Business organizations are instrumental in defining economic and social development of a place. Traditionally, the aim of a business operation is to generate profit. However, corporations extend their roles within the operating environment to cover the concept of social responsibility. Corporate social responsibility entails engaging in programs or activities that encourage environmental sustainability (Honeyman, 2014). The premise of social corporate responsibility is to promote activities that protect the environment, well being of the employees, the community neighboring the firm, and the civil society now and in future. According to Porter and Kramer (2011), corporations cannot isolate their activities from the concept of corporate responsibility because the economic ambitions of these firms have a bearing to the broader society. In essence, the corporate perception of the survival, competitiveness, and profitability must favor corporate responsibility. The proponents of corporate responsibility believe that sustainable practice encourage continuity of human existence (Porter & Kramer, 2011). As such, business programs must reflect the concept of corporate responsibility in order to safeguard the present resources for the future generation. Management of various corporations advances the concept of corporate responsibility in the firms not as a government requirement, but as good business practice.
The changing business environment coupled with worldwide governance reforms seems to set trends in corporate governance. Studies reveal that poor governance is a setback to the stock market performance (Davidson III, Sakr, & Wang, 2012) and operating performance. Available literature on corporate governance seems to advance trends in corporate governance such as shared values, more public, exchange and government scrutiny, increased stock ownership, conscious capitalism, social business, and Business Corporation. The essence of these changing trends in corporate governance is to increase the viability of the business and improve the utility of the resources within the environment.
Shared value is a strategy advanced by corporations that seek to involve the society in creating products that address their problems. In this case, the corporation interacts with the society and creates programs or products that would enable the society to meet its demand. The shared value strategy bridges the company’s success with social growth. The corporations have a duty that they play within the environment. Depending on the approach employed by the company, it could tailor its business to be economical to the society.
According to Davidson III, Sakr, and Wang (2012), proponents of shared value believe that this approach has the potentiality of defining the manner in which the business will address the challenges facing the society. Corporations can realize shared value through three dimensions namely re-conceiving products and markets, re-shaping productivity in value chain, and creating supportive industry clusters at the business location (Porter and Kramer (2011). Firms such as Wal-Mart, Uniliver, and Nestle seem to embrace the idea of shared value.
Nestle has moved to redesign its coffee procurement system. In its new design, the company engages in intensive work with small-scale farmers in the poor regions who experience the challenge of low productivity, poor quality, and degradation of the environment. Nestle concept of social responsibility entails offering advice on farming practices, supporting the farmers to get farm inputs such as fertilizers, pesticides, and plant stock, and paying high premiums for better beans (Porter & Kramer, 2011). In return, the community of small-scale coffee farmers realizes increased coffee yield, which in turn translates into increased income, improved environmental farming practices, and reliable supply of good coffee.
In this case, shared value redefines the manner in which corporations conduct their operations within the environment. Further, it shapes innovation and productivity growth of the global economy. Here, the need to improve the production system and sustain the same tends to define the strategy encouraged by the firms. Nestle’s business activities rely on the production of coffee. As such, continual and stable production of good coffee affects the existence of the business. Therefore, it channels its support to the coffee farmers with a view of sustaining its business. Evidently, unsustainable farming practices have considerable negative impacts to the existence, competitiveness, and viability of Nestle Company.
Uniliver has moved to help in addressing health problems resulting from poor hygiene in rural and poor areas in India. It spearheads health campaign in the rural and poor regions through combined approach – it created 18-gram bar of Lifebuoy soap retailing at about US$0.03. The price of this soap is affordable to the poor Indians. It directed the product in areas affected by diarrhea related diseases. Thus, in its health and public education campaign, the company provides products that can health he society to address the problem of health. The result of this shared initiative is improved health and reduced cases of disease outbreak. Here, the company identifies the challenges facing the society and work with the affected community to find solutions to the problem. Observable, whereas the chief intention of Uniliver is to realize high sales that translate into profit, the company has moved to design products that focus on solving the problems facing the society. In other words, it realizes the need to promote healthy society for its business to be sustainable.
Shared value seems to drive innovation and productivity growth (Porter & Kramer, 2011). It tasks the managers to integrate the demands of the society into the thinking of the business activities. In other words, the business must open its eyes to the large new markets and take advantage of the same. At the same time, it has to ensure that its activities address the internal social deficits. For example, the cases of Nestle and Uniliver illustrate a situation where the companies involve the society with an intention of creating a sustainable environment. The sustainability of the environment is critical to the existence of any firm. Thus, corporations embrace the concept of shared value with a view of realizing sustainable society.
Wal-Mart embraces the concept of shared value through its women empowering program. The Wal-Mart’s approach involves singling out and supporting business run by women across the globe. In this case, Wal-Mart is creating shared values by realizing business objectives that enhance alleviation of societal problems. The company support women business through marketing and selling these products on behalf of the women. Wal-Mart has created e-commerce website where it promote products sourced from small businesses belonging to women. This initiative gives women opportunity to expand their business and improve their wellbeing in the society. The support, which Wal-Mart accords to women, is significant in the society because it affects their economic and social wellbeing. Women benefit from this initiative because it helps the impoverished women to sale their products and improve their living conditions. Further, the company focuses on partnering with non-profit making organizations with an aim of training women in agriculture and value chain that would improve food availability.
The benefits of the Wal-Mart’s program have significant influence to the social and economic growth in the society. The support accorded to the women community goes to the entire society. The impoverished women have children to look after. Therefore, the support given to the women helps in supporting the entire society. Further, training in agriculture and value chain aims at improving food security in the world. In other words, Wal-Mart idea of shared value is to help the society address the problems of poverty and food security (Ennes, 2014). The assistance given to women helps in improving their economic power and increase food production hence reduction of poverty prevalence. In this case, the operations of Wal-Mart transcend the boundary of exclusive profit making to social responsibility.
The issue on conscious capitalism emanates from the ethical business behavior. Proponents of business ethics argue that the relationship between the business and the society should focus on achieving mutual benefit. In other words, whereas the sole intention of the business is to generate profit, its activities must act within some boundary. The premise of this proposition is that profit making should not make the corporation to overlook factors that pose negative consequences to the society (Osburg & Schmidpeter, 2013). Thus, the relationship between the business and the environment has been a concern of the stakeholders, governments, and the society. Corporate social responsibility therefore gives hope to the stakeholders, the government, and the civil society. The behavior of the business is critical to promoting or undermining future sustainability.
Arguments advanced about conscious capitalism settle that the business can balance between profit making and complex community needs (Osburg & Schmidpeter, 2013). This proposition challenges the leaders of the business to behave ethically so that the business may promote sustainable practices. It follows that the idea of conscious capitalism is about advancing business practices that act within ethical boundaries. For instance, manufacturing industry must consider the negative consequences of industrial effluence and create a mechanism of disposing them properly without causing damage to the society. In this case, the treatment given to the industrial waste would determine whether the sole objective of the company is to create profit without considering the consequences that the business operations have on the environment.
The commitment of the business to capitalism tends to affect the manner in which it designs its operations (Hill & Jones, 2011). On the other hand, the theories of corporate responsibility tend to underscore the need to engage in environmentally sustainable practices. Without the sustainability of the environment, the existence of the company would be short-lived. Moreover, the unsustainable environmental practices are a threat to business existence and human extinction. It means that leaders of various companies must regulate the activities of their companies in order to sustain the environment.
While managements of various businesses agree that it is difficult to balance between corporation superior earnings and social responsibility practices, Hewlett-Packard seems to demonstrate a balance hence realizing conscious capitalism (Schwerin 2012). It has achieved this strategy through egalitarian structure where employees at various hierarchies could exercise their potential to the utmost. By integrating the social responsibilities in the business strategies, the company has been able to project practices deemed conscious of the environment. Another strategy devised by this company that promotes conscious capitalism is the focus on long-term goals as opposed to short term ones. Within the confines of this view, the success of the company largely depends on emphasis that the company has on its long-term goals. Thus, the financial success of the company does not undermine the idea of social responsibility. The company places value at the top of the company’s priorities. It means that value of the products it offers to the society overrides the profit that the company aspires to achieve from its operations (Schwerin, 2012).
McDonald’s approach to improving its sales and profit seems to emphasize the concept of conscious capitalism. Initially, the company produced products that elicited public outcry on the issue of health. In the recent years, United States has stepped up its calls for less consumption of fast food with an intention of reducing the number of deaths and cases of obesity. The campaign is at the center of McDonald’s business. Fast food has been the sole products of McDonald’s and the campaign had significant influence on the activities of the company (Ennes, 2014). In a bid to demonstrate its support and consciousness to the needs of the society, McDonald’s has moved to redesign its products. It incorporates healthy food in its menus as way of addressing the needs of the society and balancing the same with corporate needs. The consciousness of this society to the societal requirements tends to push it to change its products and operations (Ennes, 2014). The sacrifices made by this company at the expense of the society seem to illustrate importance of conscious capitalism in the present business environment.
A part from the response to the health conditions of the society, McDonald’s has also moved to address the issue of wages paid to its employees. In the past, the company experienced protest from workers over low pay. A move to improve the workers condition tends to edge into the profit made by the business thus going against classical capitalism (Kazmi, Leca, & Naccache, 2012). Nevertheless, the company does not only intend to concentrate all the business proceeds without giving back to the society or addressing the problems facing its workers. Addressing the wellbeing of the workers has been one of the ways of demonstrating conscious capitalism.
In essence, balancing between the corporate values and social responsibility is critical to the continuity of the business. A good pay for example, would encourage the employees to offer utmost services to the company as observed in the case of Hewlett & Packard (Schwerin, 2012). Here, the owners of the company must address the concerns of the stakeholders in as much as they focus on meeting the company’s ambitions. Integrating the concerns of the society or the stakeholders in running the affairs of the company creates a platform for realizing the social corporate responsibility. In this case, corporate social responsibility forms one of the objectives defining the activities of the business.
Investors viewing businesses within the prisms of the social needs tend to come up with new businesses that focus on addressing the pressing needs of the society (Osburg & Schmidpeter, 2013). Social business refers to a form of capitalism that attempt to address the pressing concerns of humanity. In this case, the intention of starting the business is to solve the social problem as opposed to addressing profit needs. The driving factor behind creation of social business is to solve pressing concerns in the society through the operations of a company. It means that the existence of the company is critical to changing of the social status of the company. Thus, it must operate at profit in order to exist and at the same time, it must balance between profit and the object of its creation.
Some organizations that seem to demonstrate the concept of social business include renewable energy company and water processing company. The sole concern of renewable energy is to provide energy to the society thus addressing the pressing concerns of the society. However, the company must operate at profit in order to realize continual supply of its products and services to the society (Bhalla, 2010). In other words, the association between the company and the society is symbiotic. The proceeds of the company are useful in maintaining the operations of the company. Similarly, water-processing firm offers critical products to the society. Therefore, the proceeds it generates from its operations serves in sustaining the existence of the firm.
Presently, a considerable number of corporations tailor their products to fit within the bracket of social business. For example, IBM products focus on providing solution to human connection. The identified need is at the center of the business operations and strategies. Attempt to realize this objective has elicited innovation in IBM with the company developing products that focus on providing communication solutions to the society. The concept of social business tends to affect the manner in which management of various corporations must structure their activities and run their businesses (Mackey & Sisodia, 2013). The latest design of computers manufactured by IBM provide arrange of solutions to the communication needs in the society. Arguably, the relevance of the business hinges on its ability to provide solutions to the pressing needs in the society.
The concept of social business expose the firm to focus on addressing certain needs identified in the targeted market (Osburg & Schmidpeter, 2013). Within the confines of this thinking, a business entity should provide solutions to challenges facing the society. It means that entrepreneurs have a role in shaping the social and the economic wellbeing of the society. The products designed by the business must be able address the growing concerns and at the same enable the company to make profit. In essence, corporate responsibility creates a balance between solving the problems in the society and achieving corporate principle goal of profit making. In absence of the corporate responsibility, the practices of the company would not be sustainable. Similarly, absence of profit making goals would result into the balance failure. Therefore, the management of the company must strike a balance between the two factors.
According to Porter and Kramer (2011), the concept of social business fosters democratic business community. In this case, the community performs a pivotal role in resource generation and regeneration as well as permeating creation of new business ventures. The sustainability of the business is one of the pillars at the instance of the company creation. The rationale behind this choice is that the existence of the business is largely a product of resource management internally and externally. The external management of resources involves the stakeholders, civil society, and the government.
Proponents of social business believe that it begins by creating a condition that counts. For example, Wal-Mart seems to advance the concept of social business. The business model of this company focuses on impacting on the lives of the society through provision of products and services that are cheaper (Ennes, 2014)). From this consideration, Wal-Mart has developed innovative ways of ensuring that it provides cheap products to its market. The company has scrapped long supply chain in favor of a short one with the view of reducing the cost of running the operations of the business. As such, it is able to provide its product at prices that are lower than the rival firms.
B Corporation is about using business as a force that improves the well-being of the society. Within the confines of this view, the existence of the business should help in improving the conditions in the society and not otherwise (Hill & Jones, 2011). For the business to exist as a force for good, it must exhibit certain characteristics that promote sustainability. These characteristics are accountability, performance, transparency, availability, and cost. Many organizations today tend to focus on realizing these characteristics. Managements often integrate the running of the business affairs in a manner that promote transparency, accountability, and performance.
Transparency is critical tool that affect the performance and realization of corporate responsibility (Hill & Jones, 2011). The business ethical standards demands that corporations must engage in transparent operation. This means that the business must be ready to declare it activities and ensure that they fall within the confines of the business ethical standards. Standardization of the business operations encourages provision of services and products that reflects the needs of the society. Further, transparency in business operation encourages best or competitive practice (Hill & Jones, 2011). Notably, every business is facing competition an aspect that limits the extent to the firm would realize principle goal of profit making. However, by engaging in transparent activities, the company tends to promote corporate responsibility because its activities would fall within the boundaries of the ethical business standards.
According to Honeyman (2014), the principle of transparency demands that the company must publish public reports on general performance assessments against rival third party. It means that the business should publish its profits and operations in accordance with the existing principles. Many firms today embrace this concept. For example, Wal-Mart, Johnson & Johnson, IBM, and Hewlett & Packard publish their performance records in order to inform the stakeholders and the public about their achievements within the fiscal year.
Unlike the past when organizations did not account for their activities, today corporations inform the stakeholders about their choices (Bhalla, 2010). The leaders of these organizations take responsibility for the decisions that they make on behalf of their companies. Accountability is critical to the sustainability of the firm because it affects the nature of decisions made and the strategies used in pursuing the company’s goals. For example, directors of various corporations often take responsibility for the success or failure of their firms. This move ensures continuity of the business. Accountability streamlines the operation of the company and determines the success.
Most corporations assess and report their performance internally. This move is pivotal to sustainable practice because it affects the manner in which the company makes new decision on how to improve in future. In most cases, the management relies on the performance assessment report to appraise the salaries of their employees (Bhalla, 2010). These reports provide an insight on how the company has been operating against the anticipated goals. From these reports, the management and the stakeholders are able to judge the company. The performance targets helps in measuring the success of the organization. At the same time, it helps in influencing the approaches used by the company to pursue its ambitions.
Firms such as Hewlett & Packard, IBM, and Unilver have attained ISO certification in the production. The aim of the certification is to enable the company to produce products that meet certain specified standards. In essence, they tend to tailor their operations towards realizing the set standards. Realization of these standards is suggestive that the firm has achieved the set standards. Further, it demonstrates that the business seems to embrace the concept of corporate governance.
Reflection of the Case Studies
I think the above case studies seem to demonstrate that IBM, Nestle, Uniliver, McDonald’s, and Wal-Mart embrace the concept of corporate responsibility. The managements of these firms have managed to balance between corporate responsibility and the corporate needs. These organizations have designed their operations to reflect the needs of the society. In this approach, they are able to solve the pressing needs of the society and make profit at the same. Balancing between profit making (classical capitalism) and corporate responsibility is critical to sustainability of the business and the environment.
From the observation made, the businesses depend on the environment to exist. Thus, the design of the business activity must encourage sustainable practices. Wal-Mart involvement in empowering women and Uniliver’s approach in shared value health campaign focus on realizing sustainable society. Sustainable business practices leads to effective utilization of scarce resources and protection of these resources for future use. Further, involvement of Nestle in addressing the concerns of the coffee farmers tends to help in addressing challenges facing the community.
Corporations embrace the concept of corporate responsibility through engaging in practices that encourage effective and sustainable utilization of resources. The rationale behind this concept is to ensure effective utilization of the available resources in addressing the pressing needs of the society. Some of the corporate responsibility trends advanced by various companies include shared value, social business, B- corporation, and conscious capitalism. The existence of the company should enable the society to solve its problems at the same time the owners and stakeholders of the firm should benefit from their initiative. In essence, the concept of corporate responsibility exposes a business to balance between advancing corporate goals and solving the problems facing the society. The relationship between the business and the society is therefore symbiotic.
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