Business Ethics and CSR: Meaning, Significance and Benefits

Introduction to Business Ethics and CSR

There is a code of conduct which should be followed by any firm in the industry. That conduct should be respectful towards not just the employees but also their stakeholders. From the business point of view, the code of conduct to be followed is called business ethics.

Corporate Social Responsibility (CSR) is a type of business ethics that is followed in an organisation. The firm should be socially responsible towards society. The firm should be ethical towards society and give them the necessary importance. All corporates should follow corporate social responsibility mandatorily.

Meaning of Business Ethics

Business ethics is mainly the guidelines by which the firm works neatly. It lays down the professional and acceptable morale of the organisation. Business ethics helps the firm to understand what is right and wrong from the economic point of view. In simple words, we can say that what an individual applies in their daily life to become a better citizen is applied in the organisation as a whole to make our environment a better environment. Business ethics may differ according to the different places of operation, cultures etc. But the main fruit of business ethics is working without disturbing the external and internal environment of the firm.

Principles of Business Ethics

The above are the main principles that are followed by an ethical firm. There are other principles like legal obligations, environmental concern, mutual respect etc.

Corporate Social Responsibility commonly known as CSR is mandatorily followed by most organisations. A company which complies with social responsibility is likely to be less attracted by the legal barriers which arise in the market. A company socially responsible works for not just themselves but also the betterment of society as a whole. The employees working in that company will have a better working environment and the stakeholders will have complete trust in the affairs of the firm. The firm conserves resources and works as a responsible citizen towards the nation. The companies manage and integrate social and environmental concerns of their business operations and interactions with their stakeholders.

components of CSR

A socially responsible firm also works for the well-being of the employees. Employees are to be considered as part of their decision making and they are provided with a better working environment. As we have learnt better working environment increases the efficiency of the employees.

Significance Of Business Ethics and CSR

From the above charts, it is clear that business ethics and CSR plays a vital role in the better functioning of the organisation. But have you ever wondered why it is important to follow business ethics and CSR in an organisation? Let us look into that;

  1. A firm following business ethics and CSR will have a higher ratio of customer retention because their morals will be the best among the rest of the alternatives available.
  2. The firm will be well established and its brand will outstand among the rest.
  3. This always returns the firm with the overall improvement in the efficiency of the business operations. A firm without ethics always tends to go downhill.
  4. In many instances, the firm must follow the business ethics prescribed and do certain CSR activities in society as part of its yearly operations.
  5. In the current scenario, human resources are looked upon as part of the organisation. So in that case an ethical and socially responsible business will be the priority of the employees.

These are some of the important measures why firms adopt business ethics and corporate social responsibility. When we look into our current world an socially responsible and ethical firm enjoys numerous benefits above the normal firm. Firms tend to go ethical because of these benefits enjoyed. Let us look into the different benefits enjoyed by the firm.

Benefits of Business ethics and CSR

  1.  The firms will have less interference from the authorities as they keep up with legal compliance and work towards the betterment of society as a socially responsible beings.
  2. There will be worldwide help for the organisation which is responsible for the upliftment of the world. They enjoy supremacy in affairs regarding sustainability.
  3. There will be higher employee morale and they will work at their full efficiency because the environment provided to them is the best.
  4. The company brand will be recognised everywhere because of the good deeds done by them,
  5. There will be higher profit yield for the company as resources are optimised, ethical conduct helps the employees to fully work, the legal disturbance is less and there is a lot of aid from the outside organisations for their smooth working.
  6. An ethically responsible firm will have a very high customer retention value. The customers will have a special compassion towards the firm that works for the betterment of society. They think that by supporting the ethical firm they are also taking part in the upliftment of society as a whole.

The benefits enjoyed by the firms are a lot. Likewise in the current market conditions, firms tend to be socially responsible. Business is not just a money-making movement for them but they view business as an opportunity to make the world a better place to live in.

Conclusion

A firm will not achieve success if it does not give importance to the morals that are to be followed by each of them. A successful firm, to sustain itself in the business, should adopt the principles and practises that respect and uplift society and especially the stakeholders of the business. It is easy to become an overnight success but to maintain that success there is a lot to take in. In our world, a business will be successful if it provides a good environment for the employees as well as the stakeholders. Their social responsibility attracts customers and helps them to sustain themselves in the market. The firms should always function and remember that we work with the resources that we borrowed from our future.