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Corporate responsibility

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Corporate Responsibility

Corporate Social Responsibility

People versus Corporations

The legal and historic roots of the modern corporation reach well back into the eighteenth century, but it was in the Industrial Revolution of the nineteenth century that this truly extraordinary form of human organization came into its own and, the twentieth century, became the dominant economic force on earth.

Corporations are not natural persons. Corporations are fictitious, corporations are juridical "persons" created by law. The point is this: the ethical considerations one might use when dealing with a friend, associate, or stranger, are significantly different when the subject is the corporation.

Understanding this is critically important to an adequate understanding of business ethics. People are judged ethically and legally based chiefly on their intentions. In contrast, ethical analysis involving the entity we call “the corporation” must forever begin and end in law and public policy.

Corporate Social Responsibility

Corporate ethics is the ethics of corporate social responsibility (CSR), not corporate personal responsibility. The responsibility of a corporation is shaped by two realities:

(1) the obligations created by society through law and public policy (legal responsibilities),
(2) the obligations created by corporate culture, i.e. stakeholder (customers, employees, neighborhoods, natural environments) obligations.

CSR is a product of both compliance (legal and regulatory constraints) and integrity (the internal culture and self regulatory environment).

Corporate Social Responsibility

Mixed Motives

Corporate ethics is really about gaining understanding of what are called “mixed motives”.

Example: When natural persons have mixed motives - you give a hundred dollars to the opera because you want your boss, who supports the opera, to think well of you - we somehow know that this is not an unambiguously laudable act.

But when a company that makes computers gives 100 laptops to the public school system, and does so with the hope that exposing children to their brand of computers will lead to increased sales - this “doing good to do well” is not only laudable, it is responsible both to shareholders and the stakeholders.

Corporations as a matter of fact, can only act with “mixed motives”. By law, they are created to serve the bottom line of returning wealth to investors. To do good, a corporation must do well.

Corporate Social Responsibility

In a world of over six billion people, there is little alternative to large and complex organizations designed to feed, house, heal, and help meet basic human needs. The multinational corporation is here to stay, the issues of how these behemoths are guided and controlled is far from settled. How the humans who work and manage these organizations maintain their own integrity within the cultures of the multinational corporation is a chapter of history we are only beginning to write.

The Social Contract between society and the multinational corporation today is being radically renegotiated. The collapses of the Dotcoms, the Enron, Worldcom, and Aldelphia scandals, and now, the meltdown of capital markets across the globe portends a turbulent future indeed for both the corporation and the business professional. Yet, it is in such times that fundamental changes most often emerge. Those who dare to ride these currents of change will emerge in a new order of political economy.