explain the statement “You do business ethically because it pays.” How does the statement relate to different models of corporate social responsibility? Provide an example of a company to illustrate your interpretation.

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explain the statement “You do business ethically because it pays.” How does the statement relate to different models of corporate social responsibility? Provide an example of a company to illustrate your interpretation.

EXPERT ANSWER

  • According to the stakeholder model of corporate social responsibility, which holds that firms should consider the interests of all of its stakeholders when making choices, the statement is related to this idea. Since stakeholders frequently evaluate organizations based on their ethical practices, this also incorporates ethical issues. Therefore, since it is in their best interests to do so, firms should operate ethically.

Step-by-step explanation

  • The stakeholder model of corporate social responsibility is connected to the adage “you do business ethically because it pays.” When it comes to decision-making, this model suggests that companies should take into account the needs of all of the various stakeholders in their midst. This involves taking ethical concerns into account, given that stakeholders frequently evaluate companies based on the ethical practices they employ. Therefore, it is in the best interest of enterprises to behave ethically because doing so is in their best interests.
  • It is beneficial for a number of reasons to conduct one’s business in an ethical manner. To begin, ethical practices have the potential to assist in the development of trust between a company and its various stakeholders. When stakeholders believe in a company, they are more likely to back it, which can result in higher levels of financial support in the form of increasing sales, investments, and other forms of financial backing. Second, ethical standards can assist companies in avoiding potentially expensive legal issues. For instance, serious legal fines could be levied against a company if it were discovered that the company had engaged in bribery or other forms of corruption. Thirdly, organizations that engage in ethical procedures might see improvements to both their reputation and their brand image. Customers, investors, and other stakeholders are typically more willing to conduct business with organizations that are perceived as being ethical and responsible. Lastly, engaging in ethical behavior might sometimes be seen as little more than the moral thing to do. A large number of companies run their operations with the assumption that they are obligated to act in a manner that is beneficial not only to their shareholders but also to their other stakeholders.