The concept of right and wrong is present all around us in our daily social lives, and we conform to the legal laws and society principles according to the strict standards of morality. Similarly, businesses also have a code of conduct and a set of principles that they need to follow. Most businesses tend to accept the legal restrictions and rules to which their business is bound, but is that the only ethical consideration that businesses need to show?
Some critics believe that businesses should have a sense of social responsibility as well, i.e. they should work for the benefit of the society. The concept of social responsibility entitles that companies should not be entirely focused on earning huge profits for themselves but should also serve their community and make some efforts for the betterment of the public.
When companies take up their share of responsibility to do what is right, they can greatly benefit from it, because doing what’s right, can enable them to create a positive relationship with their clients and customers. This in turn, will improve their overall performance and profit margins, bringing success to their companies.
Social responsibility entitles working for the betterment of the people, the society as well as, the environment. If the actions of a company seem morally wrong to an investor, they will probably not be as willing to invest their capital in it. Similarly, customers will refrain from buying products that go against their strongly held beliefs.
For instance, people who are fighting for animal rights will not be too keen on buying products made from genuine animal fur. They might also be against taxidermist decorations pieces and even animal testing in cosmetic and other industries.
Some experts in the field of business argue that business in itself is supposed to be all about making money and earning profits; hence, it cannot have a conscience and cannot be morally correct. Their view states that the only social responsibility of businesses is to provide jobs to the local people and to develop the surroundings areas after discovering their own personal benefits. They do not believe in following any moral obligations other than the legal laws that are prevalent in the area where the company is located.
Some Examples of Bad Social Responsibility
There are three examples that can be given of how companies fail to fulfill their social obligations:
The first example is of the horrible incident that occurred in Bangladesh in November 2012. A fire broke out in an apparel factory killing 112 people who were either burnt alive or jumped to their deaths from the building. The fault of the employers was that the fire alarms were ignored and emergency exits had been locked. The fire extinguishers were just pieces of decoration, which did not work at all, and as a result, with nothing to do and nowhere to go; people died or panicked resulting in this large death toll. The company’s major clients were clothing stores such as, Walmart, along with other major U.S. and European brands.
The recent campaign against Monsanto Co. is the second example. Monsanto is an agricultural company based in Missouri. It is considered to be the most unethical company in the world, not only because of the genetically modified food products that it sells across the globe, but also due to its unfair treatment of hardworking farmers. Monsanto is famous for suing farmers that grow fresh and organic crops, and even if the lawsuit does not end in their favor, the legal costs are enough to bankrupt the farm and close it down. The company also produces certain weed killers that are harmful for the environment and are damaging the ecological system as well as harming human welfare.
Another example of unethical behavior is from the French Oil and Gas Company named Total. This corporation has a large oil pipeline built-in Myanmar and reports say that it is forcing the local labor to work at the site of the pipeline. Slave labor is against human rights and many humanitarian agencies have taken action against this allegation. It is also said that the laborers are abused if they do not work properly and that the soldiers have been positioned in the area to ensure that this slave labor continues.
Negative Impacts of Bad Social Responsibility
In spite of the diversified views that experts and critics provide regarding the social responsibilities of businesses, there are several negative effects that can take place once a business earns a bad reputation due to improper ethical behavior.
The key reason for this bad reputation is the fact that the success of businesses depend on their clients and customers and since the advancement of mass media, news travels fast. It reaches the people in twisted forms and the public judges the companies accordingly, often tending to stop purchases from particular stores or brands that they decide to stand against.
Hence, the major impacts that companies face when they do not fulfill social responsibilities, can be:
- A Tarnished Reputation – Companies can suffer from bouts of bad reputation because the media and the people will not allow them to live down their mistakes and will propagate them. As a result, customers will want to avoid working with a risky or ill-reputed company.
- Loss of Customers – Most customers are very particular about everything they hear from the media. They will believe everything they hear and react accordingly. Hence, if they feel that a company has done injustice to its labor, they will stand up to fight for other’s rights and refrain themselves, from purchasing products made by that company. In the end, the company suffers a loss of its precious clients and customers.
- Hesitant Investors – Investors usually opt to invest their money in stable and well-reputed companies. If the company faces troubled times and gets bad publicity, investors tend to hold back their capitals, choosing to invest in other alternatives rather than taking the risk of losing their money to a dishonorable company.
- Bad Publicity – Bad publicity can ruin eve the most successful businesses, causing them to falter in their performance. Just like good publicity can boost a company sky-high, similarly, bad reputation can cause it to sink so low that it may never be able to recover from the collapse.
Thus, considering the disastrous impacts of not fulfilling social responsibilities, it can be said that companies who do not realize the importance of their duties can suffer terrible consequences if they ever get caught by the media. In order to avoid the consequences, businesses need to recognize their share of social responsibility and they need to fulfill it efficiently, because without good reputation and clientele, they cannot hope to achieve prosperity for their companies.