Moral principles mostly guide human behavior. Business practices are not an exception to principles that are universally applicable. Ethics is the accepted moral and behavioral principles that guide interactions, transactions, practice, and investment in given profession. Different disciplines have different ethical codes for practitioners. Organizations also create their code of ethics for employees. At the center of the system is the element of morality, value, and profitability. Carroll (2015) states that “Business ethics is a system of thought that is rooted in moral duty and obligations” (p.91). Ethics play a significant role in organizational strategic planning. One of the roles is creating a culture in an organization. Also, it causes staff to align with the vision or goals set by the management or stakeholders. Ethics protect the reputation of firms by ensuring that the brand is not discredited by the society it serves. Ethical principles establish the financial discipline and bottom-line.
Corporate social responsibility (CRS) is the activity performed by organizations to the environment in which they operate and the people they serve with their product or service. It is a business concept that has evolved over several decades. Through CRS companies can improve and protect the environment as a form of support to the government. Many industries produce enormous waste into the air, land, and water. Philanthropic and human relations can improve between firms and the society. Through CRS, organizations can pursue societal issues such as work-related discrimination. Thus, the concept of CRS is important in organizational strategic planning because in planning companies assess their present position against competitors and plan on how to improve their profit and sustainability. If companies will want to transform and uplift their competitiveness, CRS is a valuable source to strengthen their competitive advantage (Porter & Kramer, 2002). Businesses or corporations have responsibilities that are internal as well as external. How they manage these responsibilities will impact strategic outcomes and bottom-lines.
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Stakeholders' needs and agendas are imperative in strategic planning. This significance is because they form one of the reasons for the continuous operation of the business. If they are not considered in the organizations' planning, the entire planning process might be counterproductive. Often, they reinforce the ethical and expansion strategies of the firm. So, a balance is essential that takes into consideration the economic, legal, and discretionary aspects of CRS. On one angle, companies must adhere to the legal requirements of the government in which they operate. It is an obligation and a responsibility to abide by the statutes that established it. Economically, the fundamental goal of a company is profit margins and sustainability. Therefore, stakeholders are critical to decision-making regarding ethics and CRS. Also, a company in a competitive space has the discretionary oversight to engage in philanthropy and other activities for the brand. The public perspective of the brand, the image, is important and connects in the way it engages with the environment and people.
Business ethics was not a big issue in academic and the global marketplace until about 2000. At this time, the ethical scandals of the century began emerging. Scholars and business directors of multinationals started looking into explanations concerning theory and practice of ethics. It shows that values affect businesses (Carroll & Buchholtz, 2015). For example, the Enrol scandal that affected the oil giant exposing the chief executive officers and chief financial officers of improper dealings that demonstrate unethical values and principles. As expected, the company's image was adversely affected. Thus, the role of ethics in a company’s strategic planning cannot be overemphasized because it describes the culture of the organization. CRS is integral to the profitability and sustainability of any firm.
References
Carroll, A.B. (2015). Corporate social responsibility: The centerpiece of competing and complementary frameworks. Organizational Dynamics 44 : 87-96.
Carroll, A.B., & Buchholtz, A.K .(2015). Business and Society: Ethics, Sustainability, and Stakeholder Management [9thedn], Cengage Learning, Stamford, Connecticut.
Porter, M. E., & Kramer, M. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review, 5-16.
