Corporate social responsibility, business ethics: article analysis

Author: Iloka Benneth Chiemelie

Published: 15/12/2013

Introduction

The article used in this case was gotten from Harvard Business Review (HBR) with the view on understanding what corporate social responsibility (CSR) is all about, how it is applied in organizations and the implication of such application.

Summary of the article

HBR (2008) made known through an interview and discussion on the above named topic that CSR is attracting numerous buzz nowadays, with the New York Time saying that the idea has gone mainstream. There are also numerous high profile CEOs such as Daniel Vasella of the Novartis who have also presented their own view on the topic by publicly committing their own companies. In any case, what does CSR actually means and how has it evolved over the years?

This questions were addressed by reflecting on the events of the past 30 to 40 years where it was made known that CSR has grown out of the activist movement as it began to apply some pressure on businesses to try and be more responsible for their actions and harms they cause the environment, social or labour issues – through their different operations that are designed basically for the purpose of their own interest. In any case, due to its origin, CSR has really evolved in a more defensive manger with the idea that outside activist are now beginning to point fingers to businesses and seek total accountability from these businesses for their actions in the communities they operate in. As a result of such pressures, CSR is being viewed as a sort of an unnecessary evil with the understanding that such view deviate the main concept of the subject from what people should actually know.

Even when viewed from the offensive side, it still remain clear that so long as companies thing of CSR as a sort of response to external pressures that are designed to please their stakeholders, it will always be a defensive measure because lack of such can lead to boycotts and other measures – which will result in negative influence on the side of the organization. It is only when a company begins to take a rethink on the social dimensions of its value propositions, and of the activities within its value chain, and the dimensions from which it compete with reference to the how its operations influence its success that it will actually begin to think about the social issues existing within the core frameworks that the company uses to present an analysis of its own strategy and business operations – and this is really a different perspective.

One good example of such pressure from activists is the case of Nestles going back to 30 years ago when they faced the issue of polluted water being used in infant formula, but the company has fixed that. In any case, they are still being cited by activist in the present days with reference to the issue of fresh water dilapidation.

Presently, Nestle have numerous brands under the bottled water segment and these brands are made available across the globe. In the view of the above discussion, the company is being tackled for its impact on the level of bottled water dilapidation but how the company responses will lay a significance influence its perception as the article made known. The most common form of response and indeed the actual response that the company made was to state that their consumption of fresh water for the purpose of canned water production and the production of other good are not significant. In any case, people don’t easily believe this as it is easily visual that their consumption is very significant. Instead, HRB (2008) made known that the company could have done much better by playing significant role in reducing these consumption through its agricultural segment. This is because Nestle maintains partnership with numerous farmers across the world for the source of its raw materials, and they could make significant impact on reducing the level of fresh water consumption by communicating with these farmers on the value for such and developing the right strategy to ensure that such is the outcome of their business process. Instead, the company ignored these opportunities and it has caused high damage to its bran value.

Review of the above article

The issue of corporate social responsibility has without a doubt become a common topic in modern business settings (Tilley, 2002; Aragon-Correa et al., 2008; Perrini, 2006; Perrini et al., 2007; Jamali et al., 2009). The main reason for such is because of the need to ensure sustainability of both resources used in production and business process on its own.

Basically, the concept of CSR revolves around the understanding that companies should be ethical in their business dealing and undertake necessary measures to ensure that the resources are sustainable in order to provide the same benefits that these resources are used to provide presently for the future generation. Discuss of ethics as it relates to CSR is vide and vast in both past and modern literatures (e.g., Hunt & Vitell, 1986; Leidtka, 1991; McDevitt, Giapponi, & Tromley, 2007; Ferrell & Gresham, 1985; Ferrell, Gresham, & Fraedrich, 1989; Dubinsky & Loken, 1989). The modal understanding presented from these discussions is that since the communities are willing to offer corporations that freedom to undertake their business transactions within their geographical sphere, the companies must return the same favour by ensuring that their business processes don’t endangered these societies in any way, undertaking necessary projects for the development of the society and paying close attentions to the reactions made by the society with respect to how their businesses are undertaken.

The concept of SCR as it is related to ethics relies heavily on mutual benefit where everybody is offered the same equal opportunity of benefiting from each other. Thus, when companies to maintain these trust as bestowed on them by this community, there will be an expected activist reaction. This is the main principle that defines the reaction in the case of Nestle as discussed above. Nestle was so ignorant to put the lives of infants at risk by making used of polluted water in the production of infant formula in Africa, in the past 30 years. It was always expected that a brand of such integrity and class should have taken extra measure to ensure that their resources are sourced from reliable means that have no negative effects on the consumers as these consumers will have to pay substantial amount of money to purchase and possess these resources. Even after solving these issues, the company was once again ignorant of the fact that these customers are very sensitive to issues and activities going on within the environment when they expressed their view in defence of the claim that they are responsible for the widespread of level of water dilatation due to their wide spread production activities – by arguing in defence that they don’t make use of much water in their production process when they actually known that they have numerous canned water brands and all their products needs water in order to be completed.

Thus, this lead HBR to stated that the company has the necessary resources and also control the high level of authority necessary to put a lasting change on the level of water depletion by designing a new program (irrigation based project) that will ensure reduction in water usages as well as the damages caused by agricultural herbicides and pesticides on natural water supply in the African region. On that ground, it was concluded by HBR that Nestle has not shown a high level of corporate social responsibility as it has the power to do more but it is actually doing less.

Thus, it can be seen that corporate social responsibility is a very serious ethical issue and stakeholders are increasingly becoming interested in such topic due to the influence it has on their livelihood and the sustainability of their natural resources. However, companies are adopting CSR more as a defensive measure and it can be used to demonstrate the high level of business-selfishness, ignorance, and low moral value in these companies as it is usually very difficult to deny the fact that these companies are very much aware of the negative impact of their business operations on the society.

Conclusion

From the above discussion, it has been demonstrated that business ethical is essential for business growth as it has a direct influence on how consumers perceive corporations. This is because stakeholders are increasingly becoming very concerned about the impact of corporations on their society as these corporations are becoming very reluctant with respect to controlling the negative impacts of their activities on natural resources, environment, and livelihood of people and social values of the society they operate in. Thus, it is concluded that CSR is a most for any company seeking to establish good public relationship and increased social trust – which are necessary for business growth due to its influence on increase in loyalty.

References

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