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Ethics and Social Responsibility

Conference Paper · January 2011

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Ethics and Social Responsibility

*Dr. Vipin K Sharma


Abstract: ‘Ethics and Social Responsibility’ is a growing and developing discipline.
Lately it has come into focus ever since the former Prime Minister Atal Bihari Vajpayee
pleaded for “zero tolerance for corruption” in order to restore ethics. He rightly pointed
out that it cannot become a reality unless we work with the foundation of human values.1
The recent scams perpetrated by Messrs Raja & Kalmadi in 2G Spectrum,
Commonwealth Games and the latest Citi Bank scam etc have already considerably
undermined this foundation. Presently professional education is equally callous towards
human values and ethics. The educated leaders and business entrepreneurs have
forgotten Vivekanand, Gandhi, Tagore, Aurobindo and several other towering
personalities for their valuable contributions in building this foundation. Ethics and social
responsibilities have an international dimension that should not be ignored. The field of
business ethics has traditionally been the domain of all intellectuals. The literature on
ethics today, is not ready to handle the practical needs of managers – the persons, mainly
responsible for adhering to ethics in the workplace. The values that were rigidly followed
are now strongly questioned. There are no clear moral and ethical values to navigate
managers through complex dilemmas about what is right or wrong. This article mainly
deals with the understanding of business ethics and social responsibility and its
implementation at grass root level arising out by virtue of one’s position in an
organization especially during this dynamic scenario mainly because of emergence of
affluent society and LPG i.e. Liberalization, Privatization and Globalization.

Key words: Ethics, values, liberalization, privatization and globalization

Introduction: Ethics and social responsibility are two concepts many individuals believe
go hand in hand for organizations in the business environment. Business ethics represents
the moral principles an organization uses to ensure all employees act in an acceptable
manner when completing business functions. Social responsibility is typically an
ideological theory governments and the general public hold, believing that businesses
should not conduct themselves in a manner counter to cultural or societal norms. The
blending of business ethics and social responsibility bears when organizations implement
a written code of ethics to prove that the organization only acts in its best interest so long
as it does not damage the organization’s social responsibility.

Ethics: When man first evolved himself from the primeval existence, his behavior and
thinking were not different from those of animals. He largely depended on instincts for
his existence and survival. But gradually, his rational faculty began to develop and he
grew from the stage of an animal guided by the instincts to that of a rational animal.

Every individual in this world wants to lead an ideal and luxurious life, where he
tries to find out the norms, ideals and standards of the particular society and this can be
achieved through three ideals of human life, i.e. truth, beauty and goodness. They refer to
*Associate Professor, Aravali College of Engineering & Management, Faridabad
three aspects of our experiences- ‘thinking’; ‘feeling’ and ‘willing’. These all refer to the
Ethics.
Ethics is a set of moral principles, which guide the code of conduct and behavior
of a human being in his life and in society. It is a person’s own positive attitude and
desirable behavior and it differs from one another among individuals.

The concept of ethics comes from the Greek word, “Ethos” that means both an
individual’s character and a community’s culture. Generally it is believed that business
ethics involves adhering to legal, professional, regulatory and company standards,
keeping promises and commitments and abiding by general principles like truth, fairness,
honesty and respect. The Institute of Global Ethics defines ethics as ‘obedience to the
unenforceable’.2

This is a well-known fact that Ethics is a complex area where no universal set of
ethical principles exists and what is right and what is wrong often depends on
circumstances. Due to global competition and rapidly developing technology change has
become inevitable. The increasing realization of this has led to a change in thinking about
the effective approaches to getting firms and their employees to behave ethically. Initial
approaches were heavily based on “compliance’, the creation of rules and systems that
people and company had to follow. But rules are hard to draft and can quickly become
obsolete while systems can tie people up in bureaucracy and hamper business efficiency.
This has led to the evolution of the belief that although some level of compliance will
always be necessary, it is more important to instill ethical “values” into the corporate
body and the employees that inhibit it. To do this successfully, businesses must have a
vision about why they exist and that ought to be shared by everyone connected with the
organization. They must have also shared beliefs about acceptable standards of behavior.

It may be called an American subject in the sense that most recent work on the
subject has been carried out in United States. The ethics movement has grown most
strongly in United States because the risk of being penalized by the courts for unethical
behavior is greatest there. Business values and business ethics have a world wide
dimension that must be looked after in an appropriate manner. Many people remain
unconvinced by the business ethics movement. Business ethics matters because there is
plenty of evidence that unethical behavior can cost a company its reputation and hard
cash and reduce its stock price. Moreover companies that are perceived as ethical are
more likely to build trust among their employees, customers, shareholders and the wider
community and this surely is good for business.

Some entrepreneurs focus on specific ways to exhibit integrity and respect in


daily business interactions with clients, suppliers, and other designers, while others
address much broader issues and present fundamental ethical principles. Some
fundamental of these practices are:

• Ethics ’not I, but thou,’ with motto: ‘not self, but non-self’3

•Always respect your competitors in fair and open competition


• Be honest when you are describing your professional experience and
competencies
• Avoid any type of conflict of interest
• Acquaint yourself with each client’s business and provide honest and impartial
advice
• Maintain the confidentiality of all client information
• Eliminate any form of hidden compensation or kickback
• Maintain commitment to the development of innovative work of the highest
quality
• Never compromise on any forms of plagiarism ethics and social responsibility
• Acknowledge contribution of others who have collaborated unconditionally with
you in creating a niche in your field.

Some of the scandals in the business world had their origin in little regard being
shown to morality. The scandals convince that maxims such as “business is business: or
principles like ‘caveat emptor’ (let the buyer beware) fall far short of public expectation.4
Businesses are under pressure to define their standards and codes of practice. Henry
Thomas, a cellular technician for Southern Bell, who was asked to randomly terminate
five employees as a disciplinary measure. He refused to do so based on his moral code,
and was then terminated. He decided to go into business for himself and dedicate his
business to God. He states that, “The Bible tells us that God’s eyes are looking to and fro
throughout the earth for those whose hearts are wholly committed to Him. Every day, I
pray that God would give us wisdom and that He would find us usable so that we can
continue our mission to help others and to show God how much we love Him.”5

Another very important area for ethics to be apparent is in the field of education.
The public often hears of student ragging resulting suicide in reputed colleges. These
instances scare people and lead to mistrust. It is essential that college authorities maintain
ethical standards so that they can maintain the trust that we need to place in them as
customers.

The interest in business ethics has increased by recent trend towards Total Quality
Management. TQM has two consequences for business ethics. First, it means that the
consumer’s interests cannot be ignored. Second, management should define procedures
and codify them for the introduction of code practice. The codification of procedures
involves duties which impart a value judgment.

Social Responsibilities: In the heyday of laissez-faire capitalism of Europe, the maxim


was maximizing profit. Social responsibility had no place in this scheme of things. The
business of business is business. So long as man made money was kept out of the
crunches of society he felt no particular obligation and acknowledged no responsibility to
the community. ‘The public be damned.’ Social welfare was not his concern. But this
attitude does not hold well in the present dynamic scenario. The recognition of social
responsibility has been termed as the emergence of ‘corporate conscience’.

Business is an organ of society and it operates in a socio-economic environment.


Every business depends on the society for the needed inputs life money, men and skills.
A business also should strive to enhance local community service and also facilitate
better living conditions for its employers. By training members of staff, wherever
possible, anyone in an organization can lead to the employees who feel empowered for
working harder as well as make good decisions. Having concerned of well-being of
employees may lead to the healthier and thus happier workforce. This should be ensured
by carrying out a comprehensive introspection of every decision made in relation to
profitability as well as long term value and social responsibility. A business can only
justify its existence by fulfilling its obligation to the society.

There is lot of money poured into advertising of a product which can be saved and
utilized for people only when we put real policies in place that take care of the employees
and as well the local community. It would automatically bring about enhancement of
business brand. This ultimately, will culminate into higher profitability. It is also essential
to offer training to staff members besides facilitating promotions from within the
organization. This will ultimately lead to employees that feel empowered, which will in
turn lead to hard working staffs that have the capability of making better decisions. There
are lots of methods to do this includes education, sports as well as environment.

It has become a routine for many businesses to indulge in serving their


community by either supporting local charities or offering sponsorship to the local
people, which in turn ensures better living conditions for the local people. Many ways to
achieve this include education, as well as sports and environment. Such ethical actions
usually bare fruits in the long term as they serve in enhancement of the brand of the
business, which ultimately will bring about profitability over the long term. You need to
have little patience and wait, unless you get success for your actions. Auckerman in his
Micro-level model of social responsibility advising that the managers should “act early in
the life cycle of any social issue in order to enjoy the largest amount of managerial
discretion over the outcome.” 6

While good ethical practices in business are one of the biggest keys to any
companies’ success, social responsibility is another factor that is often forgotten as well.
Businesses have an obligation to their communities as well, and philanthropy on the part
of businesses of any size is the key to staying in the good graces of not only consumers,
but also the cities and states in which the business operates. Some business owners think
that the only benefit of charitable contributions is an end of the year tax deduction that
can help minimize tax liability. However, these tax deductions were incorporated as a
method to encourage businesses to do more for the communities that they are in. One of
the biggest advantages of a company social responsibility policy and corporate
philanthropy is not only improved public image, but also an improved local economy that
is promulgated by the businesses that support it

I feel proud to mention here the mission of a company Hindustan Lever Limited
(HLL) which states that- “Hindustan Lever’s commitment to national priorities has
ensured that the company is part of people’s lives at the grass root level making a
difference to Indian and to Indians – in depth, in width and in size. Hindustan Lever has
always identified itself with the nation’s priorities: employment generation, development
of backward area, agricultural linkages, exports, contribution to exchequer etc.”7 Besides
this, the other example in this aspect is of TISCO which affirms ‘its faith in democratic
values and in the importance of success of individuals, collectives and corporate
enterprise for the economic emancipation and prosperity of the country’ invests a lot to
gain long term profits, but can’t cling to it, and LIUN is the example which gained short
term profits with no social responsibility with regard to quality, quantity and price of the
product. Other examples are who have public and brand image in the market because
they fulfilled the needs of the society are: Reliance, Sony, IBM etc. It is noteworthy that
an estimated four hundred crores rupee is spent per annum by corporate organizations on
corporate philanthropy in India.

While business ethics certainly play an important role in the business


environment, it is possible for governments and individuals to demand too much social
responsibility from companies. While companies should not abuse or misuse natural and
economic resources, companies cannot pay for all the needs or wants of individuals.
Some governments, individuals, or special interest groups can focus on business ethics
and social responsibility and try to force companies into paying more money to improve
society than the company can afford. This can result in lower business profits and the
inability to pay for future, more reasonable and responsible social items.

In conclusion, Ethics and Social Responsibility are very important for modern
businesses to possess to function productively and profitably. In a world that has been
rocked by multiple corporate scandals and environmental disasters consistently, it is
essential that companies put forth the effort to regain and maintain the trust of their
customers and the public in general. Hopefully the efforts of organizations like
Bainbridge Graduate Institute, and people like Henry Thomas will help to regain some of
the footing that has been lost over the years. With a little effort and responsibility,
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perhaps the organizations of today can leave the world in a better shape for our children
and the generations to come.

Notes and References:

1. Biswanath Ghosh: Indian Ethos in Management (New Delhi: Vikas


Publishing House), p. 1.
2. Ibid, p. 2.
3. Ibid, p. 285.
4. Ibid, p. 2.
5. Miller, Kevin: Refusing to Compromise Pays Big Dividends Retrieved
2006).
6. Dr Rinku Sanjeev and Dr Parul Khanna: Ethics and Values in Business
Management, New Delhi, Any Books India, p. 168.

7. Ibid, p. 18.