Background
The importance of doing the right thing, socially, economically and environmentally by organizations cannot be overstated. In response to the economic, ethical, legal and discretionary expectation that the society puts upon businesses, organizations and individual personnel have a responsibility to do good to society. Nonetheless, implementing strategies that are in line with social, economic and environmental expectations and which ultimately benefit the society, remains quite challenging within the business environment in the 21st Century. It is challenging for organizations to create a balance between shareholders’ profits and serving the social interest of the communities in which they it operates (Chaisurivirat 2009 and Stahl 2004).
Responsibility, within businesses, is basically the relationship between organizations, governments and individual citizens (Chaisurivirat, 2009). More practically, it is the relationship between organizations and the local society or residents in which it operates. It is basically a concept in which companies integrate multiple economic, social and environmental concerns within their business operations as they interact with their stakeholders on voluntary terms (Hodgetts & Luthans, 2003). All organizations are social enterprises’, hence are entities whose existence is made possible by the surrounding public hence giving back to society is expected if not mandatory (Kotler & Lee, 2004 and Mallin, 2009). Nonetheless, organizations find it difficult to achieve sustainable responsibility since the principal goal of doing business is to make profits (Katrinli, Gunay & Biresselioglu2011). Businesses find it difficult to align and reconcile the demands, interests, needs and values of all stakeholders including the customers, employees, communities, shareholders, the environment and the society at large and the economic, social and environmental expectations (Grünewälder 2008 and Drucker & Maciariello, 2008).
Social, Economic and Environmental Expectations
Dynamics within the business environment introduces new challenges such as environmental laws, economic regulations, privacy issues and corporate social responsibility, all of which makes compliance for businesses, an intricate affair (Jogulu 2010). Nonetheless, the trends and the issues can, in essence, have the potential of impacting the business either positively or negatively with respect to key partners, stakeholders and the wide and more important customer base (Stoner 1982). Ethics, hence, remains a complex subject dependent upon cultural, religious or philosophical belief of the distinction between right and wrong (Mallin 2009). Business ethics, can be understood as a set of rules that defines moral standards as applicable to specific business policies, behaviors or institutions (Grünewälder 2008). Business ethics can therefore, be understood as involving formal policies that guides individuals, entities or organization within a business context. Imperatively, it relies on the designation of standards which defines what is right and what is wrong on both theoretical and practical bases (Robinson 2009). Key ethical considerations that present challenges to businesses and individual decision makers include product safety, corporate social responsibility, green issues, grey imports, and sourcing of products.
Corporate social responsibility
Businesses across the world have taken up the challenge of engaging on socially responsible behavior as part of their overall business operations. Many organizations today donate food to the need, have elaborate employee volunteer programs for socially beneficial projects take positive actions towards the environment and participate in social causes such as supporting the education and healthcare of the needy in communities. Hence generally speaking, corporate social responsibility promotes a positive image, saves money and bolsters employees’ morale. Questions have nonetheless been raised on the levels of key organization’s commitment and genuine determination in helping the society. The level of commitment for organizations can, however, is determined by the trends of their actions, frequency, specificity and the financial and time inputs (Jin, Drozdenko & DeLoughy, 2013). Basically, corporate social responsibility serves to reflect the fundamental premises in stakeholder theory which emphasizes the need for beneficial exchanges between an organization and key stakeholders. Even though challenging, businesses and individual stakeholders ought to be socially responsible to all stakeholders (Mitchell, Agle, and Wood 1997).
Green issues
Green issues have also presented considerable challenges to businesses and individual stakeholders in recent years. Green marketing seeks to persuade organizations to be concerned about their overall contribution towards the reduction of climate change and the general reduction of pollution. Although multiple businesses ignore the aspect, consumers, retailers and the general population benefit in several ways through green marketing. Research by Griffin, Barry and William (1992), indicate that, consumers value the opportunity to be associated with environmentally friendly organizations and products. Customers may therefore be more likely to consider environmentally friendly organizations hence businesses the world over can benefit immensely by creating policies that maintain a green and sustainable environment. By starting elaborate campaigns and engaging in practices such as using recyclable packaging materials and stocking only environmental friendly products, businesses can improve their reputation and at the same time, contribute positively to the environment (Gardner 2010). Other practices include implementing Carbon Reduction Commitment Energy Efficiency Scheme, energy saving, waste reduction, and introducing green chain can also be beneficial to the organization.
Grey imports
Grey imports forms a key ethical issue facing businesses the world over. Grey imports are the products sold through unauthorized channels because they are often cheaper on the surface compared to imported products that have followed all the right channels (Thompson, 2009). Essentially, grey imports presents both safety and financial concerns for buyers since, they are not covered by manufacturer’s warranty as they are not imported with their consent. Besides, even though these products may meet the minimum safety requirements in the country of manufacture, they many not meet the same requirements in the countries in which some businesses operate (Vallero & Vesilind 2007). Additionally, grey imports have been found to have substantial impact on both brand equity and values. Although some countries have legalized parallel importing, it remains an ethical issue for the organization since is a potential risk factor for not only the consumers, but suppliers and stakeholders as well (Thompson, 2009).
Product safety
Businesses ought to be morally responsible in ensuring the provision of products that meet very high standards of safety. Nonetheless, product safety forms an ethical dilemma since businesses which wish to adhere to the high standards find it difficult to compete with similar organization offering unsafe or low quality products since they tend to sell at cheap prices (Griffin, Barry and Darden, 1992). Businesses also find it difficult to classify perfect from imperfect products since they are at the end of the transaction chain. A key determinant of product safety, nonetheless, is its price since a product can be less or more safe dependent on its retail value (Griffin, Barry and Darden, 1992).
Even though challenging, organizations should have moral responsibility and duty to make products safe. Although safety preferences may not be properly reflected by consumer demands due to lack of awareness, it should be the organization’s responsibility to determine the optimal safety levels of all products sold and services offered. By being morally responsible, organizations will adhere to high safety levels and not merely rely on manufactures, service providers or the market to protect their customers. Organizations should not assume that safety standards have been met by manufacturers, but should guide consumer’s decision making. Although consumers understand product safety to certain extents, it should be the responsibility of organizations to provide information about a specific manufacturer’s record of quality and only sell high quality products (Griffin, Barry and Darden, 1992 and Walton 1986).).
Sourcing of products
Socially responsible sourcing or buying of products has increasingly become a key issue for many businesses. Although globalized production and international sourcing brings with it lower costs to consumers and organizations, it presents key ethical challenges in terms of quality (Roman, 2007), different cultural standards and poor perceptions of consumers who may perceive foreign products as superior. Today’s businesses engage in global sourcing involving a well-structured decentralized production and distribution networks within networking and importing countries. Imperatively, socially responsible sourcing decision making serves to identify organizations committed to the practice and those not committed (Talaulicar, 2009).
As a recommendation, even though challenging, organizations ought to consider strategic sourcing as part of the procurement strategy as aligned by the overall procurement strategy. This will ensure that ethical sourcing is practiced and that the management and key stakeholders are commitment to the practice. Through a proper management of the supply chain, ethical sourcing can be practiced, yet it also presents long term excellent opportunities organizations. Research indicate that, ethical sourcing is good business for organizations since it ensures that they stock products and offer services that have fairly high demand and quality yet command average prices (Jin, Drozdenko & DeLoughy, 2013). Besides, as a result of consumer pressure, and environmental concerns, sourcing should extend beyond ethics and look into the entire product life cycle. Considerations such as the product’s disposability, recyclability and carbon content must be considered prior to engaging in sourcing.
Analysis
Based on the information presented, doing the right thing is a critical issue for businesses and individual stakeholders. Today’s society increasingly expect businesses to handle certain ethical issues and concerns such as mitigating environmental damage by following the standards of regulatory forces, participating in community project and meeting and protecting customer expectations and rites(Arjoon & Rambocas, 2011 and Kreitner 1989). Businesses are also compelled by consumer’s evolving knowhow and preferences for products which adhere to certain standards. For example, today’s consumers are environmentally sensitive hence prefers environmentally friendly merchandise. Additionally, the ever expanding customer segments across different markets have also exerted greater influence and are driving businesses to raise their ethical and quality standards (Arjoon& Rambocas, 2011).
The presentation indicates that the benefits of adopting ethical practices are attractive to businesses that seek service and cost improvements. Although pressures from customers, community groups and regulators also prompt them to practice ethical practices, it is better to adopt the practices as part of innate business strategy. Existing ethical practices studies have unequivocally stressed the role of businesses as the key players in coordinating and fostering ethical practices across their entire value chain (De Pelsmacker Driesen and Rayp, 2005). Another key reason why businesses find it difficult to do the right thing is that, stakeholders and practitioners, lack understanding on how formal ethical practices can successfully be implemented within the organization strategy. Certain programs tend to end up with different results in real life as exemplified by a series of organizations across the globe (Arjoon & Rambocas, 2011). Besides, certain practices have the potential of triggering customer complaints against the organization or result into criticism of the lack of consistency in policy implementation. In adopting a comprehensive ethical policy, businesses should take into account an array of factors such as its overall business strategy, customer’s demands, employee’s welfare, profit target, and core business practices (Arjoon & Rambocas, 2011).
Strong commitment to ethical practices has also been shown to lead to higher organizational performance as a result of employee commitment. By trusting in ethical policies and procedures, organization promotes a culture in which all employees are unwilling to engage in unethical behavior as they become committed to the organization’s key principles (Morgan and Hunt, 1994). The employees also become more creative flexible, adaptable and innovative all of which contribute to the firm’s overall profitability. Committed employee base also guarantees responsible management within the organization hence a formal ethics program and culture certainly standardizes and employee behavior making them comply with the organization ethics (Biong, Nygaard & Silkoset, 2010).
Conclusion
Organizations find it difficult to do the right thing socially, economically and environmentally due to the multiple factors involved, and the complex business environment. Nonetheless, it is the organization’s responsibility to develop and sustain a set of ethical standards and relationships with other stakeholders (Morgan and Hunt, 1994 and Koontz, Donnell, & Weihrich 1980).). By formalizing ethical practices, businesses will indubitably influence ethical values within the organization, among employees, management and other primary and secondary stakeholders, hence ensuring they comply with the expected ethical standards.
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