Should managers be concerned only about the company’s financial performance? What
responsibility do company managers have for other consequences of their strategies?
Ethical and Corporate Responsibility
When it comes to the concept of business ethics there are many different beliefs that
control how a business conducts itself. Although we believe there are common moral
agreements that should overtake culture beliefs, there are ethics that are still different amongst
the different countries. We see how certain countries allow underage laborers and bribes to
government officials. We also have to account for the societal differences that may cause these
countries and families to have to partake in these unethical behaviors. Economics in these
countries are so skewed that some families have no other choice but to send children to work
before the age of 18 with no hour restrictions. When we look at the integrative social contracts
theory it has worked to provide a median for universal ethics in business. This theory believes
that that companies should abide by two concepts, first a limited number of universal ethical
principles that are widely recognized as putting ethical boundaries on behavior, secondly the
circumstances of local cultures, traditions, and values that further prescribe what constitutes
ethically permissible behavior [ CITATION Tho20 \l 1033 ]. Looking at the companies in the
United States I feel as though they strive to build their business on strong ethical and moral
principles. Milton Friedman made a statement that “business has only one social responsibility
and that is to make profits as long as it stays within the legal and moral rules of the games
established by society.” When corporate leaders take on ideals of this nature, it is almost
guaranteed that the moral and ethical culture of the organization will be compromised. In Luke
12:15 he said to them “Watch out! Be on your guard against all kinds of greed; a man’s life does
not consist in the abundance of his possessions.”
The overall relationship of the corporation with all of its stakeholders are what
researchers consider to be the definition of corporate social responsibility [ CITATION Kho99 \l
1033 ]. The purpose of social responsibility extends into the community, employee relations,
environmental factors, and financial performance. With financial gain being at the forefront of
each company it often leads to business owners and shareholders going to great lengths to ensure
financial success and that often reduces the emphasis on ethical behavior. Companies are under a
lot of pressure to meet short-term performance targets. This can lead to the practice of finding
cheap labor which can lead to unethical -behavior. Liang and Renneboog conducted a study on
23,000 companies from 114 companies and they found that a firm’s corporate social
responsibility rating and its country’s legal origin are strongly correlated [ CITATION Lia17 \l
1033 ]. It’s believed that countries with lower common law have lower corporate social
responsibility than companies from civil law countries. Traditionally the outlook on modern
corporations is that the shareholders place their values on maximizing profits and the business
has no obligation or responsibility to serve the stakeholders interest in enhancing societal
welfare. According to Bhattacharya, Korschun and Sen, the majority of fortune 500 companies
are committed to not only engage in social responsibility initiatives but they are committed to
devoting reporting the responsibility to stakeholders [ CITATION Bha09 \l 1033 ]. According to
a survey these companies feel that activity dealing with improving social responsibility will elicit
company favoring responses from stakeholders.
PepsiCo
PepsiCo is a company that has dominated in the food and beverage market and they gross
over $65 billion in net revenue. While grossing this revenue the company has made it a priority
to dedicate to the ethical practice of business. PepsiCo has consistently been ranked as one of
the world’s most ethical companies since the award program was initiated. Their dedication to
ethical business practice has been a major role in how they treat their employees, managers, and
directors around the world. The company provides specific guidance into how decisions will be
made and how individuals will be treated. With PepsiCo operating in a multinational market
they have the challenge of conforming to the culture of the foreign nations. PepsiCo has
overcome that obstacle by implementing a Global Compliance and Ethics department. Each
employee is required to participate in an annual code of conduct training through online courses
as well as in person management workshops. They also choose to conduct their training in a
targeted manner based on role and geography. Employees of Pepsi are able to utilize resources
to handle ethical dilemmas at work. PepsiCo holds their employees to a higher standard and
require them to report any violations to the code of conduct [ CITATION Tho20 \l 1033 ]. As we
look at the success that PepsiCo has I agree with the leaders at the organization that their
commitment to ethical principles have helped them attract and retain the best people. Proverbs
22:1 says “a good name is to be chosen rather than great riches, and favor is better than silver or
gold.” PepsiCo seems to live by this scripture and as a result of placing emphasis on having a
culture of ethics and morals.
As we look into the relationship between religion and business ethics we can find a
positive correlation with religious views and ethics. H. M. Wong conducted a study and found
that those with deeper roots in faith are less likely to accept unethical behavior. The article
discusses how different religions have a love for money. When an individual or religion places
money in a high regard it may lead to different ethical attitudes [CITATION MWo08 \l 1033 ]. 1
Peter 5:2 says “Be shepherds of God’s flock that is under your care, serving as overseers-not
because you must but because you are willing, as God wants you to be; not greedy for money,
but eager to serve.” The purpose of business is to ensure that you benefit your employees and
the community.
