Unit VII Literature Review
DBA 7632, Business Ethics and Corporate Responsibility 1
Course Learning Outcomes for Unit VII Upon completion of this unit, students should be able to:
6. Summarize issues relating to corporate social responsibility. 6.1 Compare and contrast research related to corporate social responsibility. 6.2 Analyze literature regarding ethical issues in organizations.
Course/Unit Learning Outcomes
Learning Activity
6.1
Unit Lesson Chapter 11, pp. 327–347 Unit VII REM Case Study Scenario Unit VII Literature Review
6.2
Unit Lesson Chapter 11, pp. 327–347 Unit VII REM Case Study Scenario Unit VII Literature Review
Reading Assignment Chapter 11: Promoting Organizational Citizenship, pp. 327–347 Click here to access the Unit VII REM Case Study Scenario.
Unit Lesson Over the past six units, we have looked at several aspects of ethics in business. In this unit, we will look at corporate social responsibility from an ethical perspective. The value that stems from this perspective is often the perception of right and wrong at both the organizational level as well as the community and societal level. Social responsibility on behalf of corporations and organizations is not a new concept, and it entails characteristics discussed previously in the course such as accountability, transparency, and integrity (Johnson, 2019). Consider the following two scenarios, which demonstrate some of the many issues that leaders and organizations face. The Mill A textile mill in New England decides after five generations of operations to move the company down to the Atlanta, Georgia, area. There are several aspects that are of concern. The little town and the surrounding communities in rural upstate New York have been dependent on employment at the mill for over 50 years. The mill and its affiliates have made up a large percentage of the economy in the area for the past 5 decades. The mill is family-owned and has been losing profit steadily for over 10 years due to offshore competition. Decisions must be made. The Assembly Plant An automotive assembly plant in a depressed area of Mississippi has lost its contracts with the Big Three automakers. The owners have signed contracts for fabrication work in other industries; however, not enough work is available to sustain the current workforce. Decisions are made as to who can stay and who can go. The company owners opened an operation in Laos last year, gaining contracts with automakers outside the United States with the goal that they will move operations completely offshore within the next 5 years. The
UNIT VII STUDY GUIDE
Corporate Social Responsibility
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Mississippi assembly plant is not a huge portion of the economy in the area; however, it has been a stable source of income for high-school-educated and blue-collar workers in the area to earn a decent wage. Few companies in the area will employ such individuals with machinist and fabrication skills. The company has worked with local officials and other companies to try to begin employing and training employees to make the transition to other jobs. What Is the Company’s Responsibility? The two scenarios have value, and there are unique questions that come with both. The owners try to do the right thing; however, no matter what they do, employees are displaced. Work is moved outside of the area. The companies are shut down. Some employees may travel and move to the new location, but others will not. The value comes in making what is considered to be the ethical decision for how to treat the employees as well as how to operate the organization in a manner that is conducive to the community and the clients whom they serve (Johnson, 2019). Employee relations with leadership rank as being very important. To gain the greatest potential, associates and leaders must work together in order to bring about the desired results. When there is a breakdown in ethical standards or code of conduct, damage is done at all levels. Gain Perspective Over the past few units, we have talked about different aspects of offshoring, marketing, intellectual property, and international business. In this unit, as we look at an organization's social responsibility, it puts a different perspective on those who are impacted by ethical and unethical behavior. A medical transportation company that shuts down due to bankruptcy following a federal audit investigation removes potentially life-saving services from a community. The longest established industry in a rural area that employs a large percentage of families but can no longer make a profit in the area due to increased overhead and circumstances must make the decision to close the business, move the business, or even reorganize the organization in such a way that the company can survive. Competition is no longer the company next door; rather, competition is present all around the world. If we do not remain competitive, we fall behind in the market, we lose market share, we become obsolete, or we price ourselves out of the market. Company owners have a responsibility to their shareholders. This is the defense of many organizations over the past few generations. Businesses exist to make money and maximize shareholder wealth. This was the premise of Milton Friedman for more than a generation (Denning, 2013). Companies often exist due to the support they receive from the community, and there is an expectation of reciprocation. When the company takes without giving back, it is seen as greed and being irresponsible to the community. Giving Back Organizations that form service groups, service organizations, and service projects that support and build up the community tend to build visibility and integrity for the company in the community. When large donations are made to service organizations or emergency service facilities, the company earns credibility. Community services, such as adopt-a- highway or a corporate-sponsored fundraiser, represent community activism and awareness. Do companies do this to simply portray an image of corporate social responsibility? Is this a marketing project? Is it a matter of setting up strong public relations within the community? Organizations will each have different reasons for serving in the community. A team of employees who work on a community project through an organization such as Habitat for Humanity will earn notoriety in the community. A medical
Workers participating in a Habitat for Humanity build are a great example of giving back to the community. (Villiard, 2013)
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center that is owned by a large healthcare conglomerate and sends doctors to a developing nation in a Doctors Without Borders program will often get a write-up in the annual report and quite possibly covered by local news services. There are marketing milestones that can be reached through such events. Sponsoring a charitable fun run or a turkey trot at Thanksgiving gives the company marketing visibility while being active in the community. A corporation that invests a large amount of money in a community center, a theater, a music hall, or a university is seen as giving back (Peters & Lewis-Kulin, 2017). Take Responsibility and Be Accountable Corporate social responsibility is not just nameless and faceless. The social responsibility begins with individuals at all levels within the organization. The individual who chooses not to give back or to only take from the community cannot hide behind the name of the organization. Individual responsibility means choosing to make the decision to either support or not support projects within a community. The owner of an organization may choose to shut down operations and move the business to an area with lower overhead for labor and a lower cost of living. Is the company taking into consideration all aspects of what will happen if they close the business? A business owner could say that the company has no responsibility to the community. They can give a 3- or 6-month notice that the plant will be closing down, which should serve as enough information for people to begin making the transition. The organization that chooses to assist employees in transitioning into other jobs by offering training or by offering them a job at the new location can be considered as being socially responsible. These approaches leave the decisions up to employees about what they will do. Will they stay with the organization until the doors are locked, or will they make the transition into another field or employer organization? The choice is individual and not always as corporate and collective as might be seen. The organization that chooses to work with employees to cut costs and to establish profitability is also a characteristic of corporate social responsibility; in other words, the organization understands the importance of keeping operations open in a particular area in order for the community to survive and to maintain a sustainable quality of life. Community Investment Recent years have shown a decline in supporting organizations that do not practice social responsibility. Leaders sometimes choose to move operations elsewhere—decimating or devastating a community. Recent general elections at the state and federal levels made it a platform item to bring jobs back to the United States. Corporations and politicians are working together to make practical opportunities and inroads to bring organizations back to the United States to allow for a better quality of life and to strengthen the U.S. economy. Corporate social responsibility involves those in the neighborhood and the town in which we live. There is also a national responsibility in order to contribute to the good of the nation. When jobs leave one area, does it serve another area better? When organizations leave the country, it lowers the potential for jobs and decreases the opportunity for finding sustainable employment. If the jobs move away from the area or even out of country, this will have an impression on the community. The company that moves work out of the area often restricts and diminishes the community. Corporate social responsibility is important all levels. Making the right decisions at the right time and for the right reason is the foundation of ethical social responsibility. It is not a matter of what the popular decision is, and it is not a matter of what the profitable decision is; rather, it is a matter of doing the right thing all the time for the greater good of the organization and those whom it serves.
References
Denning, S. (2013, June). The origin of 'the world's dumbest idea': Milton Friedman. Forbes. Retrieved from https://www.forbes.com/sites/stevedenning/2013/06/26/the-origin-of-the-worlds-dumbest-idea-milton- friedman/#21ceab07870e
Johnson, C. E. (2019). Organizational ethics: A practical approach (4th ed.). Thousand Oaks, CA: Sage.
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Peters, K., & Lewis-Kulin, S. (2017, February).The best employers are adding giving back to their core. Fortune. Retrieved from http://fortune.com/2017/02/09/the-best-employers-giving-back-philanthropy- volunteering/
Viallard, T. (2013). ID 35196152 [Photograph]. Retrieved from www.dreamstime.com
Suggested Reading In order to access the following resources, click the links below. The following article delves into how the ethical climate of an organization plays a role in perceptions formed by employees. Hansen, S. D., Dunford, B. B., Alge, B. J., & Jackson, C. L. (2016). Corporate social responsibility, ethical
leadership, and trust propensity: A multi-experience model of perceived ethical climate. Journal of Business Ethics, 137(4), 649–662. Retrieved from https://search-proquest- com.libraryresources.columbiasouthern.edu/docview/1813115037?accountid=33337
The following article examines the impact of corporate social responsibility and ethical leadership in evaluating facets of the foodservice industry. Min-Seong, K., & Brijesh, T. (2018). Relationship of ethical leadership, corporate social responsibility and
organizational performance. Sustainability, 10(2), 447. Retrieved from http://www.mdpi.com/2071- 1050/10/2/447