Importance of Ethics and Social Responsibility

Importance of Ethics and Social Responsibility

Where would business be without ethics? Without ethics what would stop the average corporation from gouging prices and giving out limited dividends. A lot of people use the term social responsibility synonymously with the term business ethics. Personally, I feel that social responsibility is a big piece of the business ethics pie. Ethics is a broad concept that entails many facets included in decision making. On the other hand, social responsibility is focused on maximizing stakeholder contentment, and minimizing negativity.

The idea behind social responsibility is put into action when a corporation practices good corporate citizenship. This includes four major categories that businesses today try to make a positive impact in. The four categories are: economic, legal, ethical, and philanthropic. The economic side is most important to the stakeholders who are shareholders. You see, stakeholders don't have to be shareholders; actually, they can be someone who doesn't even know about the business. When looking at social responsibility, you must realize many of the stakeholders include society in general. It could be an individual that you haven't affected directly; they may simply live near a forest your corp. is thinking about bulldozing for a new facility.

Ten or twenty years ago, the legal aspects of social responsibility were pretty straight and narrow. Which isn't the case anymore; we now have strict regulatory guidelines to follow, and new laws to protect the shareholder. I think this was definitely needed. As I mentioned earlier, ten or twenty years ago we didn't need six million different laws to keep CEO's from stealing from their company. Now, it is completely necessary. The most common ethical problem in business today, is proper accounting principles, which is a big legal issue. Between Enron, WorldCom, Tyco, etc, we have had reoccurring ethical and legal dilemmas in big business. So when is it going to end? Never, ethical boundaries will always be broken. But it is of the utmost importance that we keep laying a lot of emphasis in the area of good ethical standards in business today, so that future generations will apply better business practices and make society better as a whole.