Responsible business: a personal view

In the modern business setting, a number of questions have been raised in relation to how corporations undertake their business practices. According to the OECD (2O15), many have questioned whether it is the shareholders or the stakeholders in general that should be the major priority of any given business. Answering such questions has produced a number of schools of thought in relation to what responsible business is really all about.

Answering such a question wouldn’t be of any difficulty because I am a firm believer in the school of thought that "the business of every business is business." This is clearly the case because, be it an NGO or for-profit organization, the goal is always continuous growth. Thus, responsible business does mean returning shareholders’ investments (Fafaliou, 2001); adopting responsible business practices (Fafaliou, 2001; Higgs, 2003; OECD, 2001; Stiglitz, 2002); and ensuring continuity in business growth through effective and efficient management practices (OECD, 2001).

Without the shareholders, the company would not exist.They are the forerunners of the business. They brought both financial and non-financial assets into creating a business and pushing it to become successful. Thus, if one should treat business in terms of fairness, the first people to be rewarded are the shareholders. As such, responsible business should entail ensuring that shareholders have returns on their investments in due time. Every drop of sweat endured by these shareholders in building a business should be doubly repaid. As such, any business that is not able to return these values to shareholders can be described as irresponsible. Even trees bear fruit for their owners by nature, and the same should be true for the shareholders who have invested their assets in the creation of the business.

In order to return value to these shareholders, the business will have to operate under clearly defined business approaches. These approaches can have either a positive or negative impact on either the business or the environment (in some cases, on both the business and the environment). In economic terms, production is not deemed competitive until the finished goods have reached the final consumers. This goes to imply that the shareholders (and the company itself) will be absolutely nothing without these consumers. It is only through the purchase of goods and services offered by the company that it can actually gain value (money) from such operations. As such, it is also necessary that corporations ensure that their business activities are geared towards protecting the environment they live in, obeying the rules and regulations governing such an environment, and respecting the cultures of such people. For instance, McDonald's offers "pork burgers" in China but doesn’t offer them in Malaysia. This is because while the Chinese religion permits consumption of pork, the same meat is prohibited in Malaysia’s Islamic religion.

Finally, it is also necessary that the benefits emanating from the business be continuous. This is the only way that the business can really be described as being really responsible. On that accord, responsible business also entails proper management of assets (efficiency) and adequate response to consumers’ needs (effectiveness). If this is maintained, both the shareholders and stakeholders will have a guaranteed future.

From the above discussions, it has been clearly demonstrated that responsible business is embodied in a number of activities that take place both within the business and outside the business. If a business is to be described as responsible, I am of the view that it should be a business that returns value to shareholders, is operated in line with good business conduct practices, and can suitably be maintained over a long period of time (if not indefinitely).

References

Fafaliou, I. (2001), “The social and environmental responsibility of SMEs”, National Research Document funded by the European Network for SME Research (ENSR), Annual Proceedings.

Higgs, D. (2003) “Review of the Role and Effectiveness of Non-executive Directors”. HMSO, London 19585 809438 01/03.

OECD (2001): “Guidelines for Multinational Enterprises: Global Instruments for Corporate Responsibility”, Annual Report, Paris.

OECD (2O15). Guidelines for multinational enterprises: responsible business conduct matter. Available at: https://mneguidelines.oecd.org/MNEguidelines_RBCmatters.pdf [Accessed on: 19^th-8-2015].

Stiglitz, J. (24.06.2002), “Single economic model does not suit the whole world”, The Times, London.