Why should businesses today act ethically and socially responsible Term Paper

Why should businesses today act ethically and socially responsible - Term Paper Example Businesses that act in an unethical manner have a low chance of being successful. A concept that has gained a lot of popularity in the business world is corporate social responsibility. Corporate social responsibility can be defined as the obligation of companies of behaving in ethical and moral ways (Schermerhorn, Hunt, Osborn, 2003). The purpose of this paper is to describe the reasons why companies should act in ethical and socially responsible manners. The use of ethics should be applied in all aspects of a business. Ethics involves decisions between right and wrong. For ethics to manifest itself in a company the top managers of the company must encourage its employees to act in an ethical manner. The actions of the employees determine the ethical actions of a business. It takes one rotten apple among the staff for unethical behavior to manifest itself. A way to encourage ethics in a company is to establish an ethical code of conduct. The employees must know what is expected of t hem. They must also realize that there are consequences for unethical behavior such as fines, suspension, or termination of employment. Managers have great influence over the ethical behavior of an enterprise. There have been numerous cases of companies that went through ethical scandals that destroyed their reputation and in some cases led to the demise of the firm. Three of those cases are Nike, Enron, and Chiquita. Nike Corporation in the late 1990’s was involved in a sweatshop scandal. A sweatshop is a work environment in which the employees are exploited due to sub-human working conditions and extremely low wages. In the aftermath of the scandal Nike lost half its revenues the following year. Chiquita Brands International is a food producer that specializes in the banana marketplace. Between 1997 and 2004 the company’s subsidiary in Columbia, Banadex, made payments for protection to the terrorist organization UAC. The firm was convicted in a U.S. court for its une thical actions and fined $25 million. The reputation of the firm was destroyed. The Enron Corporation was one of the most successful and respected U.S. firms in the energy industry. Unfortunately its executive management team was corrupt, delinquent, and unethical. The company cooked up the accounting books reporting billions of dollars of fake income. The accounting scandal led to at the time the biggest bankruptcy in U.S. history. Corporate social responsibility has gained a lot of popularity in the 21st century. The general population worldwide has increased its expectation of what businesses should do for society. People have realized that the private industry has a lot more wealth that all governmental institutions combined. There are millions of corporations in the world. These companies have been getting rich off the efforts and sacrifice of people for years. Society has reached a crossroad in which there are so many social problems to attend that the need has come for others to step in and become a part of the solution. The business world has become that significant other that people looked up to become an active partner. Some of the problems that need the immediate and recurrent assistance of the corporate world are world hunger, the aids epidemic, environmental damage, and extreme poverty. Nearly 1/8th of the global population is suffering from chronic undernourishment (Worldhunger, 2013). It is in the best interest for corporations to act in socially responsible ways. Customers today have become more conscious of the actions of the company they buy products from. A firm that has a strong corporate social responsibility program can benefit greatly from the support of its customers and shareholders. The stock prices of companies that act in socially r