The objective of this study is to analyze what constitutes responsible enterprise and discussing about the varied interpretations of this conception. This report also highlights on the contrast between responsible enterprises with other related concepts that is corporate social responsibility (CSR), sustainable business, social enterprise and corporate responsibility (Charter 2017). The report also evaluates the nature of ethical business and its direct or indirect impact on the behavior of the business. The report also discusses about whether ethical business creates customer value and higher profit margins. The role of government as influencer or barrier to the responsible business approaches as well as in relation to ethical business is also explained in this report.
The view about the responsible business has several conflicting opinions. The generic view defines that the enterprise is only responsible to their shareholders, which implies that the organization is not obligated to do anything other than providing product and services that the society wants. Responsible enterprise is mainly termed as the organizations that operate their corporate responsibilities in their strategy’s as well as business practices by operating to maximize business environment sustainability and develop relationships with their stakeholders (Cheng, Ioannou and Serafeim 2014). The company’s focus should not reside solely in single area and hence responsibility must be applied into its core values fir enabling maximum performance. Some recent study reflects the organizations might find it difficult to achieve success if their core values are not allied to the values of society where it operates. The varied interpretations encompass different concepts that include CSR, corporate responsibility, sustainability and social enterprise.
CSR refers to the concept that several companies undertakes in order to fulfill their stakeholder’s desires for maintaining core values of the business. The viewpoint of Aguinis and Glavas (2016) highlights that, the organizations have the responsibility for acknowledging their compulsion to their indirect stakeholders. Additionally, Carroll’s framework of CSR argues that CSR must encompass four different levels that includes legal, discretionary, economic and ethical. In essence, this model mainly brings together variety of interpretations, believing that the organizations must be conducted with these four elements (Torugsa, O’Donohue and Hecker 2013). Therefore, the company having CSR portfolio benefits financially and hence attains improved view from the customers.
Social enterprise refers to the organization that advances social mission through their earned income strategies. This mainly highlights the market based effort for receiving earned income in exchange for good or service (Edgeman and Eskildsen 2014). On the other hand, responsible business refers to the entity that seeks for leveraging business to the sustainable world. The contrast between responsible business and social enterprise is that social enterprise are stated by its revenue source while responsible business are stated by intention as well as goals of higher profitability (Ridley-Duff and Bull 2015).
Another concept that is associated with responsible business is the sustainable business. Sustainable business relates to the green business that has less negative effect on local environment, society and community. The sustainable business usually has human right as well as progressive environmental policies. In contrast to this, responsible business usually refers to sustainable development. Furthermore, the responsible business is also defined by applying the theory of corporate citizenship. Lee, Herold and Yu (2016) opine that it must be connected to the organization’s action towards leading social, civil and political rights towards the citizens.
Ethical business is also one of the vital parts of the responsible enterprise. It is the form of applied ethics that involves right conduct in connection to the business (Crane and Matten 2016). The ethics of the individual self- fulfillment as well as achievement has been most powerful in the current modern society. Strong ethical practices in business are the hall mark of a reputed organization. The value of proper ethical business practices is mainly found in the organization’s brand. As customers mainly believes in brand, branded products helps the company to attract more customers. This in turn increases overall sales growth of the company. Apart from this, business ethics facilitates the company to stay ahead of their rivalries with reduced business practices. There are basically six characteristics of ethical business, which is given below:
In the present modern society, ethical as well as moral codes have been one of the important parts of the organizations policies. Owing to constantly varying competitive business environments, the business organizations finds different methods or applies varied strategies for sustaining in this competitive environment. The responsible business usually responds to these challenges by strengthening their relationship with the consumers and building partnerships. In the current society, the business organizations are basically working in that manner, which is beneficial for the stakeholders as well as shareholders in interest of positive relations for longer term. It has been stated by Weiss (2014) that, the ethical business basically portrays the company acting in ethical manner, which involves differentiating between right or wrong practices and then selecting the right practice. Ethical business has become the great power in the global business competition. Business ethics usually ought to involve generic strategic framework as well as operational management. Moreover, responsible enterprise faces huge difficulty in building ethical competitive strategy for achieving the goals of business. In fact, proper application of ethics in business facilitates the company in creating competitive advantage against their competitors. Ethical business also has relation with the CSR and it mainly takes into account responsibilities that both within the workplace and within cultural and environmental communities (Bowie 2017). They basically deal with issues of accountability that involves consumer protections, scientific research and the whole framework of the business organizations. According to Hoffman, Frederick and Schwartz (2014), there are several method of deriving business ethics standards, which includes-
Ethics to some people has been perceived as profitability constraint, which indicates that profit as well as ethics is inversely related to each other (Crane and Matten 2016). Higher standards of company ethics also contributes to higher profit margin by decreasing the business transaction cost, creating strong trust foundation with their stakeholders, contributing to higher commitment levels and attaining employees loyalty.
The management team of the responsible business usually sets the philosophy that is based on the ethical practices as well as behaviors. In addition, building on ethical behavior foundation facilitates in creating positive impact for the organization, which includes the ability in attracting as well as retaining talented employees and maintaining its positive reputation in the marketplace. However, running the business in ethical way helps the company in building stronger bonds between the individuals of the management team. This further helps in creating stability within the responsible enterprise.
Business ethics influences the enterprise as it reaches beyond the loyalty of employee as well as morale of the management team bond (Bowie 2017). As with company’s initiatives, the company’s ethical operation has direct relation to profitability in short as well as long run. If the business reputation is less than perfect depending on this perception that it does not make its operation in ethical way, then the investors will be less inclined to invest in this business. Responsible enterprises have huge incentive for being ethical because ethical investing as well as socially responsible area keeps on developing. The rising number of total investors that seeks out ethical operating organizations is driving several entities in considering this issue seriously. In order to retain positive image, the businesses should be committed in operating on ethical foundation because it relates with their employees treatment with respect to surrounding business environment and market practices in account of consumer treatment (Hartman, DesJardins and MacDonald 2014). As most of the responsible enterprises are financially driven, it has the highest possibility in being ethical as well as successful. Therefore, it can be said that ethical business has huge significance in the market. This is because of the following reasons –
The government of the respective nation plays vital role in influencing the responsible business approach. The government mainly sets legislative a well as institutional models for the organizations and markets to do their operation. The government influences the business by intervening through taxes as well as subsidies, which can otherwise be utilized for influencing incentives of organizations in private sector. The actions taken by the government are vital for reducing risk, lowering cost as well as barriers in operation and opening huge opportunities for responsible enterprises. The challenges that comes in way for the governmental agencies to promote CSR agenda is to create incentives as well as support, mobilize resources, identify their priorities and raise awareness among the individuals. The key roles that the government actively chooses in supporting CSR agenda includes-
There are few initiatives undertaken by the government for raising CSR in business-
The government also plays a vital role in motivating business organizations to behave in ethical way. These includes-
Conclusion
From the above report, it can be concluded that ethical business is important for the responsible enterprise to expand globally. There is some business, which still believes that their unethical practices in business will have no adverse affect on the company. Therefore, there are two basic reasons why it has been required and beneficial for those businesses to focus on their ethical reputation. One of the major factors is that when unethical practices in business become government intervention, then self policing should be in the first place. These regulations in fact impact the responsible enterprises externally as well as internally in account of labor. In addition, trust is mainly based on business ethics that has been known to become vital in recent years. However, it is essential to maintain high trust level internally as well as externally as it can lead to financial problems in the longer run. However, ethical business helps the company to gain competitive advantage over the rivals and also attain higher profitability. It also facilitates the organizations to retain good reputation in the marketplace. Moreover, the government also plays vital role in influencing responsible business approaches and in ethical business. They contribute in the business by implementing initiatives and legislation. Overall, the government, business enterprise and nonprofit entities should collaborate in order to enhance sustainability for addressing the difficulties faced in the workplace.
References
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