Case and smith (2012) commented that free market system cannot guarantee the efficiency, and an efficient free market economic system need enterprises with honesty integrity fairness, justice and other ethics to operate the market in addition to a valid property right and the legal system. In recent years, there has been a thing in business ethics. Business Week (1976) described the 1970s as a period of an "ethics crisis" in which foreign political payoffs, price-fixing schemes, and the abuses surrounding the 1972 Presidential campaign dominated media attention on unethical business activities. In the 1980s, trading on insider information, scandals in the defence procurement, and leveraged buyouts have created another period focusing national attention on unethical business activities. Major companies also have been involved in activities such as check-kiting and money laundering( Arlow, P. J Bus Ethics 1991 ). According to Stanford Encyclopedia of Philosophy (2016), Business ethics, goes by the name corporate ethics, is a form of applied ethics or professional ethics that examines the ethical, moral principles and problems that appear in a business environment. Law often guides business ethics, but businesses may follow the basic framework of business ethic to gain public acceptance. In 1960s, the concept of business ethics emerged as companies became more aware of a rising consumer-based society that showed concerns regarding the environment, social causes and corporate accountability. Business ethics is not just defining what is right or wrong, it is to reconcile what companies must do legally and maintaining a competitive advantage over other businesses.
According to Ardichvili, Jondle and Mitchell (2008), There are five characteristic of ethic business. The first characteristic is mission and value driven. For an organisation to both survive and thrive, mission and values must be one of the fundamental component of an organisation’s strategic focus. It is because, it reflects on the organisation ethical values and it also builds trust and respect from other people. The second characteristic is stakeholder balance. It shows a tension exists between multiple stakeholders because focusing too long and too much on any one stakeholder may create ethical lapses. It does, however, create a medium for discussion of various stakeholder groups of an organisation to work towards maintaining the stakeholder. thirdly, an effective business must have effective leaders. In an ethical business organisation, effective leaders “talk the talk” and “walk the walk.” Leaders symbolise the organisation’s values in their own behaviour and must manifest those values so that employees and all other stakeholders willing to follow. besides, if there is any ethical issues arise, the leaders will not shoot the messenger but instead, they gather facts and take action accordingly. The fourth characteristic is process integrity, which is described as to integrate the missions into every aspect in the company. organisations must establish goals that focused on consistent growth over the long-term such as environmental sustainability, social responsibility and not be influenced by short-term growth. All the characteristics bind and make a good model of business ethics.
Business ethics and Corporate Social Responsibility (CSR) are inseparable. Many consumers and social advocates believe that businesses should not only make a profit but also consider the social implications of their activities. According to International Organisation for Standardisation’s, CSR is acting in an ethical and transparent way that contributes to the health and welfare of society. It begun in the 1800s, with a Scottish philosopher of political economics, Adam Smith, who expressed that the free interaction of organisations and the public would meet the needs and desires of society. This responsibility was then termed Corporate Social Responsibility (CSR) and started an evolution from the 1950's and further expanded during the 1970’s . CSR is the way in which an organisation find a balance between economic, social, environmental imperatives and not forgetting the expectations and welfare of the shareholders. This shows that social responsibility or rather its execution involves a well planned strategy.
There is much debate as to what is considered socially responsible, and it is difficult to conclude where to draw the line in regards to where a company’s responsibilities begin and end. Civil society advocates question corporations’ fundamental motivations for CSR, claiming that corporate programs are nothing more than public relations campaigns rather than to fund social and environmental programs to boost their brand reputations. This dismissal of CSR is due every corporation’s strategies to maximise profit. they reject the role of CSR in a capitalist society where the primary role of business is seen as creating financial returns for its shareholders and the larger economy. If each sector did what it is supposed to do, a prosperous and just society would flourish with optimal allocation of resources. For a sector driven and evaluated by its measurement of financial returns and investments, the lack of any agreed-upon measures to quantify the social or environmental return of money spent on CSR seems to run counter to corporate ethos.
There are times when corporations use CSR as a management fad or public relations ploy. For example, hot dog vending companies may package their hot dogs with labels stating their brand of hot dog is healthier than another when in fact, the hot dogs are manufactured in the same plant, and are exactly the same. There are corporations that also exploit the green movement by incorrectly labelling their products or putting green dots on aerosol cans to make them look green, when in fact, no aerosols would contain them as chlorofluorocarbons (CFC) have been banned in the U.S. since 1978. The corporations may do that as several researches have analysed the connection between CSR and purchase intention. Creyer and Ross (1997) , Mohr et al. (2001) and Prabu et al. (2005) found that the ethical behaviour of companies is considered by consumers during the purchase decision and it is suggested that there is a ‘substantial market segment’ pays attention to companies’ CSR practices. This shows that public is interested with companies that have a good corporate citizenship and provide a basis for accountability for the future. Apart from that, Only the CEOs or the executive committee will have the authority to execute such initiatives. Yet the reality is that most CSR functions in companies are done by managers who are a rank below the executive committee level. Many of these managers feel disconnected from the shared value concept because they perceive it should have been done by the executives. besides, given the pressures of business and meeting their expected numbers, CEO’s shared value is naturally not at the top of their agenda, except for some passionate CEOs.
However, There are many different ways a corporation can support a social initiative and still make profits. A good example is the Marriott Corporation (2014), who was motivated by a desire to help the community while still helping the bottom line, by training and hiring 200,000 associates working at corporate offices and managed properties in nearly 80 countries. Marriott was still able to reduce expense and increase productivity. By incorporating a service that improves the resources and infrastructure of a community, it can offer a higher economic return for the organisation through recognition or direct community investments. This shows that a business has a responsibility to both profit and serve the community, for all stakeholders involved. When a company practice in good CSR, it gains better reputation and brand image which may increase in sales, more investors and customer loyalty platform. This is supported by the survey done by Hill & Knowlton Harris (2001) showed that 91 % of all customers said that they would switch the company if they had a bad image. With all of this being said, corporate social and environmental responsibilities are more important today than they have ever been in the past, to benefit society and protect the environment.
In conclusion, corporations, although are enterprises with purpose of commercial pursuits, are powerful and influential institutions. However, one must not forget that their processes have a very public impact and affect many lives through their actions and behaviours. Regardless of whether business or government, leaders in all sectors have an opportunity to improve current issues and solve business problems. Community needs can be opportunities to utilise business technology and provide collaborative efforts to serve community needs.For this reason, it is very important that they act and behave responsibly and CRS policies should be there to guide corporation to ethical path and this responsibility can make a worthwhile contribution to society as irresponsible business can be harmful in equal measure. Companies without regard for their responsibilities and act in an unethical ways that is damming to the world's natural resources, will earn bad reputation which could not only loss profit or even destroy the company in their home ground but also the impact could be greater for international companies as their restriction could expand to many countries across the world.
reference:
http://www.marriott.com/Multimedia/PDF/CorporateResponsibility/2014SustainRpt_FNL_lr.pdf
https://www.investopedia.com/terms/b/business-ethics.asp#ixzz4y7qx4IVm
https://doi.org/10.1007/BF00383694
https://plato.stanford.edu/entries/ethics-business/
http://files.eric.ed.gov/fulltext/ED501640.pdf
http://johnsjc.com/BO/CSR.pdf
https://www.iso.org/iso-26000-social-responsibility.html
https://edge.sagepub.com/system/files/Ballantine5e_5.1CQR_0.pdf