Corporate Responsibility And Governance For Ethics

LB5231 Corporate Responsibility and Governance

Exercise Independent Ethical judgment and Initiative in Solving Differing Business Problems Creatively

Discuss about the Corporate Responsibility and Governance for Ethics.

The essay focuses on the concept of business law, ethics and corporate governance and it will illustrated about the various ethical issues faced during different types of business problems and also how several ethical initiatives can be undertaken for the purpose of resolving those and make sure that the process of decision making is successful and noteworthy. Within a complex business environment, each and every business organisations face certain ethical issues during their functioning within the business environment. The business organisations have various roles and responsibilities associated with the development of codes of conduct, ethics and also various rules and regulations in order to make sure that all the workers and employees of the organisation abide by those rules, regulations and codes of conducts and put those into action for ensuring smooth flow of business. The fundamental ethical issues could be certain concepts and ideas related to the trust and integrity, diversity and also corporate governance, compliance and process of decision making (Albareda, 2008 page 430-439). The ethics are dependent upon the appropriate decision making and also can create an impact on the different types of stakeholders involved in business like the shareholders or investors, suppliers, customers, employees of the organisation, etc.

The different kinds of issues faced in business situations and circumstances are fundamental issues, diversity issues, issues faced during making of decisions and also issues related to the compliance and corporate governance within business organisations. The major fundamental issue that might be faced by business could be the trust and integrity. It is important to gather necessaryunderstanding about the integrity and trust about how to conduct the business affairs with the maintenance of proper legal procedures and also with honesty, thereby making the customers gain a good impression about the company. It also means the organisation’s commitment of serving the customers and also treating them with honesty and respect. One of the ethical issue can occur when the business organisation is exhibiting inappropriate ways and unethical business practices, then the customers will lose the trust on the company and a negative image of the company will start growing (Blowfield& Murray, 2014 page 24-30). This will not only make the customers, who are considered as major stakeholders in business unhappy but also will make them not to purchase products and services from the company on a consistent manner. This is how the customers buying behavior can get affected and also a bad image of the company will be developed. It is important to develop a sense of trust and loyalty between the company and customers by making sure that the company abide by the rules and regulations properly and also commit themselves to the ethical business practices so as to ensure maintenance of ethical; standards in an effective manner too. This is how the fundamental issues can be dealt with as well make proper decisions in business. By maintaining the ethical practices properly, the products and services’ quality would also be good and also all the rules and regulations should be followed that would be necessary for proper functioning of the organisation within the business environment as well (Brammer et al, 2012 page 3-28).Developing a healthy relationship between the organisation and the customers could also be an essential aspect for the success of the company.

Fundamental issues and corporate governance

The other ethical issues which might be faced in different business situations could be the issues while making decisions in business. There are various ethical frameworks which can help to explore the ethical dilemmas and determine the most appropriate ethical course of action that shall be undertaken. By complying to the ethicalstandards, the ethical issues can be understood along with the alternative actions taken and how to make effective decisions, thus resulting in to bring out positive outcomes (Deitelhoff& Wolf, 2010 page 1-25). For example, in case of Barstone Resources John’s finance request has ethical rights for being accepted as he is the son of the founders of the origin business, Don and Jan. However, the poor financial performance of Barstone Resources is the main cause for the stress and cardiac issues Mr. Barstone is going through currently. Hence, knowing the health condition of Mr. Barstone and possible financial crisis for Barstone Resources due to financing John Co it is not ethically correct to approve the finance request of John.

There are various compliance and corporate governance issues as well which might arise when the business organisation do not comply with the environmental laws, rules and regulations. (Griseri&Seppala, 2010 page 26-34). Within every business settings managers of the organisation is given up the maximum responsibility to accept the challenge of resolving all the ethical issues which are making the business organisation fall into critical dilemma. In order to resolve ethical issues it is important to take up ethical decisions which would increase the chances for a company to achieve business success. Though there does not exist any special rules to resolve the ethical issues still the managers of a company are responsible for resolving those by different means (Jamali et al, 2008 page 443-459). The three different principles that managers of a company intend to follow for resolving the ethical business issues are as follows:

The principle of intuition- this principle mainly works with different forms of assumptions that the often made up by the HR persons of the company or even a manager play the role. It is true that business decisions could not be taken depending on assumptions and it case of managerial decisions assumptions could have more severe consequences. However, depending on principle of intuition a management professional having adequate knowledge and experience could realise the future outcomes for specific organisational context through observing the current situations (Cheshire, 2010 page 12-20). For example, in case of Barstone Resources principle of intuition could be effectively helpful for the financial manager to take necessary decisions for approving or rejecting the finance request made by John. John asked for the approval of $100,000 finance for paying the pending dues of his subsidiary company. Barstone Resources is a family owned business and John Co is a subsidiary of the organisation. Being the son of Don and Jan, the owners of the original company, may be john has the rights for asking for financial support (McBarnet et al, 2009 page 45- 50). However, being the financial manager of Barstone Resources, my intuitions suggest me to disapprove the finance request of john. Firsts of all, John Co is going through a negative financial output for the last couple of months and the business is not productive as well. subsequently I anticipate that John would not be able to return the credited fund within next one month as he is promising because is not in a state of giving $100,000 profit within next 1 month (Dahlsrud, 2008 page 1-13). On the other hand, observing the poor financial outcome of the origin organisation, Barstone Resources, I also anticipate that there would be severe financial crisis in the business within next 2 months if the requested fund would be provided to John. Hence, according to my realisation of the principle of intuition I would disapprove the finance requested made by John (Jo &Harjoto, 2011 page 351-383).

Issues during decision making

The principle of idealism- this principle simply states that for resolving the ethical issues in a business it is important to list out and make a difference between the negative and positive decisions in a business. This principle puts me in a dilemma for making the appropriate finance management decisions in the organisational context of Barstone Resources. First of all, John is the son of Don and Jan, the founder of Barstone Resources. Moreover, John Co is a subsidiary business of Barstone Resources (Dahlsrud, 2008 page 1-13). Hence, my ethical values suggests me not to deprive John of his father’s assets and gains as he has the ethical right for asking financial assistance for John Co from the origin organisation, Barstone Resources. However, recent poor financial performance is the major cause for the stress and subsequent cardiac issues of Don Barstone, the CEO and Founder of Barstone Resources (Jamali et al, 2008 page 443-459). Don has to go through an open heart surgery next week and in this condition in cannot put his organisation under financial risk by financing his son’s organisation with $100,000. My anticipation says that financing such a huge amount to a subsidiary business which is running through losses will cause severe crisis for the origin organisation, Barstone Resources and in that would not be good for the health of Don just after 2 months from his surgery. Hence, principle of idealism suggests me not to approve the finance request of John as the outcomes would be highly negative for the sustainability of Barstone Resources and also for the health condition of Don as well (Jo &Harjoto, 2011 page 78-84).

Utilitarianism- Utilitarianism is the most important principle which clearly brings into view the good and bad things in a business could be resolved. This principle focus on the situation on which basis the decision has been taken and ultimately looks into the outcome of the business after the decision is implemented. This principle simply indicates that if the business outcome after implementing such a decision is positive the decision taken is correct. Making moral choice and the balance sheet approach is another two modernized approaches that helps a company resolve ethical issues (Lund-Thomsen &Nadvi, 2010 page 201-222). This principle of managerial decision making process considers the outcomes of managerial decisions and subsequently it is the most useful principle for me to take the necessary finance management decisions in the organisational context of Barstone Resources. First of all, John Co is running through severe losses for last couple of months and the business has larger financial burden of it (Dahlsrud, 2008 page 1-13). However, John is committing to pay back the financed amount of $100,000 within next month which is not possible anyway. Moreover, approval of the finance request of $100,000 would surely have negative financial outcomes for Barstone Resources within just next two months. Hence, based on the principle of utilitarianism disapproval of the finance request of John is the most justified decision to be taken by me as the financial manager of the origin organisation (McBarnet et al, 2009 page 45- 50).

References

Albareda, L. (2008). Corporate responsibility, governance and accountability: from self-regulation to co-regulation. Corporate Governance: The international journal of business in society, 8(4), 430-439.

Blowfield, M., & Murray, A. (2014). Corporate responsibility.Oxford University Press.

Brammer, S., Jackson, G., &Matten, D. (2012). Corporate social responsibility and institutional theory: New perspectives on private governance. Socio-economic review, 10(1), 3-28.

Cheshire, L. (2010). A corporate responsibility? The constitution of fly-in, fly-out mining companies as governance partners in remote, mine-affected localities. Journal of Rural Studies, 26(1), 12-20.

Dahlsrud, A. (2008). How corporate social responsibility is defined: an analysis of 37 definitions. Corporate social responsibility and environmental management, 15(1), 1-13.

Deitelhoff, N., & Wolf, K. D. (2010). Corporate security responsibility: Corporate governance contributions to peace and security in zones of conflict. In Corporate Security Responsibility? (pp. 1-25). Palgrave Macmillan UK.

Griseri, P., &Seppala, N. (2010). Business ethics and corporate social responsibility.Cengage Learning.

Jamali, D., Safieddine, A. M., &Rabbath, M. (2008).Corporate governance and corporate social responsibility synergies and interrelationships. Corporate Governance: An International Review, 16(5), 443-459.

Jo, H., &Harjoto, M. A. (2011). Corporate governance and firm value: The impact of corporate social responsibility. Journal of business ethics, 103(3), 351-383.

Jo, H., &Harjoto, M. A. (2012).The causal effect of corporate governance on corporate social responsibility. Journal of business ethics, 106(1), 53-72.

Lund-Thomsen, P., &Nadvi, K. (2010). Clusters, chains and compliance: corporate social responsibility and governance in football manufacturing in South Asia. Journal of Business Ethics, 93, 201-222.

McBarnet, D. J., Voiculescu, A., & Campbell, T. (Eds.). (2009). The new corporate accountability: Corporate social responsibility and the law. Cambridge University Press.