Business ethics and social responsibility are important concepts for companies. Ethics vary, but common good ethics include honesty, integrity, transparency, and accountability. Corporate governance helps promote these concepts, but demands for social responsibility can be excessive and harm corporate profits.
Business ethics and social responsibility are two concepts that many individuals believe go hand in hand with businesses in the corporate environment. Business ethics are the moral principles a company uses to ensure that all employees act in an acceptable manner when completing company functions. Social responsibility is typically an ideological theory held by governments and the general public, believing that businesses should not behave contrary to cultural or social norms. The marriage of these concepts occurs when companies institute a written code of ethics to demonstrate that the company acts in its best interest only if it does not harm the company’s social responsibility.
Ethics can mean many things to different people and companies. What one company deems acceptable behavior, another may deem unethical or inappropriate. While there are many different types of ethics, the good common approach most closely links business ethics and social responsibility. Common good ethics is a Greek philosophy that states that all individuals should follow or use the ethical traits they do best to further the common good of society. While this ethical approach may apply to different regions or countries, a basic set of ethical traits include honesty, integrity, transparency and accountability. These characteristics ensure that owners, managers and employees are not acting in their own self-interest, but are upholding the company’s values as a guiding force for the company’s operations.
Large organizations and public companies often use corporate governance to promote business ethics and social responsibility. This governance creates the framework of policies, procedures and guidelines for all individuals financially invested in a company. External stakeholders who do not have an investment can also benefit from corporate governance. Large organizations and publicly owned corporations are typically subject to more business ethics qualms as they command large portions of a region or nation’s economic resources. These companies must seek to benefit local communities and raise the standard of living of as many people as possible and must be careful not to pollute the surrounding environment.
While business ethics certainly play an important role in the business environment, it is possible that governments and individuals are demanding too much social responsibility from companies. While corporations must not abuse or abuse natural and economic resources, corporations cannot pay for all needs or wants of individuals. Some governments, individuals, or special interest groups may try to force companies to pay more money to improve society than society can afford. This can result in lower corporate profits and an inability to pay for future, more reasonable and responsible corporate elements.
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