The law provides equal opportunities for all businesses to undertake their activities. However, the size of a business determines the extent by which firms feel the effect of legal demands imposed on them. It is a legal requirement for large businesses to comply with accounting regulations and standards. They are subjected to internal audits and reporting of financial statements at the end of a financial year. These activities create immense pressure on a firm’s management since a high level of accuracy, and attention to details is required. An error in accounting will result in wrong figures which will raise questions from shareholders. Small businesses are exempted from the legal requirements of internal audit and public display of financial statements (Kaptein, 2011). This gives them the liberty of transacting their businesses without complying complex accounting regulations.
Most small business transactions are relatively straight forward. Negotiation and business deals are done without formal legal help. However, it is important to get acquitted with legal paperwork for safety purposes. In large businesses, negotiations and business deals are conducted under drafted legal framework and agreements. It is imperative for parties involved in the business deals to carefully read and understand the content in a written agreement. Legal experts are sought to give legal advice and direction concerning a problematic issues in the agreement. Large companies are faced with huge legal fees which is not the case with small businesses.
Ethical demands are felt differently between large and small businesses. Large businesses are with a multitude of different ethical demands and objectives. In addition to creating wealth and jobs and thereby improving the human standards of living, large corporations are increasingly expected to serve their community and to protect the environment. Small businesses are also expected to conduct their activities within the confines of societal ethical demand. However, their ethical demand and expectation from the society is not huge as compared to that of large companies. It is the moral responsibility of all businesses to reduce their potential negative consequences to the community and environment.
Business ethics goes beyond legal compliance. It is primarily concern with issues not covered by the law. Ethics therefore represents an attempt to systematize and rationalize morality into general normative rules that attempt to offer a solution to situation of moral uncertainty. This concept helps to draw a line between social responsibility, moral responsibility and legal responsibility (Wueste, 2010).
Social responsibility defines the institutional relationship between the society and business, and specifies what is expected of the business (Gössling, 2011). A company is also expected to be socially responsible to their employees. This is achieved through providing them with a conducive working environment and attractive remuneration packages. Doing business is related with external effects, most often negative externalities. It is therefore important for managers to understand the possible negative effects and manage their activities to reduce the negative externalities. Legitimacy, public responsibility and managerial discretion are the major principles of social responsibility. Managerial discretion is whereby managers and other employees are moral actors. They are obliged to act in discretion to achieve socially responsibility outcomes. Public responsibility concerns working within the framework of protecting the society from negative externalities. Legitimacy views a business as a social institution.
A company’s moral responsibility concerns the question of how the firm balances the conflict of interest among parties and whose interest does the firm pursue. Moral responsibility refers to sincerity, correctness, meticulousness, diligence and fairness of a business. Moral responsibility can be developed into part of a business’s culture. Business ethics is a discipline which concerns itself with reflecting on moral values and norms in the business world (Kaptein, 2011). This perspective helps business to develop and analysis the moral responsibility against the stipulated standards in business ethics. The aim of businesses does not concern profit making alone. Fairness in distribution of benefits, social wellbeing and national economic growth should also be of concern.
Some companies in a competitive sector such as, food and beverages use moral responsibility to gain competitive advantage over competitors (Campbell and Miller, 2004). It can also be used for the long term sustainability of companies since they are outgoing concerns. For instance, companies should be tax compliant and desist from hiding their pretax profits with the intention of tax evasion. In the rewarding of dividends, moral responsibility should be the driving force for fairness and justice in distribution. Executives and other employees in a business should understand and incorporate moral responsibility in their professional discharge of their duties.
The economic system permits businesses to take the productive role in an economy. Legal responsibility establishes the ground rule under which businesses are expected to operate. It reflects the society views on coded ethics from the perspective that they are notions of fair practices as established by the lawmakers. It is the responsibility of businesses to comply with these laws. Legal responsibilities help to protect other companies in a competitive environment to avoid anti competitive strategies (Carroll and Buchholtz, 2012). However, the law cannot legally address all the issues that a business is facing. This is because the business environment is a dynamic sector, and issues keep on arising. For instance, genetically modified foods and technological invention that are harmful to humans are issues which were not addressed by laws regulating businesses. However, there is a provision in the law for addressing arising issues through litigation processes.
Legal, social and moral responsibilities are issues addresses in business ethics which provides a framework to safeguard the interest of all the stakeholders in a business.
In vertical organizational structure it is the responsibility of management to formulate programs that are in line with a corporation’s missions and objective. Workers are expected to implement the programs. They report back to the management concerning the progress of the program. In most cases, the management of a corporation provides oversight on activities. Corporations provide the framework under which all the activities are formulated and implemented. To achieve the objectives, it is vital for managers and workers to work as a team. Managers should learn art of listening to the views of their employees. This is due to the fact that employees experience various successes or challenges during implementation that can provide important insight while formulating a program.
References
Campbell, T., & Miller, S. (2004). Human rights and the moral responsibilities of corporate and public sector organisations. Dordrecht: Kluwer Academic Publishers.
Carroll, A. B., & Buchholtz, A. K. (2012). Business & society: ethics, sustainability, and stakeholder management (8th ed.). Mason, OH: South-Western Cengage Learning.
Gössling, T. (2011). Corporate social responsibility and business performance: theories and evidence about organizational responsibility. Cheltenham: Edward Elgar.
Kaptein, M. (2011). Ethics management: auditing and developing the ethical content of organizations. Dordrecht: Kluwer Academic Publishers.
Wueste, D. E. (2010). Professional ethics and social responsibility. Lanham, Md.: Rowman and Littlefield Publishers.
