Corporate Citizenship and Society, Essay Example

Business criticism. Business criticism takes place when the expectations of the society are not met by the organization or the business. The condition of business criticism is based on a social problem that is the gap between the society’s expectations on the business’ performance and the actual social performance of the organization. In the pluralist modern society, the increased level of affluence, education, media awareness through internet, television, revolution through higher expectations towards businesses, the rights movement, creating thousands of special interest groups, as well as the victimization philosophy’s presence creates a fertile soil for business criticism. The increased level of affluence impacts awareness of rights, business and social issues. The media’s role in the society also impacts the growth of rights movements and expectations, as well as the philosophy of victimization. Rising expectations is likely to be a continuing trend, due to increased awareness and exposure of social issues.

Four levels of power. Business power exists on four different environmental level: macrolevel, intermediate level, microlevel and individual level. On a macrolevel, the power of the organization can be exercised through a totality of business organizations. While these usually exist on a national level, such as Corporate America, the impact of globalization has created some regulatory and power implications throughout various industries. On the intermediate level, power can be exercised through industry organizations and groups of companies. A good example is a common interest group of financial companies trying to influence policy-makers regarding decisions affecting the companies. The microlevel power is the firm’s own power, and it consists of its ability to increase its profits. One example can be using the buyer power to tie up all supplier resources, making it hard for competitors to enter the market. On the individual level, power can be exercised through the leader based on associations, lobbying in organizations and for political causes. Public speeches and media coverage can help leaders exercise this power.

The economic power of the company can put pressure on policy-makers to provide tax allowances. The social-cultural power sphere is based on the society’s dependence on services: strike of telecommunication workers would impact a large proportion of the population. Individual sphere of power can be exercised through personal connections. Technological power is exercised through innovations made or not made available for the public or other organizations. Environmental power is a tool that can impact the outcome of projects within the business environment (Little, 2008). Political power is a tool that is used to influence government decisions to favor the industry or organization.

Iron law of responsibility. When an organization does not meet the expectations of the society based on how it uses its power, it is taken away, due to the impacts of the pluralist society. Indeed, the recent cases of corporate power abuse media coverage have created reduced trust in businesses and called for a higher level of transparency and accountability (Morrison & Bridwell, 2011). As an example: I, as a customer of Nike expect the company to pay decent living wages for workers around the world and not engage in creating sweatshops in Asia. Still, the company has been alleged to have factories in Asia with poor working and safety conditions (Nisen, 2013).  Therefore, while the company makes an extraordinary profit and charges top prices for its products, it does exploit low-cost workforce abroad. Government intervention was also used to increase control over responsibilities and enforce accountability within the financial services sector. Because the abuse of power and the lack of willingness to take responsibility for actions affecting other companies and members of the society, the government’s intervention was justified.

The Pyramid of corporate social responsibility. The pyramid of corporate social responsibility successfully describes the relationship between the four main components of CSR. The company needs to fulfill four different responsibilities: economic, legal, ethical and philanthropic. If the business is unable to create profits, it will not survive, therefore, there is no need for regulations. However, while one business can act legally all the times, it can still endanger lives or negatively impact the society. For example: there is no law to ban selling tobacco, but its consumption is harmful for people. This brings up ethical responsibilities: caring for people’s well-being and thinking outside of legal terms. Philanthropic responsibilities are best expressed through community projects, visions and charitable plans within the organization.

Corporate Social Responsibility and corporate social responsiveness. A firm that is socially responsible should aim for making a profit, adhering regulations and the law, being ethical and being a good corporate citizen.  Social responsiveness is a way the company reacts to social pressure. This can be implementation of environmental policies near national reserves, due to society’s disapprovan of industrial activities. Corporate responsiveness, according to Figure 2-1 originates from the business’ assumption of corporate social responsibility. Social responsiveness creates the organization’s social performance and forms the norms of its corporate citizenship model. While corporate social responsiveness is base on actions and activity, the idea of corporate social responsibility is based on obligations and responsibilities related to running the business. Corporate social responsibility is based on visions related to accountability and obligations towards the society, such as community projects and fair employment policies. Corporate citizenship is based on the three concepts of corporate social responsibility: corporate social responsibility, corporate social responsiveness and corporate social performance; outcomes.

Argument against corporate social responsibility. The strongest argument expressed against corporate social responsibility is that the implementation of management approaches to listen to various stakeholder and society groups dilutes the business purpose. Indeed, as it has been mentioned earlier, it is hard to find the balance between supporting various interest groups within the society. The primary focus of the business should be to look after immediate shareholders and those within the organization, instead of trying to meet the expectations of the society. While this objection has not been realized, it is important to note that it is significant and indeed business leaders face a challenging situation when they need to potentially compromise profits for corporate social responsibility. An example would be a microchip manufacturing firm with a mission to provide low-cost parts for large computer manufacturers. While the principles of corporate social responsibility would suggest that the microchips should be manufactured in America, this would reduce the profit margin of the company and increase the prices. While those groups that support creating jobs in America would be satisfied, customers who are looking for more effective computers and laptops would not.

Socially responsible investing. While socially responsible or ethical investing principles have been around for several decades, they failed to create an impact in the macroeconomic business environment. While there are several social and policy lobby groups that participate in the project and are committed to sustainability, it needs to be implemented in company policies and internal regulations. Social screening is a tool that is designed to determine the level of which a firm is socially responsible. However, this tool is based on individual judgments and indeed, it is hard to determine when an organization is “sustainable” or “green” enough. Without clear guidelines on all companies’ transparency, mistakes can be made. This can result in a company being appraised for its corporate social responsibility project attracting investors and customers, engaging with the public, but in a few year’s time, disturbing accounts about animal testing or low cost labor exploitation can surface. While the Council on Economic Priorities argues that research is more reliable today than it was ten years ago and the influence of socially conscious investors is constantly growing, the use of responsible investing alone would not result in the disappearance of unethical or irresponsible companies. While socially responsible investing is a good tool of demonstrating concerns, but does not have a large enough impact on the economic level.

References

Little, A. (2008) The business case for corporate citizenship. Retrieved from:      <http://www.csrwire.com/pdf/Business-Case-for-Corporate-Citzenship.pdf>

Morrison, E., Bridwell, L. (2011) Consumer social responsibility – the true corporate social responsibility. Retrieved from: <http://www.larrybridwell.com/CSR.pdf>

Nisen, M. (2013) How Nike solved its sweatshop problem. Business Insider. May 9. 2013. Retrieved from: <http://www.businessinsider.com/how-nike-solved-its-sweatshop- problem-2013-5>