SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE

Introduction

Over the period, the topic of economic development has been on the fore front of individual economies of the world. In this regard, all the economic planners have established measures to help them realize a positive economic growth. In a bid to ensure that global economies maintain an upward development trend, the global planners have instituted the formation of an institution that could overlook all the financial issues in the globe. The formation of the World Bank and the IMF were critical because they ensure that financial matters are handled with the utmost care they deserve. On the same note, the planners at the World Bank and the IMF have realized that adequate circulation of money and financial assets has considerable influence on the performance of the global economy. These financial institutions have established measures of ensuring the businesses are funded to enhance their development in global cooperate ventures that have the capacity of serving greater percentage of citizens.

The emergence of cooperate business has significant contribution towards the enhancement of the economy in terms of taxation and the provision of jobs. However, as the businesses row in larger corporations, there is dire need for the organizations to have the stake of the customers and shareholders in mind (Fenarndo., 2009 36). Analysis conducted on the establishment of cooperate organization revealed that larger corporations have significant problems when it comes to social responsibilities and environmental aspects. It is extremely beneficial for the corporate organization to consider the interest of the stake holders in their operations because these people form integral aspects of the development plan. Social responsibility is an area that most corporate organizations tend to avoid because they perceive it to be an area of less importance. However, the importance of this aspect has led to the introduction of laws and regulations governing the introduction of social responsibility (Akerstrom, 2009 61). As in, the big corporate ventures must give back to the society. Giving back to the society can be done in many diverse measures but the most common method is to ensure the safety of the stake holders. This is done by ensuring the goods and services they deliver to the stake holders and the customers are legitimate, valuable and of an established standard.

Over the period, various campaign programs have been initiated to help in the reduction of global warming. This same ideology applies to the operation of corporate organizations. With the rise in the level of operation and expansion of their capacity, history has proven that the management of these organizations tends to deviate for the regular norms that include protecting the environment. In this regard, it is vital that corporate ventures observe the rules and regulations that lead to the creation of carbon free environment. With regard to social responsibility, waste management forms an integral aspect because most corporate ventures have the power to influence national decision making (Crane, 2008 102). Some of these organizations have influenced the formation of policies that has enabled them to pass laws allowing dumping waste in unapproved channels. However, corporate responsibility is a vital aspect of enhancing development and ensuring the requirements of the stake holders are considered.

Large corporate business organizations should realize that corporate and social responsibilities are extremely vital for their survival. The analyses of reports on corporate and social responsibilities have proven that there are rules and regulations enacted to ensure that the corporate organizations act according to the provisions of the laws. In addition, the managers of these corporate organizations should understand that the needs of the consumers and the stake holders must be realized (Fernando, 2009 79). It is beneficial to consider that companies not considering the social implication of their actions are eliminated from the market because consumers will tend to avoid being associated with them. The survival of larger corporations dealing in substandard commodities and other corporations that are involved with poor waste disposal methods is uncertain because the adverse effects dictate the response of the consumers. In the analysis of the corporate social responsibility, the following fields are considered to be of significance.

The emergence of corporate social responsibilities

The analysis of time series and the emergence on the idea of social corporate responsibility is based on the idea that companies can develop to be profitable and minimize the increasing negative impacts they have on the society. Furthermore, research findings shows that stakeholders are proud to be associated with productive and ethical companies. Based on a study conducted in Germany, between 55-65% of the companies under analysis had ethical relationships with their stakeholders (Ian Rosam, 2004 211). These companies were excelling because the good relationship that they established with their stakeholders. On the contrary, companies outside this bracket had management issues and did not focus of the establishment of ethical standards. Therefore, most of these companies suffer frequent losses because of the failure to observe ethical relationships in the market.

The survival of corporate companies in the market is paramount to the observation of social responsibilities. This sentiment is echoed by the American citizens who believe that illegal corporate companies should be rejected and shunned from the market. Survey conducted on the American firms shows that Americans are more concerned with the social responsibility of the firm as much as the financial benefits and satisfaction is derived from the company. They have devised various methods through which non-conforming corporate companies can be punished. These measures of punishing corporate companies include boycotting the use of services or goods manufactured by that company. Equally important is the use of bad mouthing to spread the news about the corporate company (Lorenzo Sacconi, 2011 73). In severe conditions, the company can sometimes be sued for the production of substandard illegal. In view of the above research findings from the United States, it is highly vital the corporate ventures maintain a good relationship with the stake holders including the consumers because the consumers are the source of vital information in the form of feedback. Social responsibility represents the satisfaction that the stake holders derive from interacting with the company. Increase in the benefits received by the stakeholders is represented by an increase in the number of customers and a corresponding increase in stability. One aspect that has been understood by the successful corporate organization managers is the estimation of good will of the company. In reality, the goodwill of the company lies in the fact that the company is socially responsible and it has benefits that it administers to the environment. Companies with established goodwill have got higher chances of excelling and increasing the volume of their daily sales. An example of a socially responsible company cited by most of the respondents in the United States was Coca Cola Soft Drink Company (Nina Boeger, 2008 51). The analysis of this company reveals it has been in operation for a very long period but it has conserved the rights and the cultures of the persons where the company is situated. The company has sponsored series of community events since its conception and in a bid to impact on its social responsibility. In fact, smart corporate company managers realize that goodwill is an extremely valuable asset that takes years to acquire. It also appreciates with time. Therefore, companies must strive to reduce the amount of negative impacts they might have on the stakeholders because that will significantly reduce the value of their goodwill assets.

PROMOTING RESPONSIBILITY

Technological advancement and increase in knowledge acquisition has led to an increase in the number of corporate business ventures. The rise in the business within the period has resulted in a sudden increase in the rate of completion for the few goods available in the market. Certainly, some business organizations have taken advantage of the increase in competition to exploit the consumers by delivering substandard goods. However, the governments of various nations have realized this concern and have instituted regulatory committees to oversee the actions of the corporate organization (Ramón Mullerat, 2010 265). The consideration of social responsibility is extremely beneficial to the corporate business organizations because the government has instituted organizations and regulatory authorities to monitor the activities. In order to ascertain the establishment of social responsibility, the corporate organizations are required by the law to submit their end year financial records to the examining authorities. This is helpful because the government can use the information received to verify on the social responsibility plan of the organization. In addition, the government has also increased the demand to ensure that the companies observe environmental laws because this has the effect of ensuring that the corporations do not engage in activities that degrade the environment. Based on the analysis of the established companies, the stakeholders are not willing to be associated with the companies that do not respect the social responsibilities of the organization. In addition, the activities of some companies lead to the degradation of the environment. Some companies may engage in the conduction of illegal activities. All these vices collectively defy the social responsibility roles of the organization (Lorenzo Sacconi, 2011 29). Therefore, the society must establish a method of taming these companies and this is done by boycotting the usage of goods and services made by these companies. Furthermore, the consumers may also resort to abuse the goodwill that the companies may have taken many years to build. Lastly, it is the responsibility of the corporate organization to observe the social responsibilities in their areas of specialization. The media fraternity has played significant roles in ensuring that the corporate organizations violating social responsibility and structure are duly punished. This is done by highlighting their updates in news conferences and updates.  This is extremely detrimental because to their performance because the customers and other stake holders will deviate away from them (Ramón Mullerat, 2010 65). When this happens, the socially irresponsible corporate organizations are driven out of the market.

RATIONALLE FOR ETHICAL BEHAVIOR OF CORPORATE ORGANIZATIONS

Corporate organizations have the role of ensuring that they impact an increase in the living standards. In this regard, corporate organization must observe the rules and regulations stipulated in the constitution to ensure that they are not engaged in illegal activities. The activities of the corporate organizations have significant influence on the lives of the individuals interacting with the organization. Various measures have been instituted to ensure that the organizations are beneficial to the society (Solomon, 2011 95). Some of the most common measures include the conduction of analysis by the United Nations Human Rights watch group. The results from these findings will be beneficial because comparison can be made to ascertain the social responsibility of the corporate organization. Another critical tool that can be used by the regulatory committee to ascertain the performance of the company is the use of records collected by the labour agency. It is recommended that corporate companies adhere to the rules and regulations set by the joint agreement in Amsterdam that called for the reporting of financial records, environmental report and social welfare analysis report to the regulators for analysis.

Corporate governance

The code and mode of operation of corporate organizations are governed by the establishment of corporate governance. Broadly, corporate governance encompasses all the rules and regulations provided the law stipulating the order into which businesses are supposed to be conducted (Akerstrom, 2009 73). The formulation of corporate governance can be done by the stake holders that are interested with the profitability of the corporation of by the government or a group of clients and consumers.

During the establishment of corporate organizations, there are provisions in the corporate governance that stipulates and guides the organization should there be problems in the management. These specifications in the governance provision are aimed ensuring the organization works in harmony with all the stake holders. The daily activities of the organization as provided in the corporate governance provision are aimed at maximizing both global and local business returns that to the business. The field of corporate governance has been mocked in the recent years because high profile corporate organizations have been involved in scandals that involve the abuse of power and criminal activities. The increase in the number of corporate organizations globally has resulted in the formation of international market where commodities can be easily found. As evidence to this sentiment, they are a number of new organizations that have been formed regionally, nationally and globally. Finally, an integral aspect of corporate governance is the provision stating that the organizations involving in unethical or illegal acts in the name of enterprises will be prosecuted.

The risk of irresponsibility

Over the period, the managers of corporate organizations have emphasized on the establishment of sound financial records and accuracy of reporting. This formula of reporting to the regulators has established an era where corporate organizations violate the rules of the environment but are not detected. In the wake of this, strict rules have been initiated to ensure that the environment is not degraded by the activities of the corporate organizations. The establishment of these rules requires that the managers of these organizations draft a report to the regulators stating how they deal with the problem of environmental degradation and other social issues (Urip, 2010 175). The stipulation of these policies is extremely beneficial because the governance of corporations largely considers the financial reporting aspect. However, it is also vital for the regulators to analyze, social, environmental and financial performance of the corporate organization.

The organizations risking the above propositions suffer adverse effects in the long run because the customers and other stakeholders do not want to be associated with irresponsible companies. The appointment of the corporate managers and auditors of the corporate organizations are made on the aspect that they will safeguard the rights of the stakeholders (Urip, 2010 163). In this regard, the managers and the auditors appointed by the stake holders should accurately report about all the events that range from financial, environmental and social responsibility. Research findings have shown that some irresponsible managers only display financial records while neglecting the social responsibility of the organization.

Conclusion

Corporate governance and social responsibility are vital aspects of operation that must be considered by the management of these corporate organizations. Social responsibility provides an elaborate measure of the benefit that the organization has on the society while corporate governance provides the stake holders with the opportunity to analyze if the corporation adheres to the established rules and regulations. These two measures provide the basic measure of ascertaining the profitability of the organization and the ability of the organization to meet the goals of the stake holders. Over the period, the formation of the corporate organization has been guided by the quest to establish satisfaction for the social responsibilities. Corporate organizations not offering social satisfaction to the citizens are viewed as irresponsible and are liable for persecution because they do not follow the principles of corporate governance and social responsibility. The regulators of corporate organizations have devised methods of measuring the performance of the organizations. This includes the analysis of the reports from the UN organizations on human rights, labour records and tax analysis. Through the analysis of these records, the regulators will ascertain the operation norms and practices of these organizations. Finally, corporate organizations spend a lot of time in the establishment of their goodwill and brand name. Goodwill is regarded as an asset to the business. However, companies foregoing the provision of social responsibility risk losing this vital asset. Therefore, corporate organizations should ensure that they observe the provisions of social responsibilities and corporate governance to increase their profit margin.

References

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