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Trending: Call for Papers Volume 3 | Issue 2: International Journal of Advanced Legal Research [ISSN: 2582-7340]

Importance of Corporate Social Responsibility and Business Ethics in Growth and Development of Business

The concept of business ethics and corporate social responsibility have come to force in the recent years. These two concepts are increasing rapidly in developed as well as developing nations because of the result in the growing sense of corporate wrongdoing. Both concepts can bring significant growth to any business enterprise and there is also a basic idea that business enterprise has some of its responsibility towards the society also rather than just making profits for the shareholders which has been around from centuries. Both business ethics and corporate social responsibility are very important for the organizational growth and success of any business. This paper will highlight the basic details of both the concepts and how these concepts are important for the growth of any corporation.

Business ethics

Ethics are the code of values and principles that exercise control over the actions of a person or group of people regarding what is right and what is wrong and therefore, ethics set standards as to what is right and what is wrong in the organization’s conduct and decision making. Business ethics deals with the internal values that are part of corporate sector and also provides shapes to the decision with respect to the social responsibility for the external environment. In the concept of business ethics, ethics refers to the principle of honesty and fair dealing with the employees and customers. In the corporate sector ethics applies to the form of applied ethics or professional ethics that examines the ethical problems that arise in the business environment. Business ethics is defined as the rules, standards, codes and principles that provide guidance for morally right behavior in the decision making related to the operations of the corporations and relationship of the business with the society. It applies to those aspects of the business conduct that is adhere by each and every individual of the corporation as well as by the corporation as a whole. The overall growth of the business depends on the good ethical code of conduct that has been set to guide the management as well as the employees in the daily activities of the business. The basic idea for the practice of business ethics is that a good ethical framework will create a systematic and healthy work environment for the employees and will drive to the development of ethical human resource practices.

 

Corporate Social Responsibility (CSR)

Corporate Social Responsibility or CSR is defined under section-135 of companies act, 2013. Companies or corporations have now started to look beyond their profits and interests and now they are prioritizing the services to be rendered to the society in which they operate. The concept that a business enterprise has some responsibilities towards the society rather than just making profits for shareholders has increased in a near century. This concept has been arose because the business owners operates within the society and in return the society expects that business should also be responsible towards it. It is now clearly impossible for a business enterprise or a corporation to experience a good economic prosperity in a closed environment form the stakeholders within its environment. Therefore, the relationship of a business enterprise with its employees and stakeholders like the customers, investors, suppliers, public and governmental officials, activists and communists are the most important key for success of the business enterprise. Corporate Social Responsibility or CSR can be defined as a combining management concept, which establishes a responsible behavior within the business enterprise, its objectives, values and competencies and the interest of the stakeholders. It refers to a business system that provides the production and distribution of the wealth for the betterment and rapid growth of the business enterprise as well as the stakeholders by implementing the ethical systems and sustainable management practices in the business operations. Therefore, corporate social responsibility or CSR refers to the responsibilities of the business enterprise for its impacts towards the society and the consequences of the integration of social, environmental, ethical, human rights and customers concerns in the business operation with the close collaboration with the stakeholders. The concept of corporate social responsibility is often expressed as the assumptions of responsibilities that go beyond the economic and legal responsibilities of the business enterprise. It also refers to the discretionary activities and policies of the business enterprise to engage itself in providing a positive social change and environmental sustainability in the environment within which the business enterprise works. Corporate social responsibility also refers to the selection of institutional objectives and analyzing the results not only with the help of criteria of profitability and welfare of organization but by the help of ethical standards and judgments of social desires. According to this, the exercise of corporate social responsibility should be in consistency with the goal of corporate earning of satisfactory level of benefits and also implies a desire to give away some degree of benefits in order to achieve the non-economic objectives that are set for the business enterprise. In the recent years the concept of corporate social responsibility has been subject to debate. On the one hand, one point of view speaks that, the sole purpose of the business enterprise is to earn profits only and the other point of view speaks that, the business enterprise should work for the satisfaction and completion of desired corporate goals and also take care of the society in which the business enterprise works. Corporate social responsibility can be achieved when the business enterprise goes beyond the compliance and involves itself in the actions which are suitable for the social good, beyond the interest of earning profit. One of the most relevant theory by Mc Whilliams and Siegel, the stakeholder theory became the dominant example in the field of corporate social responsibility. A well-established model of corporate social responsibility was proposed by Caroll, which is known as the “Four Part Model of Corporate Social Responsibility”.

 

Conclusion

Corporate social responsibility and business ethics are the most important aspects of a business enterprise and they both play a key role in the growth of the corporation. Both these concepts helps the business enterprise in ensuring to create a good brand image and to meet the competitors as well. In the recent years, many business enterprises have adopted the practice of corporate social responsibility and business ethics in which they have established a particular set of guidelines according to which the business operations will take place and the corporation will also keep in mind what the society is expecting from it within which the corporation is operating. By these practices business enterprises are expected to develop reliable products and to charge fair price with a fair profit margin and to pay a genuine amount of wage to the workers in order to maintain the customer loyalty and retaining of good employees. Corporate social responsibility and business ethics help in developing a good public image of the business enterprise with help of social practices and letting the people know about these practices. Customers look for such a company who is sustainable, socially responsible towards the environment in which it operates and follows a well-designed corporate ethical structure and together these things lead to a good public image and maintain the customer loyalty. Both these concepts together bring number of advantages to a business enterprise and are very beneficial to it. A company practicing both corporate social responsibility and business ethics have great results within the corporation as well as outside the corporation. Employee’s satisfaction is high in such an organization and this brings total customer satisfaction.

AUTHORED BY: JALAJ GOVIL

End Notes-

1.       Section-135 of Companies Act, 2013.

2.       Mc Whilliams & Siegel, 2001, corporate social responsibility and theory of stakeholders.

3.       Carroll, 1979, model of corporate social responsibility “Four Part Model of Corporate Social Responsibility”.

4.       Caroll &Buchholtz, 2000, Business and Society: Ethics and Stakeholder Management

5.       Jamshed “Importance of Corporate Social Responsibility and Business Ethics” (5th August, 2020) International Journal of Trend in Scientific Research and Development (IJTSRD), volume 4, issue 5, August 2020, page no: 799-801.

6.       Godfrey Adda, Dr. John BoscoAzigwe, Aboteyure Roger Awuni “Business Ethics and Corporate Social Responsibility for Business Success and Growth” European Journal of Business and Innovation Research, volume 4, No. 6, December 2016, page no: 26-42.

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