Corporate social responsibility is defined by the European Union as “the responsibility of enterprises for their impacts on society”. According to the European Union, organizations should strive to unite consumers, human rights, ethical, environmental and social concerns to their fundamental business strategy and operations. Firms should have an objective to optimize the development of shared value for diverse stakeholders and owners and the society as a whole. The next objective of organizations should lie in recognizing, mitigating and preventing perceived negative impacts and strive to optimize societal welfare (European Commission, 2011). This definition of corporate social responsibility is in line with the CSR definition provided by Carroll.
According to Carroll, corporate social responsibility comprises of philanthropic, economic, legal and ethical responsibilities. Carroll defines Corporate Social Responsibility as “the social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point of time” (Carroll & Shabana, 2010). The discretionary aspect has been later referred to as the philanthropic expectations of the society from organizations.
He has explicitly pointed out that organizations have other societal obligations comprising of ethical and philanthropic responsibilities towards the society. Furthermore, he maintains that the philanthropic responsibilities are desired, and the ethical obligations are those that the society expects organizations to fulfil. According to him, the economic responsibilities of the organization are to produce commodities and services preferred by the society and then sell them to garner revenue. The legal responsibilities pointed out by Carroll is that firms should have a code of conduct or in other words should follow ethical principles that lead to the welfare of the society.
Carroll’s stand on CSR is different from the profit maximization doctrine proposed by Milton Friedman. According to him, business has the social responsibility to utilize resources and conduct tasks which aid to augment profits. In other words, business should conduct activities in a manner that they are devoid of fraud and deception and leads to profit maximization. The classical theorists are of the opinion that organizations have legal and economic responsibilities towards the society. The classical definition of CSR reflects the old societal contract between society and business. The new definition outlined by Carroll is far wider and includes broader social contracts like philanthropy and ethics.
The two varied explanations for the economic aspect of corporate social responsibility observes that in the long term, CSR should strive to optimize the wealth of the shareholders. However, the main difference is that Friedman’s view does not accept the negative impact of economic responsibilities of organizations in the long run. Carroll, on the other hand, accepts the view optimizing profits in the long-run should lead to societal benefits (Carroll & Shabana, 2010).
Walmart has a reputation of doing social good by having a strong corporate social responsibility agenda. It believes in helping individuals across the globe by helping them to live better and save money at the same time. It is one of the leading organizations in the lines of providing opportunities for employment, sustainability and corporate philanthropy (Walmart, 2013). The “going green” initiative by Walmart, is one which includes the constructs of philanthropy and ethics. In the words of Carroll, these are desirable and expected responsibilities of firms towards the society.
Unethical business practices including corruption, red-tapes and bribery may be conducted by organizations across the globe. There have been severe cases of scams and corruption leading to disastrous outcomes including closure of business operations. There may be several reasons for firms to engage in unethical conduct. The first is not having an ethical code of conduct. Such codes help firms to differentiate between positive and negative actions and furthermore facilitate in decision-making on the part of the management as well as departmental supervisors and subordinates. Engaging in unethical business practices can lead to reputational failure that may lead to severe long-term impacts. There have been several rules, laws and regulations that are in place in order to provide for environmental protection, consumer protection, and competitive behavior (Ezigbo, 2012). Walmart has a written code of conduct and is one of the leading firms engaging in corporate social responsibility practices. This code of conduct is one of the reasons as to why the firm is striving for environmental protection, consumer protection and competitive conduct activities.
Firms engaging in unethical practices are not aware that such conduct may be questionable. There have been several instances of organizations being closed due to engagement in malpractices and scams leading to reputation loss. Walmart is aware that such unethical conduct is questionable, and the firm may suffer adverse impacts. The firm has a written conduct of codes that clearly maintains and preaches the engagement and practice of ethical codes. Violation to the standard codes of conduct is also subject to serious coercive action, and this prevents both organization and its employees to follow ethical practices.
According to Hofstede, there are cultural discrepancies in societies based on evasion of uncertain situations, masculinity, individualism and power difference. Academic scholars have observed that values and norms shape the culture of an individual. These norms impact ethical circumstances and help to determine possible alternatives and outcomes (Vitell, Nwachukwu & Barnes, 1993). Modern firms have two significant dynamics. These are diversity and ethics. Walmart is culturally diverse and encourages a diverse workforce without distinguishing on the basis of color and sex. The company has hired veterans, female managers and people of color so as to promote an inclusive and diverse culture (Walmart, 2013). Such an inclusive and diverse culture helps individuals to accommodate to a single organizational policy which believes in respecting the norms and cultural values and the sentiments of other individuals. It helps individuals coming from diverse strata of the society to work together in a culturally diverse environment and also helps firms to gain competitive edge.
Cultures differ from country to country and from society to society. Some countries may consider the acceptance of bribes to be normal whereas others may view it to be an unethical practice. Countries that are rule-based are highly stringent as compared with nations that are relationship based. Such countries have higher corruption levels and have a less transparent structure. The contemporary world has witnessed the emergence of multinational firms like Walmart, that are slowly creating effective processes of private law making. Walmart has transparent systems which clearly denotes the transparency to conduct business with diverse entities, both for contractual and permanent business relationships.
Related to this is the construct of holding different value for stakeholders and business people. The firm strives to know their stakeholders and does a stakeholder analysis to find out the desired aspirations of stakeholders. Walmart has consistent values and hence can conduct business activities that are in sync with the aspirations of its diverse stakeholders.
Thus, Walmart is setting examples in corporate social responsibility practices by engaging in economic, legal, ethical and philanthropic measures for societal welfare.
References
Carroll, A.B. & Shabana, K.M. (2010). The business case for corporate social responsibility: a review of concepts, research and practice. International Journal of Management Reviews, 85 – 105.
European Commission, (2011). Communication from the commission to the European Parliament, the Council, the European Economic and Social Committee, and the Committee of the Regions: A renewed EU strategy 2011 – 14 for Corporate Social Responsibility. Retrieved October 20, 2014 from http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0681:FIN:EN:PDF
Ezigbo, C.A. (2012). Assessing enforcement of ethical principles in the work place. International Journal of Business and Social Science, 3(22), 231 – 241.
Vitell, S.J., Nwachukwu, S.L. & Barnes, J.H. (1993). The effects of culture on ethical decision – making: an application of Hofstede’s typology. Journal of Business Ethics, 12, 753 – 760.
Walmart (2013). 2013 Global Responsibility Report, retrieved October 20, 2014 from http://corporate.walmart.com/microsites/global-responsibility-report-2013/pdf/Walmart_GRR.pdf
Walmart (2013). Diversity & inclusion Impact 2013, retrieved October 20, 2014 from http://diversitymbamagazine.com/docs/Walmart-2013-D+I-Impact-Report.pdf
