Good Governance And Social Responsibility

Running head: CORPORATE SOCIAL

RESPONSIBILITY 1

Corporate Social Responsibility

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CORPORATE SOCIAL RESPONSIBILITY 2

Introduction

Social responsibility refers to a theory of ethics founded on accountability of

individuals through validation of their actions to ascertain that they are sensitive to the

economic needs, social needs, and the environmental needs of the society they live in. This,

therefore, means that the people in leadership positions especially should strike a state of

equilibrium between the economic growth and the general needs of the society. On the other

hand, good governance can be defined as a leadership approach established on the basis of

effectiveness, inclusivity, and transparency in decision-making. The key elements of good

governance include the rule of law, being proactive, efficient, competitive, and accountability.

Most organizations rely on the theory of social responsibility and ethic-based practice to

achieve their set objectives. This is the import of good governance which is applied in the

decision-making as the key influence in the achievement of the set organizational goals (Saeidi

et al., 2015). The individuals in leadership positions engage in a variety of activities which are

expected to be conducted within the set ethics and code of conduct so as to satisfy the

constructs of social responsibility. The principles of conduct apply irrespective of whether the

organization is a public or privately owned. In this regard, the leader acts as the organization’s

spokesperson, monitor, resource allocator, disseminator, negotiator, and figurehead.

Background of Organization

Basically, an organization refers to an independent and stable social structure that

absorbs the production input from the immediate environment and converts them into more

valuable outputs. The organization should be able to seamless integrate the concept of social

responsibility and good governance in its interaction with the immediate environment which

CORPORATE SOCIAL RESPONSIBILITY 3

forms the society in its key operations. This creates a confidence in the consumers due to the

existing good relationship between the organization and the elements of its surrounding

environment.

In the light of corporate governance, an organization should operate in a way that is

socially acceptable as prescribed in the code of ethics to minimize or even eliminate the

likelihood of conflict in the societal dimension. This significantly facilitates decision-making

with regard to management dilemma when the society is positively involved in the activities

of the organization. Effective corporate governance results in value addition to the society and

the organization founded on these key principles.

Definition and Understanding of Ethics and Corporate Social Responsibility

A successful firm is able to effectively interact with its immediate environment through

observation of the key values, ethics, and moral constructs of the society irrespective of the

industry in which the organization operates. Therefore, a watertight description of the business

code of ethics cannot be defined due to the variation in the key parameters. However, business

ethics has a wide scope that ranges from the economic addition of value to the cultural tastes

of the society (Chernev & Blair, 2015). Ethics can be basically defined as the principles and

moral values upon which an entity or an individual acts. The key values and morals form an

integral part of the code of ethics despite the disparities in the immediate environment

surrounding different organizations.

Corporate social responsibility is the basis upon which an organization portrays

sensitivity to the social welfare of the people in its environment while formulating the key

objectives that facilitate profit maximization. Most organizations bear the obligation to

CORPORATE SOCIAL RESPONSIBILITY 4

safeguard the interests of the society to avoid criticism and the consequentially possible

conflicts (Brammer & Pavelin, 2016). Therefore, a community within the environment in

which an organization operates will probably associate with it more profitably if the

organization shows interest in the welfare of the society. However, keeping the factor of the

mutual association constant, any organization has the obligation to act in a socially responsible

manner.

The Applicability of Approach

Organizations consider the key needs of their surrounding community while

formulating their code of ethics and social responsibility to add more value and relevance to

the fulfillment of this obligation. These code of ethics are, therefore, formulated such that they

not only fulfill the needs of social responsibility but also facilitate steering of the organization’

agenda of profit maximization. This creates the need for a purpose while engaging the

community in activities that promote a sense of social responsibility by the organization.

The applicability approach in fulfilling the constraints of organizational ethics and

social responsibility largely depends on activities in which the organization is engaged in. For

instance, the applicability of corporate social responsibility may revolve around the

environmental issues, ethical issues, economic issues, legal-political issues, and the

philanthropic issues. The environmental responsibilities of an organization to the society

revolve around ecological conservation and preventing pollution while the economic

responsibility deals with financial benefits through jobs and projects. The legal responsibility

is concerned with ensuring that the organization operates within the set laws to avoid conflict

with the authorities and the society at large. Additionally, other responsibilities such as the

CORPORATE SOCIAL RESPONSIBILITY 5

ethical and philanthropic activities combine to steer the organization’s agenda for the extended

benefit of the stakeholders in the society.

Impact of Concept of the Organizational Commitment and Decision Making

Organizational commitment and decision-making facilitate the attainment of the

threshold for good governance and social responsibility. Therefore, the organization should be

stable enough to ensure that the impact of some decisions is felt within the firm and the society.

This culminates to the success of the organization’s commitment to promoting cohesion and

satisfaction by application of a cognitive and environmentally interactive model that can

analyze the functional consequences of the key decisions successfully within the immediate

environment (Tai & Chuang, 2014).

The commitment of an organization to attaining the threshold of good governance and

social responsibility depends on the effectiveness of the decision-making process which is

fairly political in most organization. This is because the process is generally manipulated

though subunit powers that make up the bureaucratic process of making key decisions. These

powers bring about the inclusivity of all the concerned stakeholders through a series of steps

which include forming groups, storming the projected ideas, norming, and incubating the ideas.

This significantly influences the criteria in which key decisions are arrived at.

Ethical and Business Dilemmas

The ethical dilemmas in business have significant impacts on the successful integration

of the business interests and the welfare of the key stakeholders such as the community. These

dilemmas are usually either long-term or short-term. According to research findings seeking

to analyze the implications of the use of questionnaires which are considered ethical in

CORPORATE SOCIAL RESPONSIBILITY 6

collecting certain data about an organization is an example of an ethical dilemma in business.

This is because the ideologies deducted from the data can be symbolically used to explain a

moral issue affecting the business at a given time.

The price fixation is another dilemma in business whereby most organizations try to

obey the requirements of the code of ethics while maximizing their profit margins. The

deception of customers is deemed unethical in business despite the occasional lobbying by the

consumers to protect them against the malpractice. Therefore, it’s important that an

organization should adhere to business ethics in solving the dilemmas.

How Leaders Set and Influence Corporate Responsibility

The theory of social learning is usually situational in most leadership positions since

the managerial perceptions of social responsibility depend on the situational influence. As a

result, the leaders adopt a proactive approach to influence corporate responsibility for the long-

term benefit of the organization. This is achieved by involving the members of the society in

making the key decisions that concern their welfare. Therefore, leaders consider the resource

allocation and the consequential outcomes of influencing the corporate social responsibility

before taking any actions.

Models, Concepts, Theories, and Literature in Organizational Behavior

Organizational behavior refers to the way in which the members of a group related to

each other (Huczynski & Buchanan, 2010). The literature on organizational behavior focuses

on models of efficiency, accountability, and effectiveness in decision-making. The key theories

of organizational behavior are;

CORPORATE SOCIAL RESPONSIBILITY 7

1. Theory of neoclassical organization

2. Contingency theory

3. Classical theory

4. Systems theory

These theories interact to promote good governance and social responsibility based on

the four key principles; close supervision of workers, management control and planning, one

best way rule, and division and specialization of labor.

Supporting Research and Theory from Corporate Responsibility Literature and

Journals

According to Peter, Jeremy, and Bin (2017), the theory of corporate social

responsibility can be best viewed from the angle of authoritarian capitalism. This seeks to

explain the concept of corporate social responsibility using a framework that derives its code

of ethics basically from the national environments and the societal pressures. The authors of

this journal have focused on a code of ethics that is applicable in both small firms and huge

multi-national firms to meet the global and local expectations by the society. This calls for the

effectiveness of the decisions that play leading role in mediating the national and societal

pressures. As a result, it’s imperative to focus on the conceptual integrity of an organization to

operate within the constraints of corporate social responsibility.

CORPORATE SOCIAL RESPONSIBILITY 8

References

Hofman, P. S., Moon, J., & Wu, B. (2017). Corporate social responsibility under authoritarian

capitalism: Dynamics and prospects of state-led and society-driven CSR. Business &

Society, 56(5), 651-671.

Huczynski, A., & Buchanan, D. A. (2010). Organizational behaviour. Financial Times Prentice

Hall.

Tai, F. M., & Chuang, S. H. (2014). Corporate social responsibility. Ibusiness, 6(03), 117.

Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate

social responsibility contribute to firm financial performance? The mediating role of

competitive advantage, reputation, and customer satisfaction. Journal of Business

Research, 68(2), 341-350.

Chernev, A., & Blair, S. (2015). Doing well by doing good: The benevolent halo of corporate

social responsibility. Journal of Consumer Research, 41(6), 1412-1425.

Brammer, S. J., & Pavelin, S. (2016). Corporate Reputation and Corporate Social

Responsibility. A Handbook of Corporate Governance and Social Responsibility, 437.

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