Ethics Assignment Paper on Understanding Corporate Social Responsibility

Understanding Corporate Social Responsibility

The overall respect for democracy, freedom, and human rights is one of the essential principles in any business. The three create an effective framework for the operations of companies and prerequisite success and growth. Every firm has to follow the universal declaration by the United Nations (UN) on the importance of human rights, which requires that each agency, individual or a corporate organization to contribute towards the attainment and observation of the set rights. Moreover, companies across the world have to respect the tripartite declaration of principles concerning the social policies of the UN international labor organization (ILO) and the OECD guidelines for foreign companies.

 Finding a balance between profit and the social impact of a business has been a constant challenge in the business world, which has continually led to the spawning of different discussions (Onkila 2013, p.227). Notably, the profit side of the argument emphasizes on the golden rule in business which is to ensure increasing of shareholders’ wealth and maximizing the income. However, the social argument elaborates that the community served by the firm is equally a shareholder in the enterprise and deserves proper and healthy consideration. As such, this article analyzes a newspaper article on corporate social responsibility (CSR) and the impact it has on both the business and the community. Additionally, the study will elaborate on the effectiveness of CSR and the best method for its implementation.

 The article  SMC  donates  P1-B  to government for drug rehab centers, authored by Daxum  Lucas, a reporter for the  Philippine Inquirer, is a unique and a well-elaborated review of the efforts that different companies put forth to ensure that both the company and the society benefits from their efforts.  The paper was published on Sunday, August 20th, 2017 by the Inquirer newspaper. The author notes that San Miguel Corporation had donated a total of P1 billion to boost in the relief efforts that the government has effected to ensure that they curb the drug addiction among its citizens. Moreover, the amount donated was historically cited as one of the biggest assistance the Philippines government has ever received from any business organization. The diversified conglomerate stated that the amount was meant for building rehabilitation centers and other related facilities as part of the campaign by President Duterte in fighting illegal drugs (Lucas 2017, p.1). 

The author demonstrates that peace and order are essential components in ensuring that the company progresses economically across the state. In any business setting, the move by SMC will be seen as a corporate social responsibility since it advocates for uniform development in both the firm and the surrounding community.  According to Servaes and Tamayo (2013, p. 1059), CSR is a concept that develops a mutual relationship between global corporations, citizens, and governments of that particular country. In a local setting, CSR is concerned with building the connection between a company and the local community in which it resides or operates. Öberseder, Schlegelmilch, Murphy, and Gruber, (2014, p.113), on the other hand, defines CSR as going beyond the economic functions and legal requirements set for any business.

 Understanding the corporate social responsibilities of a company requires conducting of a feasibility study on the wants and preferences of their customers. Additionally, the management needs to understand the dynamics of the market and how their competitors operate.  Some of the mega trends in business include technological breakthrough, demographic and sociological change, rapid urbanization, the shift in economic power, and climatic changes (Servaes and Tamayo 2013, p. 1062). All these factors have a direct impact to both the activities of the company and to that of the customers. The social responsibility adopted by an organization must also be in line with the mission and the strategy adopted by the company. This will enable creation of a common operational language across the sectors.  The management of the company should also create a good relationship management program to enable it understand the tastes and preferences of their clients.

Notably, other different names have been used to describe CSR including corporate citizenship, social responsibility, and strategic philanthropy. As the names perceive, the business including SMC carries with it particular perspectives on the role that companies owe to the society. Regardless of the name used, the dominant paradigm underlying in CSR is that creation of a value-sharing platform between the various stakeholders. Servaes and Tamayo (2013, p. 1056) argue that the role of any business is to create value to its shareholders but in such a manner that creates worth to the society, manifesting itself as a win-win situation. In the article, the president of the SMC Company states that an enterprise’s human resource is a key factor in its growth and development (Lucas 2017 p.1). He also adds that by supporting the government, the company will create an environment that enables various factors of the society to participate and contribute to the growth of the country.

In its 125 years of operation, SMC has been involved in different events that contribute to the betterment of human existence including production of medical facilities, building of infrastructure, and participation in charity events. With a net worth of P1.3 trillion and revenue of P329 billion in the first half of the financial year 2016- 2017, the conglomerate had initially donated P500 million for different housing projects in Iligan city and Cagayan de Oro, and another P500 million for a similar project in Leyte (Lucas 2017, p.1). Conversely, the president of the corporation states that the most effective method of fighting illegal drugs is through the building of rehabilitation centers to enable secure provision and accessing of drugs by the dependents. Further, it provides a chance to restore the lives of drug addicts and help them to become part of a developing society once again. Onkila (2013 p.223) notes that, through the adopting of the corporate social responsibility principles, the organization will be able to refrain from other undesired characteristics including pollution.

The Virtue Ethics Theory

The method provides an approach that emphasizes on individual or organization characters as an essential element in ensuring ethical thinking rather than the rules about the acts and their consequences. Virtue, as defined by the theory, entails the favorite characters in the business including the courage to engage in activities that other firms refrain from engaging in (Valentine 2015, p.6). Moreover, moral behavior in any enterprise is not limited to the guidelines set by the management but rather involves the company pursuing moral excellence as one of the objectives it has set. According to Aristotelian, the founder of the theory, a virtuous agent in business is involved in a continual quest that aims at balancing ethical decision making and profiteering the company. He further adds that such an agent does not need to apply the rules set in the industry but rather attempts to make decisions that are consistent with the wants of the pursuant, which may include exercising of sound moral judgments, courage, wisdom, consistency, and integrity (Lucas 2017, p.1). Moreover, Valentine (2015, p.7) states that moral virtue is a habit that once a business adopts, it will win the loyalty of its customers. 

 Although the theory gives an overview of how ethics in companies helps in achievement of CSR, it has been criticized by different scholars on different grounds. Rangan, Chase, and Karim (2012) assert that morality involves interaction between the company and its customers, while virtue ethics concentrates on self-development of personal character and flourishing. The initiative by SMC is based on the restoration of society morals and reduction of unethical behavior in the Philippines. Although the article provides an elaborate strategy adopted by both the company and the government, it fails to provide the extent of the drug menace in the Philippines society. The author provides the monetary part of the deal and fails to present the effects of the organization’s activities to the community. It is, therefore, important for the article to include the opinion of customers who are the ultimate beneficiaries of the project. Additionally, he fails to give an insight of the contribution of the government to the entire project. As the highest authority of the land, the government ought to have put in place measures that limit drug abuse among its citizens.

Conclusion

 Corporate social responsibility is an essential part of the business since it ensures proper understanding between companies and the community. Companies can achieve this in different ways including utilization of available natural resources, engaging in healthy competition with other players in the market, creation of employment, and transformation of the landscape. The move by San Miguel Corporation presents a larger picture of the extensive role played by the business sector that ensures uniform growth of both the company and the immediate community.   In the long run, the company will create a wider market for its commodities and increase its competitiveness both in the local and international markets. Additionally, the rehabilitated individuals will act as marketing agents for the company thus reducing the cost of advertising the company’s products.

References

Lucas, D, (2017), SMC donates P1-B to government for drug rehab centers. Inquirer. [Online] Available at:

SMC donates P1-B to gov’t for drug rehab centers
[Accessed 20 Aug. 2017].

Öberseder, M, Schlegelmilch, BB, Murphy, PE, and Gruber, V, 2014, Consumers’ perceptions of corporate social responsibility: scale development and validation. Journal of Business Ethics124(1), pp.101-115.Retrieved from: http://cebr.vse.cz/cebr/article/download/184/128

Onkila, T, (2013), “Pride Or Embarrassment? Employees’ Emotions and Corporate Social Responsibility.” Corporate Social Responsibility and Environmental Management 22.4 (2013): 222-236.Retrieved from: https://jyx.jyu.fi/dspace/handle/123456789/49758

Rangan, K, Chase, L, and Karim, S, (2012), Why Every Company Needs a CSR Strategy and How to Build It. Working Paper, pp.2-31. [Online] Available at: http://www.hbs.edu/faculty/Publication%20Files/12-088.pdf [Accessed 20 Aug. 2017].

Servaes, H and Tamayo, A, (2013), The impact of corporate social responsibility on firm value: The role of customer awareness. Management Science59(5), pp.1045-1061.Retrieved from: https://pdfs.semanticscholar.org/3f0b/b9263e39278a49eb94c10120c9009e9fdc2c.pdf

Valentine, S, (2015), The Case for Considering Virtue Ethics in Organizational Ethics and Human Resource Management. Handbook of Virtue Ethics in Business and Management, pp.1-9.Retrieved from: http://abiturient.bgu.ru/mag/files/inter/Richard_Daft_Management_Text_Book.pdf