it was demanding them to seek attention from the employers. Under the circumstance that the victim is abstract or becomes the offender, the case is weakened. For instance, the employees may organize a cold strike to protest against poor remunerations and other allowances in a pre-agreed modality of payments. Consequently, production is derailed, supply reduced below demand level, acceleration of operation costs and loss of revenue. In such a case, the employers may justify that their action was a retaliatory action against the employers’ unethical conduct of failing to honor the agreement. This technique interferes with the ethical code conduct prescribed by the company thereby raising ethical contradictions.
Denial of responsibility
This technique occurs when the delinquent argues that the course of his or her action to the victim was involuntary and beyond his capabilities. The offender, therefore, convinces the victim and other interested parties that he was not willing to commit the action and he were influenced by circumstances .In the business context, they employees may defend their action based on an external force that they could not control. Such a situation could be compared to the principal-agent theorem that argues that the principal (shareholder) may influence the agent (manager) to commit an action for self-gains. For instance, the manager of a commercial bank may be induced by one of the banks directors to facilitate an overdraft for the director against the bank’s policy and code of conduct. In self-defense, the manager may claim that he committed the offence to safeguard the termination of his employment contract.
The technique is detrimental to the business operations and could lead to ulterior motives by the employees leading to loss of revenue.
Denial of injury
Under this technique, the offender accepts responsibility of the wrong doing but insists that the offence caused no harm to the victim. In a tactful approach to defending his or her actions, the offender may base his arguments on the guidelines. The technique separates the action as a contravention of the law from the society’s acceptable norms. For instance, an employee may commit truancy based on the argument that it was a public holiday and, therefore, his absence would not have any severe impact because there would be no customers. In this case, the employee justifies his absence because the management did not report any economic loss incurred for his absence. This action compounds the code of ethics because it states that truancy without permission is wrong and punishable. Therefore, it creates confusion on the best action to take against the offender.
Condemnation of the condemners
Under this technique, the offender neither accepts nor rejects the offence implicated but rather blames the victim(s) accusations as malicious and based on ulterior motives by the presumed victims. For instance, a manager may be accused of misappropriation of funds based on the findings by internal audit committee. In a tactical argument, the manager may defend himself on the basis that the employees had bribed the internal auditors motive was to oust him from the helm of management. This technique creates confusion in the interpretation and implementation of the business ethics. The situation creates an ethical dilemma. Consequently, the accusation could lose its foundation leading to a loss in the business.
3. Discuss four approaches to address environmental issues
Corporate citizenship is an aspect that bestows responsibility on a business enterprise to exercise corporation and social objectives in an effective manner without bias. One of the social objectives in any company is to enhance the social welfare of the society by maintaining the environment. Environmental issues range from chemical emissions, water pollution, soil pollution, air pollution, disposal of plastic materials and many others. According to Seppala and Griseri, there are key approaches that corporations use in order to comply with the demands of corporate citizenship. These key approaches include activist approach, Legal approach, market approach and Stakeholder approach. These approaches provide an effective method to make sure that the business adheres to all the set requirements as well as maintaining the key objective of maximizing profit and shareholders’ returns.
This approach concentrates on the companies’ adherence to laws set by the constitution regarding the environment. All business enterprises have an obligation to respond to environment acts as stipulated in the constitution of the federal government or nation. For instance, all companies have been advised to wastage disposal methods that are healthy for the environment. Besides, companies are required to disinfect the chemical effluents before they are released to the ground to avoid killing microorganisms that are health for soil fertility. Another common requirement that has been proposed by the United Nations Environmental program (UNEP) is that all companies should create public awareness to the society to educate them about measures of handling industry effluents and how to dispose of the end products that are not biodegradable. For example, In United States, Willamette industries of Portland invested $7.4 million to install pollution control equipments in adhering to the Environment Protection Agency (EPA) rules. The companies incur costs that may be partially forwarded to the customers on the cost of products. The government may intervene through provision subsidies to protect consumers from exploitation. (Griseri & Seppala, 2010).
Under this approach, the companies respond to multiple stakeholders concerns on a single based formula approach. The stakeholders include consumers, suppliers, employees, other companies, shareholders and the surrounding society. This approach is critical since it enables harmonization of similar concerns to avoid addressing similar petitions differently. Consequently, the approach saves on costs. For instance, other companies may petition the other company to avoid emitting effluents since they could act as raw materials to their company. This may lead to a merge or create a market for trading the end products and thus reduce pollution. In addition, customers propose that the company uses bio-degradable packages that could easily decompose into the soil and add nutrients. The stakeholder’s approach may incur costs for implementation that could be forwarded to the consumers. For example, the government may intervene by enacting rules that prompt the companies to use bio-degradable packaging materials. (Das, 2010).
This approach refers to the voluntary address to environmental concerns affecting the society. In this approach, the companies shoulder the costs and consider me as an external diseconomy of scale. Additionally, the government could be prompted to support the noble act by the companies and allocate them the funds to sponsor their environmental conservation initiatives. This approach is regarded as the best approach due to its ease of implementation. However, few companies take the initiative voluntarily, citing the high cost as a concern. (Das, 2010).
4. Critically discuss ethical issues that can impede government’s ability to regulate businesses in the interest of the wider society.
Ethical behavior refers to the acceptable code of conduct that guide the behavior of companies, employees, shareholders and all other stakeholders in attaining the set goals of a business enterprise. Business enterprises are obliged to adhere to the set rules guided by the nation’s constitution in a bid to enhance the cohesiveness among all stakeholders and maximize revenue for the company. However, ethical code of conduct of businesses has always conflicted with the government’s imposition of policies. The government acts as an oversight authority to the public and private enterprises to ensure that they adhere to the set policies and standards as stipulated in the constitution. The government has little influence on private enterprises that are restricted to exercising an oversight authority to ensure that private companies do not exploit the consumers. The following situations have hindered the government from fully exercising its authority to control them in a bid to adhere to the government’s standards:
Remuneration of employees
The role of the government is to make sure that all employees are paid proper wages as per the set standards by the nation’s constitution. The government may impose regulations on the business management to harmonize the wages as per the prevailing wage rate. However, conflict arises when the business management realizes that its financial capacity cannot sustain the suggested wage rate. Therefore, the company would contravene the government’s order to harmonize wages. Additionally, private businesses have the tendency of manipulating the financial statements because the law provides a privilege to the business persons not to publicly declare their financial earnings. The government henceforth loses full control over the business enterprises.
Whistle –blowing versus ethical code of conduct on secrecy
All employees are obliged by the company’s code of conduct to ensure they safeguard the internal affairs of the company. Employees are supposed to maintain the integrity and spread the good reputation of the company despite its unhealthy social and economic internal affairs of the company. On the other hand, the government code of conduct emphasizes on full disclosure of any misdemeanor by any employee in the management to ensure that corruption and nepotism are intolerable. However, whistle-blowers encounter the dilemma of exposing the corrupt officials at the expense of his job and instead prefer to remain silent. This situation hampers the government effort to protect the society’s interest from misuse by the management.
Conflicting interests between the government officers and the business enterprises
This situation occurs if a government official has invested an interest in the private sector. Consequently, the government officer may act as a shield for the business from facing the wrath of the law. The government will be in a dilemma because one of the law enforcers will be unwilling to fully implement the government’s order at the expense of his personal interest. As a result, the government is hindered from fully exercising its oversight role to protect the interests of all stakeholders and the society. (Griseri & Seppala, 2010).
On the other hand, businesses may influence the government to respond to their social and economic challenges in order to ensure that they are able to withstand the economic shocks. Business may require the government to provide grants, reduce tariffs on raw materials, provide subsidies or adopt policies that would enhance an equal competitive environment with public enterprises. The business may utilize different forms of drawing government’s attention that include:
Lobbying: The businesses may seek the attention of law legislators by sensitizing them on the need to reject or pass a certain bill that concerns their interest. Lobbying may occur through rent-seeking problem; a practice that has led to the passing of controversial bills or rejection of important clauses that benefit the society.
Interest groups: This practice entails mobilization of those organizations whose role is to advocate for policies that defend the interests of all business enterprises. Interest groups act as the voice of the majority and form a link between the government and the businesses. (Griseri & Seppala, 2010).
Cold protest: This is the unorthodox and last resort approach that businesses may utilize to demonstrate their concerns against a certain action by the government that may curtail on their freedom. The businesses may mobilize their workforce to destabilize the operations of the companies thus leading to the economic downturn of the country. This situation would prompt the government to act quickly and salvage the country’s economy.
Monks, R. A., & Minow, N. (2004). Corporate governance. Malden, Mass: Blackwell Pub.
Carroll, A. B., & Buchholtz, A. K. (2003). Business & society: Ethics and stakeholder management. Mason, Ohio: Thomson/South-Western.
Griseri, P., & Seppala, N. (2010). Business ethics and corporate social responsibility. Australia: South-Western Cengage Learning.
Das, G. A. (2010). Ethics, business and society: Managing responsibly. Los Angeles: Response Books.