EFFECTS OF IRRESPONSIBLE BUSINESS PRACTICES

Introduction

Irresponsible business practices can be curbed through external interventions. Recently, business have been engaging in irresponsible business practices such as the excessive privatization of industries that are subsequently unanswerable to governmental bodies may result in infringement of consumer and employee rights. Additionally, certain companies are outsourcing their jobs in order to avoid the full effects of the law. In other words, unless there is a cap on the amount of outsourcing that businesses can do, chances are that this avenue will be a method used to dodge environmental laws in countries with tough regulations. The essay shall look at the effects of irresponsible business practices with regard to such issues and a critical analysis on the matter shall be given.

Effects of irresponsible business practices
Fleishman – Hillard conducted a National Consumers league Study during the year 2006 to find out what the key concerns about irresponsible business practices were. They found out that there was a lot of commitment towards the issue of corporate responsibility. According to most consumers, responsible business behavior is demonstrated by commitment to the sense of community. In other words, most companies are supposed to provide living wages to their respective employees. Additionally, most US consumers felt that when companies carry out excessive downsizing, then they are not exercising responsible business practices. This opinion was further solidified in subsequent years by the existence of the US’s economic downturn. (Bulkeley, 2001)

In the latter survey, it was found that the environment was still an important aspect of responsible business practices. Most people now fully understand the impact of businesses upon the environment especially because they know that natural resources are shrinking by the day. They asserted that corporate organizations needed to show this commitment through the use of direct action in conducting business.

What was particularly interesting to note was that the American public felt that their corporate organizations were not meeting expectations. This was largely because people felt that responsible business practices within the US are nothing short of average. Most people claim that companies are not improving their responsible practices. This is highly affected by information obtained from media sources. The latter study also illustrated that there is a tendency towards a tipping point in which consumers are getting to expect more government intervention in terms of ensuring that businesses act in socially responsible ways. (Paluszek, 2005)

It has also been asserted that close to eighty two percent of the American public feel that the government needs to do more in terms of the health care, the environment, energy and other issues that businesses have a direct interest in. It has also been asserted that lack of government oversight within industries such as food, energy, chemicals and pharmaceuticals is a clear sign that irresponsible business practices are now on the rise.

It has also been shown that interventions through international standards need to be done. In other words, corporations need to be aware that their actions are not being conducted in isolation and that they are now accountable to the kinds of issues that affect consumers or employees. (Kyle, 2005)

Overly, the findings from this study indicate that corporations ought to be on their toes. They need to realize that being proactive is their best bet against the challenges of the current business arena. Irresponsible business practices are likely to cost businesses because consumers easily gain access to this information through the internet and also through internet blogs and interactions. Company generated sources are not the only avenue for accessing information and that the American public will verify information asserted by these companies through other external sources. Corporations are also faced with the challenge of redefining their business practices. This means that the companies need to inform consumers about other dimensions of responsible business practices such as;
• Environmentally responsible actions
• Better salaries for employees
• Better jobs
• Local interactions

The latter study was an examination of some of the opinions that the American public had about their corporations. In order to bring some balances into this discussion. It is essential to look at another side of the story. Some adherents claim that the issue of responsible business practices is actually quite contradictory and may even be regarded as irresponsible in itself. People holding this school of thought claim that companies are obligated to their respective shareholders. They assert that the number one commitment for any business is to make profit. Consequently, expecting businesses to apply their resources for socially responsible practices causes companies is to behave in a socially irresponsible way. (Bansal, 2000)

It would therefore be an acceptable thing for a company’s owners to purchase hybrid vehicles using their personal resources so as to reduce carbon emissions. Alternatively, company owners may decide to support organization taking part in charitable causes through their own prerogatives. However, it has been argued that company directors have no right to deploy resources or assets to social causes that would have otherwise been utilized for profit making ventures.

In line with the latter thoughts, some groups have asserted that in order to be responsible business men, one should give consumers the alternative of paying more for a certain good or service so that the remaining balance is allocated towards other socially responsible causes. In Massachusetts, such an experiment had been conducted. Contrary to expectations, only one percent of the entire consumer market was willing to engage in such a charitable coz. This is largely because the public felt that it was their responsibility to engage in sociable causes. Additionally, they were against the idea of being involved in mass business practices that had charitable connotations. This shows that the public’s perceptions of what constitutes responsible business practices are not what one may expect. (Orlitzky & Schmidt, 2003)

According to these adherents, managers are expected to invest corporate assets to achieve corporate objectives such as product innovation, profitability, growth and other issues that are likely to improve the rate of shareholder’s return on investment. As a result of this, it can be asserted that engaging in responsible business practices such as building a green headquarters would in no way contribute towards higher returns on investment.

According to these adherents, irresponsible business practices are caused by directing resources meant for corporate purposes into sociable functions. Most of the time, this can lead to failure of a business’s directors to respect the group that it owes its highest form of appreciation and this is their owners or their shareholders

Analysis of the arguments
Irresponsible business practices are far reaching and wide and it can be very difficult to cover all these aspects at one attempt. However, as mentioned above, greater emphasis shall be given to environmental aspects and treatment of one’s employees or workers.

The American public argues that there is indeed a new face of irresponsible business practices that companies have to embrace during their operations and this revolves around their human resources. Americans are right in wanting to protect the needs of their respective citizenry so as to ascertain that businesses are responsive to them. One of the methods in which employers are showing irresponsible business practices is through the act of outsourcing and off shoring. Corporations usually opt to outsource their business functions so as to maximize their business returns. For instance, one may opt to transfer production of commodities into Asian countries where labor costs are much cheaper. In other scenarios, outsourcing assists companies in concentrating on their core business functions so that companies who have perfected other business functions can do the rest. Outsourcing also offers a series of benefits to these businesses by working on projects at different time zones thus complementing the businesses that are affected by them. (Habisch, 2005)

There are certain instances in which outsourcing can be treated as an unfair business practice. This normally occurs when the parties under consideration merely engage in it in order to evade laws and regulations that may be applicable within their respective countries. An example of one particular law that employers may be trying to avoid is the environmental one. There is considerable evidence to indicate that a number of businesses are concerned about the environment when they know that the government is watching or that laws are very stringent. However, when the concern is transferred to another country through the process of outsourcing, then most companies disregard this fact yet their level of pollution may be considerable high in the countries chosen for outsourcing. What this shows is that there is a
need for external intervention when it comes to these matters.

The government needs to introduce a cap on outsourcing after the realization that the company under consideration might cause more pollution upon transfer into other countries. The latter assertion supports the view by the American public about the need for greater government intervention in curbing irresponsible business practices.

Additionally, the latter view also supports the view of the American public that the environment is still a very important aspect in shaping business practices. As asserted in the 2006 consumer study, most people felt that they would feel more obliged to purchase commodities made by a company that had respect for its environment. While a number of avenues have already been exploited by companies in this arena, there is a need for minimization of excessive transference of work into other countries without due consideration of the kind of effect that it may exert upon the environment. (Cohen, 2005)

Aside from creation of a cap on excessive outsourcing, the latter study also indicated that there was a need to redefine irresponsible business practices. Most of the American Public believes that employee practices are just as important as other responsible business practices. They explain that in order for a company to demonstrate that it is responsible, then that company needs to offer decent wages to their jobs or it should not engage in excessive downsizing and the like.

This is a concept that is highly valid. However, it calls for greater attention from the following parties
• Federal agencies
• Local agencies
• Governmental agencies
• International agencies

These agencies have a great responsibility before them owing to the fact that privatization has been viewed as an aspect that eliminates them from assessment of other corporation’s business practices. However, this view has caused more harm than good since more corporations disregard the welfare of their consumers once they have privatized. There are a number of industries that are affected by these sorts of perceptions. In fact, almost all commodity industries fall victim to this. Since the latter industries are not under heavy scrutiny by any external bodies, then most of them rarely take the time to deal with employee or consumer rights for that matter. In order to eliminate such perceptions, it would be essential for local, federal, international and government agencies to analyze the privatization of industries. (Korschun & Sankar, 2008)

It should be noted that the latter argument does not recommend minimizing privatization; on the contrary, it supports privatization but the only thing that needs to be done is to ensure that there are carried out in a responsible manner. Usually, this may necessitate institution of rules and regulations that require a respect for employee and worker’s rights.

In line with this argument is an assertion that has been put forward by a series of companies in these respective arenas. There is considerable evidence to show that corporate social responsibility is placing a lot of emphasis on the role that independent mediators play in curbing irresponsible business practices. The government is one of the chief mediators for ensuring that this occurs. Most experts claim that government have the ability to prevent companies form harming the environment, people and social good through the institution of laws and regulations. They also put forward the fact that the government needs to set the agenda for responsible business practices through a number of avenues. (Grayson & Hodges, 2004)
First of all, the government can deal with infringement of consumer rights by clarifying the law so as to eliminate some of the grey areas that the law is currently presenting to a number of companies. An illustration of how this kind of regulation is badly needed is with the example of General Electric. The latter company had contaminated the Hudson River with toxic wastes that were organic in nature. Instead of taking up blame and cleaning up this River, the latter company kept dodging their responsibilities by looking for loophole is within the law. GE claimed that the law does not assign responsibility to them and the company was therefore not obliged to carry out this kind of issue.

Another converse argument to increased government involvement is the fact that the latter party is already involved in the process of ensuring that the latter companies adhere to sound business practices by collecting their taxes and then using them to enact laws and regulations to protect employees and consumers as well. However, holding on to such thoughts could be rather misleading owing to the fact that direct involvement is always a precedence to success in the latter matter. (Williams, 2008)

Lastly, as it has been seen earlier, some people believe that engaging in irresponsible business practices can continue without due consideration of the effects because their primary responsibility is with their shareholders rather than with other sociable causes. However, adhering to such a school of thought is like going back to the olden days where employee and human rights were not respected by companies. Since corporations are part of the community in which they operate, then they need to demonstrate their respect for that community by respecting the rights of the people living in it.

Conclusion
The essay has examined some of issues surrounding irresponsible business practices. First of all, it has been shown that the public is more interested in the protection of employee and citizen’s rights. Additionally, they believe that the government should be more involved in ensuring that businesses engage in responsible business practices.
It has been affirmed that this is definitely a desirable act owing to the fact that it could lead to greater scrutiny and hence greater respect by privatized companies that would curb irresponsible business practices.

References

Grayson, D. & Hodges, A. (2004): Seven steps to make CSR work for your business; Routledge
Williams, C. (2008): Corporate Social Responsibility in a comparative perspective; Oxford University press
Habisch, A. (2005): CSR across Europe; Springer Publishers\
Orlitzky, M. & Schmidt, S. (2003): Corporate Social Finances, Sage Publications
Korschun. D. & Sankar, S. (2008): Winning the war in talent through responsible business practices; Sloan Management Review, 49, 2, 37
Kyle, B. (2005): Social responsibility; Harvard University
Paluszek, J. (2005): Ethics and Brand Value; Business and organizational ethics
Bansal, P. (2000): Why Companies Go green; Academy of management Journal, 43, 4, 36
Bulkeley, H. (2001): Governing Climate Change – The politics and Risk to Society; transactions of the Institute of British Geographers, 26, 4, 400
Cohen, G. (2005): Business Ethics; Oxford University Press

The author of this article is a holder of Masters in Business Administration (MBA) from Harvard University and currently pursing PhD Program. He is also a professional academic writer. ResearchPapers247.Com>