Table of Contents
Section 1: Introduction
Introduction highlights the usefulness of ethics and corporate social responsibility in the management of today’s organizations. The term ethics refers to a code of certain moral principles that sets fixed standards for good or bad. There are many ethical perspectives that one can consider in making organizational judgements. The utilitarian view, for instance, is different from individualist, moral-rights, justice view of ethics. Corporate social responsibility (CSR), on the other hand, refers to the obligation bestowed upon an organization to act in a manner that serves its own interests as well as those of external stakeholders.
This essay utilizes the analyses of three scholarly articles in order to create a theoretical framework for use in the analysis of an organizational event that happened in the practical world. This event involves the corporate social responsibility that BP demonstrated in the course of the oil spill. Finally, the essay ends with conclusion and reflection on the connection between theory and practice in areas of ethics and corporate social responsibility.
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This article is the work of Lotila, who introduced an interaction-based model in illustrating the iterative process through which organizations respond to social pressure. This model is then applied in a case that is of international relevance. The case study discussed using this model involves the forestry industry in Latin America. Here, foreign companies continue to face explicit criticism and fierce activism.
According to Lotila, three different of management approaches can be adopted when corporations are interacting with the society. These approaches include social pressure the practice of public relations, and the management of different corporate relations with the society. The choice of perspective depends on perception of tactic and strategic actions adopted.
The management approaches adopted are then reflected in the practice of public relations within an organization. Ethical leadership manifests itself in use of proactive approaches in the practice of PR, through which mutual understanding between the organization and all stakeholders is always maintained.
According to Lotila, interaction between a firm and its stakeholders is not a guarantee that relief from social pressure will be achieved. Instead, the PR may end up failing in its quest to meet all stakeholders’ desires and expectations. The main precondition for strategic and proactive management of relations with stakeholders is identifying the relevant publics, emerging issues and the ideal methods of communication in any given context. This is of utmost relevance in an international business environment whereby an organization faces pressure arising from institutional distance divergent cultures.
This article, by Reuber & Fischer explores the question of why stakeholder may decide to overlook discreditable actions that have been disclosed, including those that entail ethical breaches. The paper is based on the stigmatization theory, which Reuber & Fischer use to develop a model of explaining the possibility of reputational loss after discreditable actions have been revealed. Four properties of actions are integrated into this model: perceived certainty, perceived control, perceived deviance and perceived threat. Aspects of media coverage and stakeholder motivation are also highlighted.
According to Reuber & Fischer, evidence shows that many organizations frequently survive revelations of wrong-doing in the public without facing any serious discrediting criticism. For instance, stock market reactions remains at its most shortlived and minimal point when organizations start reporting high levels of toxic emissions.
Some of the repair tactics commonly used in organizations includes excuses, justifications, explanations and denials. Alternatively, the management may acknowledge the practice and go ahead to indicate that the necessary measures are being taken in order to reverse any ill effects caused. These measures normalize such practices to the media as well as the stakeholders.
Within the framework of stigmatization theory, an organization’s reputation is its overall appeal, which is revealed to external stakeholders. Reuber & Fischer draw on the example of Arthur Andersen, a large international accounting and consulting company, which faced a damaged reputation as a result of its actions in order to analyze the practical utility of the theory.
The third scholarly article was done by Lin et al, whereby a research model for corporate citizenship and its influence on organizational citizenship behaviors (OCBs) is analyzed using the resource allocation and social identity perspective. Within this model, the authors examine how OCBS are influenced in a positive manner by perceptions of ethical citizenship, while being negatively influenced by perceptions of discretionary leadership.
Most of the hypotheses made by the authors are conformed in the survey of employees from 18 international organizations. The concept of corporate citizenship is of great strategic significance to all business organizations. This is because it represents the activities of firms and their statuses relative to their perceived stakeholder and societal obligations. Corporate citizenship takes the form of the engagement by organizations in activities advancing the social agenda beyond what is provided for by the law.
This study is unique in that it addresses an issue that previous researches have not tackled: that involving clarification of the influence of perceived corporate citizenship on employees’ OCBs. In terms of social identity theory, corporate citizenship remains valuable to OCBs. This is because the perceptions relating to the identity of the organization largely affect the strength with which employees are identified and their resulting citizenship behavior within the organization.
Four dimensions of corporate citizenship are identified in this study: economic citizenship, legal citizenship, ethical citizenship, and discretionary citizenship. However, this study suffers from a major limitation relating to generalizability owing to the delimited nature of the single-country sample of Taiwan.
Section 3: Ethics and Corporate Social Responsibility in Practice
With the use of the insights generated from the three articles by Lotila, Reuber and Fischer and Lin et al, different theoretical perspectives can be used to analyse the actions undertaken by BP in the wake of the oil spill in the Gulf of Mexico. In a report released in response to harsh international criticism, an apology was not included. This validates the stigmatization theory as described in the article by Reuber & Fischer. The company failed to issue apologies despite fears being expressed that social fallout from the effects of the oil spill may last for as many as four years.
By early June, 2010, pressure was already mounting on BP as the company faced a government-imposed deadline of coming up with a better plan in order to stop oil from flowing into the Gulf of Mexico. The White House was pressuring the company to set up an account in order to ensure that all the legitimate claims filed by businesses and individuals hurt are paid.
Two months earlier, a fire aboard a rig had precipitated the most devastating oil spill that the US has ever experienced. Since April 2010, BP has been struggling to stop the continuous flow of crude oil from the underneath well, which had ruptured. According to scientists’ estimates, the amount of oil that has already spilled into the Gulf is between 950,000 and 2.5 million barrels.
The investigation that BP generated an outcome that partly put the blame on BP and partly on two other companies that were working on the well. This way of responding is typical of the stigmatization theory as described by Reuber and Fischer, whereby some organizations are always reluctant to accept blame for mistakes done. For such organizations, the need to maintain a positive reputation takes precedence moral views of ethics. Such companies may justify, deny or downplay mistakes as a cover-up for media and social criticism. This arises from a shared feeling, among stakeholders, of the need to protect the market performance off the organization.
Both of the firms implicated in the report released by BP criticized the report. One of the main sources of challenges for BP was how to deal with billions of dollars worth of individual and corporate legal claims in compensation over the spill. Ultimately, BP managed to cap the well on 15th July.
BP released a 193-page report on its website, saying that the decisions that were made by multiple work teams and multiple companies are the ones that contributed to the disaster. The disaster, the report said, arose from ‘a highly complex and interrelated series of mechanical failures, engineering design, human judgments, team interfaces and operational implementation. This report downplays the role that BP must have plays as the owner of the oil drilling infrastructure that caused the accident. From a theoretical perspective, these claims are aimed at preserving the public image of the organization. These actions fit in with the description of interaction-based model as given by Lotila as well as the social identity perspective analyzed by Lin et al.
Section 4: Conclusion and reflection
The three articles that were analyzed in this paper highlighted the different theoretical perspectives used by companies in issues of ethics and corporate social responsibility. In each of these articles, the hypotheses proposed were tested using analyses of different case studies and organizational scenarios.
An analysis of these three articles exemplifies the critical role played by CSR and ethics scholars in describing various theoretical perspectives underlying practical actions of organizational managers. Once these theories are described, it is the role of managers to put them into practice and to engage in various corporate social responsibility and ethical undertaking in the most feasible manner.
In this paper, the case study of the BP Company is highlighted, with the accident involving an oil spill in the Gulf of Mexico forming the bedrock of theoretical and practical analysis. The case study validates most of the theoretical perspectives analyzed in the three articles. The practical measures that BP adopted touch on issues of both ethics and corporate social responsibility.
The fact that some theories stated in the articles were not associated with corresponding courses of actions adopted at BP does not mean that they are invalid. It merely means that the context was not ideal for their practical application. What is clear from this analysis is that issues of ethics and corporate social responsibility are becoming unavoidable for companies such as BP, which have to operate in an international environment. In such an environment, these organizations come into contact with different social groups, publics, demands and responsibilities.
As Lin et al points out, the social identity perspective is being complemented with corporate citizenship in order for international-based companies to maintain an appeal at the global level, even in the face of disasters such as the one that BP encountered recently. Such companies have to contend with different perspectives of public relations management and ethical issues. Issues of cultural relativism versus ethical imperialism have to come into play in determining the ethical positions that are adopted in official forms of communication. These perspectives will never be uniform since people from different societies have divergent views on what it takes for an individual to be said to be possessing discretionary leadership skills.
Although proactive approaches to corporate social responsibility, HR, and ethics ought to be the norm, this is not always the case, accidents, such as BP’s are always unprecedented. Therefore, organizational leaders should be ready to contend with unforeseen events that challenge them to give excuses and shift blames to workgroups and individuals in order to maintain a positive reputation of an organization.
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