Business Ethics And Social Responsibility Vs Efficiency Commerce Essay

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This research study identifies the importance of practicing ethics and social responsibility by a business organization. It is realized that the two contributes positively to the efficiency of the business. Productivity which is a measure of profits and revenues of a business is improved by the impact that ethics and social responsibility has on the employees although these is not directly realized according to the research but are said found to come along with the two. The image of the organization in the eyes of the public, customers, investors, suppliers and the regulatory bodies is improved and this will encourage more investors to join the organization, more customers will be attracted as well as suppliers and therefore the organization will operate more efficiently and smoothly with minimal pressure from regulatory bodies and the public. But for any organization to realize this, a separate and independent department needs to be established to reinforce social responsibility and business ethics as well as ensure an ethical and socially responsible work place.

The terms ethics and social responsibility are closely related and work hand in hand. Perhaps the two terms can be practically demonstrated as catalysts for one another. This means that practicing of ethics or being ethical improves or reflects on the social responsibility of n individual therefore liable to taking actions that are socially responsible. Business ethics is actually a very vital component of leadership when it comes to business and is therefore defined as the concern that one has or develops to ensure good behavior in the business not only for the well being of ourselves but also in consideration of other people. This definition is derived from the golden rule which clearly states that you should do unto others what you would wish them do the same unto you. Therefore in business, a clear description of ethics is that it is the ability including the willingness to consider the values especially when engaging in process of decision making of the business and this will help evaluate hoe this values or ethics and the decisions made affects different groups of stake holders. This can lead to establishment of how leaders can make use of such percepts in company day to day running. Fairness in conjunction with justice is the mail core values of ethics in a business (Brenner, 1992).

On the other hand, social responsibility can be described as an obligation to effect an action which not only are friendly, protective and meets the interests of the business organization but also the society at large. It simply means "different things to different people" (McGuire and Sundgren, 1988, p.89). The subject of this report is to research on the relationship between business ethics & social responsibility with efficiency at the work place. The goal of the study is to find out how business ethics and social responsibility can be used to increase efficiency, the effect that it can have on the reputation of the company, and the effect it can have on the company's relationships with employees, investors, and customers (Friedman, 1989).

How business ethics and social responsibility increases efficiency and the relation to the employees, investors, customers and the public

The corporate social responsibility and ethics concept requires that any business organization must aim at fulfilling both the goals of the organizations as well as the societal goals. Ethics is a very vital tool when it comes to management of the business and it contributes a lot to the effectiveness as well as efficiency of the business in the following ways. It is required that the business runners be ethical to make good or excellent business sense. Failure to be ethical, companies and other business organizations can not be able to compete with other businesses both at national foreign level. Although research has not clearly indicated the direct relationship between financial profitability and the ethical practices, there is totally zero inevitable conflict between the emphasis of a business firm on profit making and the ethical practices. However most of business competition systems presume the issue of truthfulness and fairness in business deals as an underlying factor (Davis, 1975).

Ethical business practices if well employed can enhance efficiency and effectiveness in the following areas. The first one is that it improves productivity. Note that any practices by the management of the business organizations affect the stakeholders including the employees. It is then obvious that the employees will be positively affected if at all the management takes ethics into consideration when exercising its mandate. For example, "For example, a business organization can make a decision that business ethics needs a special effort in insurance of the health as well as the welfare of the employees. Many business corporate organizations have come up with employee advisory programs to assist employees with work of the family, financial needs, other legal problems and issues, also mental illness and other forms of needs. Such programs may be a source which can enhance the productivity in a business corporation" (Ross, 1988, p.132).

The second area where ethical practices have a positive impact on the efficiency and effectiveness of the business organization is on the outside stakeholders and this comprise of the customers and the supplies of the business organization. When a business organization takes into account good business ethics, it is likely to earn a good public image and this will actually attract more customers to the business. The best example is when "a producer of food products tactfully guards the public image of itself as an organization that considers its customer health as well as their well-being ahead of the profits expected and quotes this from its code of ethics." (Sethi, 1975, p.61).

The third area where ethical practices have a positive impact on the efficiency and effectiveness of the business organization is in minimization of the government agencies' rules and regulations. In cases where business organizations are perceived to be acting in a manner that is not ethical, the public is most probable likely to reinforce and push the legislators among other relevant officials of the government to tighten and enforce the present regulations in place. The best example here is the oil price scandal in Kuwait invasion by Iraq in the year 1990, "where the hearings were held on the rise in prices of gasoline and home heating oil due to the perception by the public that oil companies were not acting in an ethical manner" (Shafritz, 1990, p.87).

Therefore for any business company to realize the positive effect of ethics in its operation and efficiency, it needs to establish a code of ethics as well as create an ethical work place for its employees. A code of ethic which is just a mere statement will give guidance to the members of the organization on how to make decisions and act on them in a manner or fashion that is ethical. Ethical codes will improve efficiency by addressing issues to do with as conflict of interest, reaction or behavior towards competitors and privacy of information, issuance of gifts, making and reception of political contributions. This codes of ethics need to be monitored and ensured that they are in practice. An ethical work place can be created by continual creation, distribution and improvement of the business code of ethics. The other way of creating a ethical workplace is by creating a department or a section of the organization specifically to deal with issues to do with ethic of the business. This department will ensure an ethical work environment therefore realization of ethical benefits. Also training will assist to create and realize ethical workplace by encouraging and business teaching ethical practices (Dean, 1992).

Social responsibility will determine the degree of efficiency a business organization displays in decision making and undertaking of appropriate actions. A business organization will be greatly effective and efficient if at all it will more socially responsive. A socially responsive organization will always meet its social responsibilities with minimal wastage of the resources of the organization in the due course. Social responsibility in a business organization will contribute to the efficiency of the business by increasing productivity through employee motivation, creating good public image thus reducing public pressure and gaining more customers as well as good relations with the suppliers just like business ethics (Genfan, 1987). Social responsibility can be ensured by carrying out audits to examine and determine the performance of the business organization in this area. Others include training and establishment of a department that will enforce social responsibility (Davis, 1975).

The effect of social responsibility and ethic on the relationship between the organization and the employees, investors and customers is as follows. It will create a good and positive relation and more investors will be attracted in invest more in the organization as well as more customers. The employers will feel recognized and motivated thus their productivity will as well increase and the relationship between them and the organization will improve (Aupperle, 1985).

Therefore according to the above gathered information and its analysis, I appeal to the business organization management that the issue of social responsibility and business ethics be handled separately in under its own department sine it is very vital when it comes to performance and efficiency of the business so that it can be enhanced and its benefits realized as explained above.


Social responsiveness of a business organization is a function of business ethics and the two when properly practiced leads to positive gain by the organization in terms of relations to both inside and outside stake holders. These include the employees, the investors, the customers, the suppliers and the public at large. The benefits include attraction of more customers thus more revenues, reduction of government regulations due to reduced public pressure thus smooth operation, increased productivity by employers and finally good reputation of the business organization among other associate benefits. Practice of business ethics and social responsibility enhances relationship of the organization with the investors, customers, employees, suppliers as well as the public at large.