Business Law: Corporate Responsability

Through the debate over both perspectives from corporations, CORPORATE SOCIAL RESPONSIBILITY impact ;n the business world will be examined in the spectrum of its ethical, financial, legal, and philanthropic standings, redesigned to meet new purposes in the 21st Century corporate setting. Many might agree that there is a fine line between ethics and corporate social responsibility, due to the fact that these two could be confused. An ethically correct corporation does not necessarily have to be socially responsible, while a seemingly social responsible corporation is not always abiding by the rules of ethics.

Let’s begin by defining ethics. Ethics can be defined as the study of what constitutes right or wrong behavior . In the business world, ethical behavior depends on the individuals cases like the Enron, Tycoon International, World, Delphic, and Peregrine Systems, which have cannibalized the corporate atmosphere and uncovered corporate officers abusing their power and privileges. Moreover, these cases also reveal how officers were manipulating information for their own interest rather than that of the company, employees, and society.

Nevertheless, such cases brought attention to ethics, and how officers of a corporation, and employees of a company should act for the minimization of wealth of shareholders. Nowadays, every business school is teaching young aspiring business students to develop good ethical standards. Were the officers of these companies being ethical when they decided to pursue their own interest above all others? Obviously, the United States will refuse to such accusation, since many of their officers were sentenced to life in prison.

These officers were breaking rules, not simply legal rules, but also acting wrongly and acting unethically towards the business and its competitors, these are rules of society that can ruin a corporation regardless of how communities service oriented they might be. Different people will have different opinions on where the ethical to unethical line is crossed, and this includes, what is real or fake in reference to the actions and “for show’ of corporations. On the same token, we have examples from the Enron scandal whose wrong acts are the starting causes of the recession we have been experiencing for the past few years..

As a result of this particular example, corporate social responsibility was a big factor in creating the Serbians-Solely Act of 2002. This regulation states that top management must prove their financial statements to be factual and accurate among other things. There is no doubt that embezzling money is unethical, against social responsibility, and a crime. If corporate social responsibility were more popular back in the early 21 the century, would these reparations have acted in such a way leading to the economic recession?

Most likely not, since corporations like Enron would have looked for much more true, correct, ethical, and socially responsible ways to bring more profit to their corporation if social responsibility was more of a cultural “thing” back in the g’s, instead of painting a pretty picture for the world to believe. Unfortunately, even if it were a trend, we would never be able to understand and calculate the thoughts and intentions of people with what ifs or could’ve been because they could simply be fraudulent people that will always have anxiety for wealth.

This is where we must ask ourselves if ethics and social responsibility really go hand in hand. There have been companies like Nikkei that have gotten considerable negative publicity for acting unethically towards their factory workers. In the case of Nikkei its labor cost was minimized by producing in other countries where they could pay for labor 20 cents an hour, therefore reducing their cost and maximizing shareholder’s profit. Were Nine’s actions socially responsible?

They were following United State’s laws and maximizing shareholder’s profit, but they got bad publicity for outsourcing their production and reducing labor costs. So where do we draw the line for defining what is corporate social responsibility, or not? Because Nikkei was outsourcing production and reducing labor cost but making employees work overtime and got paid less than in America. The American public saw these actions as unethical behavior portraying Nikkei to not be following social responsibility and unethical overall.

The question follow it? In Nines case if they had treated their production employees as employees in the US there would be no purpose to outsource in the first place. Because of the trend of social responsibility their actions were looked as unethical. People could argue that it was not socially responsible to outsource from the beginning, and leave Americans Jobless, but it poses an obstacle to the corporations overall goal of maximizing shareholder’s profits.

Because of this trend of social responsibility Nikkei lost profit when information about their labor practices leaked to the American public. Even though their labor practices where unethical in respects towards the lives we have in America, people in Indonesia or Vietnam live under different conditions and having the opportunity to get a Job and provide some income to their family is a blessing. Did Nikkei take advantage of these countries poor economic standings? Yes, but they did it in order to maximize their shareholder profit in turn helping the US economy.

So again when does social responsibility and ethical behavior end? Perhaps if Nikkei would have turned its ethical part and social responsibility around, they could be outsourcing, while still donating to causes and working with organizations in these other countries, which would make criticizes understand that their actions were not abusive and that they are willing to be socially responsible towards the countries in which their employees reside in, and in edition, be socially responsible, here in the United States.

Another case of labor mistreating is with Wall-Mart by not wanting to pay overtime wages and female employee discrimination. In this case would Wall-Mart’s actions be in the scope of social responsibility or ethical? Since Wall-Mart resides in the U. S. And its directly affecting the U. S. Community its labor mistreatment is considered unethical and not socially responsible because it is affecting U. S. Workers, the U. S. Economy and the U. S. Community. There is less of a gap between what is right and wrong from Wall- Mart’s actions, no gray areas.

When talking about Nikkei there is more uncertainties because it does not directly affect America. But because actions of corporations don’t directly affect the US as a whole, it doesn’t mean their actions where ethical towards every source that is affected by such action. If companies act well towards the community as a whole because of this corporate social responsibility trend, could their actions be considered ethical? Many would say yes because if the trend is in fact better for society as a whole it would be ethical and right.

There are some companies that have social responsibility at the core. Struck Coffee brewed responsibly and one of its main focuses is the sustainable production of green coffee. Not only does the company strive to archive product quality, social responsibility and environment leadership but it supports Ethos Water, which provides clean water to people who don’t have access. Ben & Jerry have also fulfilled its duty to social responsibility by starting the Ben & Jerry Foundation that contributes to charitable organizations in the corporate world with 7. % of its pretax profits. Whole Foods is another green organization that fulfills its corporate responsibility with their organic rodents as well as its philanthropic movements. These organizations have fulfilled their corporate social responsibility by creating green products, being environmental friendly, and giving back to the community. Do these companies thrive in the corporate world? Yes, they are fulfilling their corporate responsibility and are donate to charities to get tax refunds from the government.

Why does the government have such plans set up? Nevertheless, it could be said that these are incentives to encourage corporate social responsibility. TOM Shoes is another company that has good corporate social responsibility standing. Its social mission is the same as its corporate mission. That is with every purchase of a pair of shoes they would give a pair to a child in need. Its social responsibility was incorporated with its mission making it self-fulfilling. Would you say TOM Shoes is an ethical company?

Some may argue that it is because its profits go to making the pair of shoes for the child in need. But others may say that TOM shoes are overpriced for what it takes to make 2 pairs of shoes wondering where the extra money goes. To conclude, when acting on a business environment everyone must think of what is ethical and choose o act accordingly, of course our definitions of ethical vary from person to person but that is why we have laws to guide everyone in acting ethically.

Corporate Social Responsibility is a positive trend to our society, because it promotes ethical behavior, and an overall well-rounded business world. Whether a corporation has gone through turbulent legal accusations or not, we must be observant, and go for the companies that have changed their ways, acted more ethical over time, and been socially responsible, because even though they do not always come hand in hand, ethics and social responsibility encourage each other and our corporations to do good for society and for their own corporation/clients.

What are corporations really aiming for when they lean their corporation towards being a “socially responsible” corporation? How much of this responsibility is actually for the good of their shareholder or for the good of the corporation itself? How much of this social responsibility is volunteered, and how much is regulated, or obligated? And do non- profits also benefit financially from being socially responsible? To begin with, reparations must be socially responsible, financially, when it comes to their financial statements, keeping them up to date, and keeping them accurate.

Thus, at least some of their interest should root from the services they should be providing to their shareholders, and part of it could also be in the interest of increasing capital and clientele for the corporation. In addition, whatever a corporation aims for in creating a socially responsible sector for their corporation has a financial cost, aspect, and result. So what is the opportunity cost of being a “socially responsible” corporation?

Furthermore, non-profit organizations, usually already have a cause, which means that they have a somewhat base of being socially responsible, however, when it comes to collecting funds, do they look for financial benefit more than social, and how much of it is abuse of the public in order to collect more money? Are non-profits looking for more financial benefit than corporations? There are laws regulated by the GAP, which requires that corporations have relevant, reliable, consistent, and comparable financial reports. This is basically obligating companies to be socially responsible and ethical.

Corporations have to be recipes and up to date with what they report annually in their statements; in order to change the way that they report things, such as depreciation. They must make these changes formally, and they cannot be impulsive with these changes. This is not only because of simple checks and balances, but also because corporations that are these statements and many investors search through these and make financial decisions on where and how to spend their money. Now, does this mean that following these regulations is bad, and/or that what they report and how they report it is all a lie used to attract investors?

I would debate that a socially responsible corporation, is one that would report a relevant, reliable, consistent, and comparable financial statement. How would you know that a corporation isn’t being consistent just to have a good statement? Honestly, you would have to do a little research to see if the company has reported the good, the bad, and the ugly, in order to be sure, but fortunately, we have these regulations, and other departments of government that review these statements previously.

Other sources such as auditing would eliminate fraudulent acts, therefore, yes, financial reports are obligated to be socially expansible, and a socially responsible corporation would be the one to follow the rules. Do they benefit financially from being socially responsible? Probably, because investors keep up with financial reports, but also in certain cases, (for a product corporation per say) it probably won’t be so beneficial. This is because the public is usually attracted to certain corporations regardless of their following of GAP or other regulations.

This correlates to the question of how much does social responsibility benefit the corporation versus the customer. I would assume that in the end both parties would infinite from an environmental movement, or fundraising for poverty, because these activities allows for a corporation to brand themselves, not only domestically, but internationally. Also they are able to attract current and potential clients. Such corporations will be able to work through with other organizations and with causes to advertise their “social responsibility’ even further.

With these elements combined, their corporation will eventually benefit financially. For this argument, I would like to use Wells Fargo as an example. In their website, they emphasize their focus on evolving how they are a socially responsible corporation. They are the main supporter of women, small businesses; they support the environment, education, and non-profits. It seems they are on top of their game and they are quite a genuine company. Wells Fargo has recently increased their capital and even bought over the Wichita bank.

They give billions of dollars to all these organizations and even have goals on how much they expect to continue to give, but the only reason Wells Fargo would continue to do this, is so that they can keep growing. It is analogous to a University and its Alumni. Universities will do daily searches on rich versus non-rich Alumni to see which ones will donate and which ones will not. For a university it is more of a monetary interest, however, corporations are also going to see where their money is needed and where they can amp themselves from.

You have to look for causes that are going to be loyal to you, and provide for businesses that are probably going to get loans from you, and even if you make them affordable, they are going to pay some kind of interest. The more you help them, the more they will refer you, and both the client and the organization are going to benefit from that. No corporation is going to get involved in something that is not going to benefit them somehow.

A corporation is an entity that even has rights, and although the corporation cannot feel for the poor, or for a community, the directors and managers of a company can, mind. While they do this, clients develop “feelings” towards corporations. If your company is utilizing and allocating the peoples interests to their maximum potential, then you are going to work with your maximum potential, and financially you are going to grow through this social responsibility that must be as consistent, reliable, elevate, and comparable as a financial statement.

If you are going to do something, you are bound to do it right, especially if you feel some kind of social responsibility. Social responsibility is not Just about helping, it has become about building a relationship with your customers, and relationships are mutual, so what helps one should help the other as well. Therefore, getting your name out there is going to benefit you financially, attracting customers is going to provide them a service, and the corporation a financial benefit.

Working through organizations and causes is owing to benefit them because it gets their name out there as well, while eventually you will benefit financially, and I believe both the causes and your corporation will eventually benefit financially, because usually need some kind of financing to help a cause, and those who have been attracted to you, heard of you, or worked with you, are bound to get service from you, which is going to financially benefit your company. It is a win-win situation.

Corporations have costs and financial issues to deal with when they engage in socially responsible activities, but then, is this a good cost, a sky cost? For companies that are well-known, big corporations, there isn’t much cost in social responsibility because it is basically an advertisement, as well as a service. When you provide these volunteered services your financial result is positive because when people like your company, they are most likely to invest in it.

A small business, it seems, would have more of a financial risk, because really they might not have a big name, and investors probably do not monitor their progress. However, this could work if the business is located in a small town. This would become a very important tall relationship between the company’s social responsibility and its consumers. Imagine living in a town of only 3000 inhabitants, if 1/3 of them could potentially be your clients, if there is an important cause this town is particularly supportive about, financially, social responsibility is very important to your business.

The cost of engaging in socially responsible activities varies, and so does the risk of not being socially responsible. Social responsibility is trending, which could mean that if any business or big name corporation did not engage in socially responsible activities, hey could be socially looked down upon. This is where the financial aspect of social responsibility really takes part, because it isn’t about money anymore it’s about what are you doing or going to do to give back to the community?

It is an expectation that people are beginning to look for, and as a financial result it could be life or death, your result could either be more clients which drives more income, less clients producing less income, or you simply stay in the same place. The opportunity cost could be all or none, and it is important to give back and contribute to our society’s American Dream, because what good is a dream if you hog it all to yourself? Speaking of dreams, Non-profit organizations are organizations that are established for purposes other than to make a profit. Instead they fundraise money to support the specific cause they are working towards.

Non- profit organizations are basically born to be socially responsible, and the question here is, how much can a non-profit example would be an organization that raises money for kids in Central America to be able to travel to the United States and get their individual critical medical conditions treated and/or operated by doctors in the U. S. The issue with this would be if even after these children have been brought to the United States, treated and/ or operated, that the organization would not report, on their website or list of children in need, that this child has either passed, or successfully recovered.

This would be an abuse of their social responsibility of helping these children, it would be completely unethical, and an overall teeth-grinding situation. Non-profits are regulated and have some of the same requirements as a for profit organization, however they are filed through a separate application and do require that their Irvine and/or purpose be specifically stated on their application. In addition, non- profits may receive governmental charters in order to help with their funding. However, Just like a corporation might evade income taxes, how much of what a non- profit declares is true?

In this case, it would benefit to read through testimonials, as well as their financial statements and see any suspicious activity. However, financially, wouldn’t a non-profit organization be looking for ways to feed off people’s charity more than a corporation would? A corporation provides a service and will eave an opportunity cost if they do not engage in social responsibility, but for a non- profit, money is not a guarantee and they already are socially responsible, so their only issue is getting funds.

In the financial aspect of corporate social responsibility, corporations versus non-profits, non-profits probably abuse more of the social responsibility benefits than a corporation. Big name corporations evade taxes, while non-profits lie for charity. And in the end everybody is financially responsible for social responsibility because it is a web that contributes with each other, and we are all contributing to the world and its economy.

In conclusion, we can agree that the financial aspect of social responsibility has many branches, topics that we have not even touched upon, and issues that will rise in the future. When we think about a corporation’s true intention when it comes to engaging in socially responsible activities, one can assume that a corporation that follows its financial rules and obligations with the intent of actually connecting with the community. Social Responsibility is for the good of the community, as well as for the corporation, and it is something that will hold the company high, and eventually bring profits.

When you provide good services in and out of your corporation, people are most likely to stay loyal to your company, and social responsibility helps this. An interesting topic was about our non-profit organizations and if they abuse their socially responsible power more than corporations do. Well, the answer to this could go both ways, but due to the fact that having social responsibility is a given for not- for-profit organizations, it is most likely that they would abuse of the financial benefits that being socially responsible would bring.

Social responsibility is a concept that varies according to each individual corporation. Corporate social responsibility is not only the liability that we owe the community as businesses, but also the key that most approach to achieve success and profit amongst other advantages. In support of such dilemma, in the article by Elisabeth Garcia and Doyenne Melee, both accredited professors of business ethics, author Voted writer of responsibility means something, but not always the same thing to everybody.

To some it conveys the idea of legal responsibility or liability; to others, it means socially responsible behavior in the ethical sense; to still others, the meaning transmitted is hat of ‘responsible for’ in a causal mode; many simply equate it with a charitable contribution; some take it to mean socially conscious; many of those who embrace it most fervently see it as a mere synonym for legitimacy in the context of belonging or being proper or valid; a few see a sort of fiduciary duty imposing higher standards of behavior on businessmen than on citizens at large”.

Many corporations might seek to engage in community projects such as charities, foundations, and employee benefits. However, it is uncertain whether or not these corporations employ these initiatives for their own financial benefit or for the well being of society; this is what ponders on the true and dark side of corporate social responsibility. Although many question the true intentions behind corporate social responsibility, as per corporate law, there’s much evidence to prove that the ultimate goal is often to maximize profit.

Social demands drive businesses to adapt to new perspectives and activities in order to develop a sense of belonging and satisfaction in the consumers. By constructing a basic philanthropy companies shape their goal as a business and their responsibility o society in conducting their operations. Companies such as Johnson and Johnson as well as Ernst and Young ALP, emphasize their purposes for business in their philanthropy statements. For example, Johnson and Johnson developed a philanthropy referred to as their Credo in conducting business, which focuses on putting the needs of their consumers before their own needs as a corporation.

For consumer retention this is a very effective initiative since it fulfills the need for belonging in the community, yet the purpose for these tactics are ultimately inducing retention and consumption for the growth of the corporation. Ernst and Young ALP, gears towards community involvement, as well as professional and personal growth for their employees, however, how can it be distinguished if companies misuse corporate social responsibility to market themselves as charitable corporations and responsible business professionals?

Developing philanthropy establishes the compromise between corporations and society. Nevertheless, there is still an implied compromise to shareholders and investors, which is often a stronger motivation for corporations to practice satisfactory corporate social responsibility. For this reason reparations such as Nikkei promote awareness issues such as breast cancer to exercise their responsibility and support to society. For instance, Nikkei has developed a breast cancer collection in their apparel segment to demonstrate their solidarity with this social issue.

However, with every supportive consumer, Nikkei gains a profit and improves its reputation in the market force. Other initiatives are the zero waste goals in the supply chain, which supports environmental protection and ecological sustenance, and the focus to prioritize labor conditions for their employees. Even so, Nikkei is also known for its poor working conditions, overtime, and poor human rights advocating for employees in Western regions, which are tremendous reasons for Nikkei to redeem its brand value through corporate social responsibility.

Therefore, it is evident that Nikkei seeks to project a better image to recover its sales performance in relation to its competitors and further expand its financial growth to maintain and responsibility is the One for One movement created by TOMS shoes. Their philanthropy is based on changing the world one shoe at a time by providing a pair of shoes to unprivileged people around the world for every sale. This incentive is not only satisfactory to the consumer but also to the sales projections for the corporation.

Yet, it can also be misleading since in reality businesses are in business to make profit, regardless of how many changes in the world have to be sacrificed in the specific case of TOMS. Although, the promise is to make a change in the world with the purchase of footwear and aware, how do we really know if the promise is being fulfilled? As per the article by world known reporter Amy Costello, ‘Igniting Debate about the Business of Doing Good,’ TOMS’ incentive although carried with good intentions, is not fulfilling the priorities of those in need.

While children around the world might be yearning for food or shelter, TOMS promise to provide footwear is not satisfying such a crucial priority, as the consumers might believe. Hence, corporate social responsibility can be used as a game tactic to gain consumer trust and establish a brand reputation, which as a result leads to business financial success. Ethical behavior is the main component of corporate social responsibility. Each corporation designs an ethical structure to embrace in interaction with consumers and the community.

Yet, corporations often don’t operate to the standards promised in their philanthropic culture. Coca Cola is a well-known example since they have established to make proper and responsible use of natural resources in their mission statement. Still, CORPORATE SOCIAL RESPONSIBILITY case study reports have proven that Coca Cola in the process of its operations and production has depleted many village wells, thereby causing greater damage than good to the community. In fact, Coca Cola was suit in India for causing water shortage and contamination to the village water supply of Appalachia.

It is definitely evident that in the process of causing such harm, Coca Cola has not Jeopardized its focus to increase profit minimization standards and remain in the top of the beverage industry. To support this notion of self-interest, corporations act according to the law governing the corporation and deviate from that which governs the individual responsibility to create fine corporate citizenship. In theory, corporate social responsibility is not only limited to social issues such as environmental preservation or charities, but also liable to human rights in the workplace and safe working condition for corporate employees.

As a result of globalization, many corporations such as McDonald’s, Target, and KEA have expanded their corporate horizons to increase their performance and generate more profit. However, corporate citizenship has deteriorated in such cases, and alike corporate attorney Robert Hinkler proposes in his article, ‘How corporate Law inhibits Social responsibility, I believe the law should be amended to actually enforce social responsibility instead of exclusively corporate gain.

Corporations off course do not agree that corporate law hinders social accessibility because the private interests of the corporation might be Jeopardized if corporations took more initiatives to embrace corporate conscience. In cases such as Nikkei and Wall-Mart, by improving their financial performance throughout the years, human rights and working conditions have plummeted to the extent of lawsuit cases such as Nikkei v. Ashy.

This lawsuit not only brought to light the poor working frequently advertised as supportive, but also the fact that their employees were victims of exploitation and unacceptable conditions in the workplace. How do these reparations Justify their actions to the public? Undoubtedly, corporate law has succeeded at determining corporation’s only lawful goal to be generating profits, and has noted other crucial social issues as beyond the scope of these corporations. On a different note, corporate culture and the environment at which the corporation is developed also influence corporate social responsibility.

When businesses create their philanthropic mission statement, they grant value to their beliefs and moral standards. Therefore, corporate social responsibility might be perceived differently room nation to nation, and its implementation might be more encouraged in other countries as compared to the United States. Nevertheless, globalization might also affect the way businesses conduct corporate citizenship by adapting to each cultural and ethical focus depending on their place of operation.

Because of such controversy in respect to the handling of corporate social responsibility around the world, certified professor of business law at US Davis School of law, A. Fashioner states, “… Countries around the world are engaging in rich and nuanced debates, and undertaking significant reforms in the corporate governance and CORPORATE SOCIAL RESPONSIBILITY arenas. ” In fact, countries such as the United States are often viewed as highly driven towards capitalism and profit growth.

For example, while in the United States corporate social responsibility refers to the liability to care for environmental and health issues in society, as well as good employee care, countries in Europe might exercise corporate citizenship differently. For instance, in countries such as Germany, corporate social responsibility is often more geared towards the immunity enhancement. Europe, unlike the United States, has the National Health Service mandate a law for all employees to pay a fair amount into medical insurance through the employer.

This measure eliminates the need for corporations to develop programs through the approach of corporate social responsibility to better the health issues their employees might face. This also allows corporate social responsibility in corporations to truly be projected to more crucial social issues that required the attention of these capable corporations. As a result, corporate social responsibility in such cases is not merely exercised at the disposition of the corporations but rather entitled by law.

Western countries such as China also greatly differ from the United States, and focus on corporate social responsibility in a more community driven perspective. Alike European corporations, corporate entities in China must abide to some legal guidelines to maintain the goal of corporate citizenship for the benefit of society as a whole. Some of these statutes prioritize on environmental concerns and require corporations to decrease perilous practices caused by misusing corporate social responsibility without regards to the environment in their regular operations.

An example of such statutes would be the Circular Economy policy in China . Now, if corporate social responsibility is meant for the overall good of society in business practices, why do different corporations around the world adopt it differently? The answer is simple. Each country in the same manner as each corporation has different interests and concentrates their ideas on diverse goals. For America, corporations feel more strongly driven to promote financial gain and therefore utilize corporate