Corporate citizenship can be described as the social responsibility of organizations or businesses that requires them to meet varying ethical, economic and legal responsibilities as set forth by shareholders. The aim is to improve the quality of life and standard of living for communities around them while maintaining profitability aspects for their stakeholders. The need for socially responsible organizations is continually growing with investors, employees and consumers using their individual powers to desist from organizations that are not sharing these values. There are various challenges in the attainment and development of corporate citizenship (Branco " Rodrigues, 2007). Organizations rise to higher stages of corporate citizenship on the basis of their credibility and capacity in the support of community activities, their dedication to incorporate citizenship in their structure and culture and their understanding of community needs. These aspects bring in factors and issues of ethics that can be illustrated using varying philosophical concepts (Frederiksen " Nielsen, 2013). This paper evaluates the contemporary issue of corporate citizenship using the utilitarian philosophical concept of renowned philosopher John Stuart Mills in the aspects of right and wrong.
Literature Review
Utilitarian theories view corporations or organizations as being part of an economic system with a mechanical function that traditionally was the maximization of profit. Corporate citizenship emerged from the reference of institutions as individuals with political, economic and social responsibilities, in respect to economics of responsibility and business ethics (Singer, 2011). Utilitarianism requires organization to ensure that they maximize the overall happiness of a community or society. Additionally, the organization has to satisfy all stakeholders involved directly with the organizations. These concepts raises some issues in the aspects of even when a company satisfies its stakeholders and increases the happiness of the society, it may sacrifice the interests of some groups. For instance, cost cuts may lead to the happiness of the society at the expense of shareholders. There is also the issue of evaluating whether the company is making the stakeholders or society happy. These role needs an independent evaluator since if the company take the role itself its decisions may go unchallenged while if the government take the role it may intervene in the company’s operations excessively in the pretext of social or public welfare (Renouard, 2010). Therefore, there is an urgent need to evaluate the utilitarian theory in aspects of corporate social responsibility where the company acts to satisfy the needs of its stakeholders and enhance the happiness of the society.
Corporate Social Responsibility and Corporate Citizenship
Corporate social responsibility can be descried as the way organizations achieves a balance in their social, environmental and economic responsibilities in operations to address stakeholders and shareholders expectations. Corporate social responsibility is a term used interchangeably with terms such as corporate ethics, corporate stewardship, corporate citizenship and corporate accountability. It is a general management issue that is exceedingly imperative to all business aspects as it is integrated into organizational operations through culture, values, decision making, reporting mechanisms and strategy (Singer, 2011). This brings the issue of ethics and philosophy into play when trying to analyze the right and wrong aspects surrounding the application of corporate citizenship. For instance, one may ask the question of how corporate performance in a society can be judged or gauged, whether the measures and goals in organizations have a system of guidance and the scope of managerial responsibility (Renouard, 2010). Taking on the concept of utilitarianism illustrating how companies should strive to enhance societal happiness, it is necessary to evaluate how this happiness is achieved and the factors that it affects. This requires people to view corporations not as instruments of wealth creation but as social facilitators. The social activities or responsibilities organization take should have varying goals apart from the achievement of economic resources.
Review of the Theory
Many associate the theme of corporate citizenship to the facilitation of competitive strategy. Utilitarian theories also associates the issue to the formulation of dynamic strategies through the utilization of natural resources to enable corporations to gain competitive advantages. This can be based on the assumption that all altruistic activities undertaken by organizations are socially identified as marketing instrument. Furthermore, these has been the case across the business world. However, one has to consider the aspect of taking on social responsibilities as a means of creating a better community (Frederiksen, 2010). For a business to thrive, the society has to thrive. Therefore, as a part of the society, businesses need to facilitate the development of a better society where they can. It should not be that a business only undertakes corporate social responsibilities to market themselves (Branco " Rodrigues, 2007). They have to bear in mind that whatever they do they are promoting the growth of a sustainable society and giving back to the stakeholders who allow them to thrive. The factor of marketing should follow these prospects without being at the forefront of whatever is done. This will ensure that institutions are able to undertake corporate social responsibility without sacrificing the interests of any stakeholders. Corporate social responsibility should be influenced by corporate non-economic forces. This is to ensure that the social power of an organization is not materialized.
The utilitarian theory suggests that organizations should accept their social rights and duties to participate in the facilitation of social co-operation. For many corporations, corporate social responsibility is viewed as a defense mechanism against external attacks from stakeholders since there needs to be a balance between social objectives and profit making (Secchi, 2009). The aspect of profit making is exceedingly crucial in any business. This is because businesses are viewed as investments and investments need to create profit for stakeholders and investors. Therefore, profit making is the key function of any firm. However, as indicated before corporate citizenship seeks to view an organization as an individual entity that is part of a society. In this case, the organization has its rights and responsibilities. These rights and responsibilities dictate that organizations thrive within the limits of the law and morality (Secchi, 2009). From a utilitarian point of view, organizations are moral agents with an obligation to promote best possible outcomes. This best possible outcome is to promote happiness in an impartial perspective. An impartial perspective means that one does not question who the benefactor or beneficiary is.
Fostering Happiness
In light of these, it means that from a utilitarian perspective organizations should and are obligated to facilitate the happiness of total strangers. For instance, a company in the United States can promote the happiness of some poor African children in a remote part of Africa. This means that corporate social responsibility should be extended as a form of good will without the consideration of profit making aspects. This shows that the utilitarian theory is quite demanding based on the fact that, corporate citizenship should not be a means for economic sustainability. This refers to the use of resources to promote the happiness of people who may even not be knowing whether the organization exists. Actions such as helping the poor or hungry in remote regions of the world can be exceedingly tasking (Frederiksen " Nielsen, 2013). However, the utilitarian theory dictates that these are the people who need happiness the most rather than promoting the happiness of individuals who are relatively well off. Therefore, institutions are required to desist from the thinking only of their interests when it comes to corporate social responsibility.
Utilitarianism is a philosophical theory coined around the maximization of happiness for the greatest possible number of individuals (Renouard, 2010). This raises the issue of morality in aspects of organizational operations. The philosophy has resulted to the need for evaluation political and economic choices focused on development and growth. Morality comes along in the issue of social ethics been understood as a way of justifying the global well-being or the material growth in the society. Businesses need to enhance the aspects of growth not only for their stakeholders but for the society, they work within. This is encouraged by the utilitarian theory through the impartial prospect of using the power they have to empower others. Empowering the society ensures that organizations create a conducive environment for people to thrive and ensures continuity and sustainability. However, there is the issue of how companies can be able to effectively empower the society without hurting the interests of some of its stakeholders.
Stakeholder and Shareholder theories
In considering the utilitarian perspective, one can compare the stakeholder theory versus the shareholder theory. Stakeholders include shareholders, employees, suppliers, governments, customers and the entire society (Stieb, 2009). The stakeholder theory implies that there are social responsibilities that corporations are required to take into consideration and take actions for as they influence the interests of parties involved. This implies that while making decisions, management should not only take shareholders interests into consideration but also consider the interests of all parties that can be affected by their decisions. This means that stakeholders’ interests can be considered as the means for businesses to achieve strategic goals, maximize profit and ensure growth and survival (Stieb, 2009). The stakeholder theory is centered on the assumption that the objective of organizational decisions is to ensure marketplace success through the utilization of stakeholder management. Therefore, it suggests that organizations should play a role in the alleviation of varying social ills even if the shareholders will feel the pinch. The stakeholder’s theory emphasizes on the creation and establishment of good relations with stakeholders to put an organization in an advantageous position. However, the shareholder theory emphasizes on the interests of shareholders or investors. This is based on the aspect of considering a business as a profit-making instrument and every decision should focus on profit maximization aspects. Shareholder theory is based on the assumption of the existence of perfect competitive markets. Perfect competitive markets are based on factors such as sellers and buyers having complete and costless information over product prices, all organizations having equal access to resources and the independence of actions from seller and buyers. In the contemporary world, this conditions cannot exist. For this, the shareholder theory supports only the consideration of investors interests and does not hold in regard the interests of the society or other stakeholders (Stieb, 2009). From a utilitarian perspective of facilitating happiness, one can conclude that for the shareholder theory it is impossible to consider the interests of the society when an organizations sole purpose is profit maximization.
Conclusion
In conclusion, it is necessary to evaluate the prospects of wealth and happiness. Does economic wealth play a role in issues of improving human happiness? The utilitarian theory dictates that there is a need to enhance happiness in people’s lives through corporate social responsibility or corporate citizenship. Therefore, according to this theory wealth results to happiness. However, one may ask how corporate citizenship improves happiness. Corporate citizenship to some is a means of gaining competitive advantage (Frederiksen, 2010). In this case, the corporate citizenship is not meant to improve happiness. The kind of corporate citizenship that promotes happiness is the kind that facilitates the alleviation of varying social ills such as hunger and poverty for people not directly connected to the organization. This ensures that the organization has improved the well-being of the entire society and reduced varying social constraints.
References
Branco, M. " Rodrigues, L., (2007). Positioning Stakeholder Theory within the Debate on Corporate Social Responsibility. Electronic Journal of Business Ethics and Organization Studies, 12(1): 5-15.
Singer, P., 2011. Practical Ethics. 3rd ed. Cambridge: Cambridge University Press.
Renouard, C. (2010). Corporate Social Responsibility, Utilitarianism and the Capabilities Approach. Journal of Business Ethics. Retrieved from: http://www.philoma.org/docs/2013_2014_Valeur_actionnariale_a_partagee/Renouard_JBE_2010_-_CSR_utilitarianism_and_the_capabilities_approach.pdf
Secchi, D. (2009). Utilitarian, managerial and relational theories of corporate social responsibility. International Journal of Management Reviews. Retrieved from: https://www.academia.edu/179802/Utilitarian_Managerial_and_Relational_Theories_of_Corporate_Social_Responsibility
Frederiksen, C and Nielsen, M. (2013). The Ethical Foundations for CSR. Retrieved from: https://www.springer.com/cda/content/document/cda_downloaddocument/9783642409745-c1.pdf?SGWID=0-0-45-1430826-p175474408
Stieb, J. A. (2009). Assessing Freeman’s stakeholder theory. Journal of Business Ethics, 87(1): 401–414.
Frederiksen, C. S. (2010). The relation between policies concerning corporate social responsibility (CSR) and philosophical moral theories—An empirical investigation. Journal of Business Ethics, 93, 357–371.
