Companies operate on many ethical models. One such model is the profit maximization model, which is founded on the old corporate paradigm of continuous growth and development; it focuses on the need to maximize the wealth of shareholders. Another model is shareholder wealth maximization model, which is premised on the empirical view that securities and markets often include ethical and social responsibility issues (Clarke and Friedman, 2). However, the profit maximization model furthers the idea that businesses should operate solely with the purpose of meeting the profiteering needs of its shareholders, even though other stakeholders might be disadvantaged. The purpose of profit maximization is conceptualized within the macroeconomic environment in which there are no uncertainties. The decision-makers of a business are owners of the company. The capital stocks are fixed and the business managers’ work is to follow the instructions of the owners without regard to their welfare. Moreover, the overall success of a business is still assessed through the prism of the old paradigm of continuous development and maximized return-on-investment. This mentality influences business organizations to undertake expansions of their brands at both local and international levels. In the process, they seek to compete with community-based businesses across the entire nation. Furthermore, they internationalize their activities without necessarily benefiting members of the social system. Ultimately, even progressive and developmental corporations are compelled to select undesirable exit approaches whenever they become too large for the purchases of employees, family members, or neighboring investments with commitments to the local communities.
B. The Balanced Model
Unlike the profit maximization model, the balanced model operates on the idea that businesses should benefit all stakeholders, even though shareholders may experience losses. This approach deviates from the traditional role of companies as profit-making institutions. Most companies that operate under this model are humanitarian institutions and non-profit-making organizations (Lya et al. 13). This is especially the case when the firms are on philanthropic missions. As such, this ethical CSR model proposes the idea that the local living economic system should be supported. Although there has been a significant study on the tasks that are being delivered to introduce radical changes to the corporate system by different customer groups and organizations, there has been a significant call by concerned shareholders to consider the importance of societal members in the business environment
Best of Both Worlds Model
The third CSR ethical model proposes a situation in which all stakeholders parties involved in business stand to benefit from business. This model is premised on the idea that no one should be left behind or overlooked in any process of decision making. As such, the all-encompassing model proposes an ideal situation in which everyone has a positive future (Wicks 3). Contrary to the widely held public view, this model holds that corporations and independent organizations are at liberty to make decisions in the interests of all stakeholders. In view of the above, local business owners are likely to gain an understanding of the idea that it is in their self-interest to operate their organizations in ways that benefit their own neighborhoods and the natural environment. This process goes a long way in ensuring that no party is left behind in the decision-making process. Many economists have attempted to conceptualize a business system in which all parties stand to benefit. One such theorist is dam Smith who conceptualized the theory of invisible hand (Wicks 3). This theory is instrumental in providing insights into how many markets operate in support of the positive perspective of CSR. The invisible hand theory supposes that both the business and market environments should work in a way that meets the self-interests of all interested parties in the investment.
The organizational internationalization of unsustainable western culture has resulted in taking more natural resources and giving off more pollution than the earth can restore. This culture is spreading across different parts of the planet. Consequently, organizational monoculture does not provide sense and justification of place. Usually, the same chain stores and consumer commodities are observed to be dominant across different parts of the world. At the coal levels, locally owned investments such as bookstores and coffee shops provide every town and city a distinct local character. Family-owned hardware stores, drugstores, and departmental trees offer personal relationships, quality employment opportunities, and civic engagements that are often lacking in national and international chains (Wicks 3). In situations in which local economies thrive, diversity tends to blossom in an organization. Thus, local languages are conserved, implying that what is indigenous to an area is valued for its level of individuality. In such situations, the distinct local products are often traded in intricate international webs of small to small or win to win relationships.
Also commonly referred to as implicit social cognition, implicit biases are brought about by the perceptions and attitudes of people that affect their understanding, decisions and actions in unconscious ways. Within the context of business environment, such biases are comprised of the extension of both favorable and unfavorable evaluations of people (Pritlove et al. 502). In many situations, implicit biases occur involuntarily by people because of certain values that are extended to various races and ethnic groups within the United States and other parts of the world. When organizational members deal with their colleagues or customers, cases of implicit biases may occur on a regular basis. For instance, in one of her experiences with implicit biases, Camille Jackson narrates how a history lesson on slavery increased people’s biases towards her because of her skin color. According to Jackson, the mere fact that she was a black student in the middle of an entire group of majority of white learners made it unbearable for her to participate in class because some students would use her as the point of reference whenever the subject of slavery was mentioned.
While this problem took place in an ordinary American learning environment, Jackson observes that implicit biases still occur even in the workplace. For instance, Jackson recounts the experiences that she had when she realized that she was the only black employee in a white dominated corporate environment. Sometimes, her performance would be valued for being black in a sea of whiteness. These culturally-unfriendly working environment and climate made it difficult to address the problems of biases that might emerge in case prejudices take place. For instance, being the only black person in a crowd of white colleagues would sometimes be frustrating because it would be difficult to report cases of discrimination or harassments that would be extended to her. Therefore, Jackson proposes a diverse working environment in which everyone supports each other.
The Addictive Nature of Money
The pursuit of financial resources is one of the leading causes of corporate malpractices. Companies may seek to maximize profit but cut costs required to compensate employees. Moreover, corporate leaders and decision-makers may decide to award themselves with hefty salary packages at the expense of both lower-level employees and shareholders who deserve to be given their shares of the profits gained. In their criticism of money-oriented bailouts and motivational programs, Bevilacqua and Singh caution that money has the same addictive effects on human beings as drugs and sex (22). The the commonly unexpected challenges associated with many pay-for-performance programs is that they can potentially be more efficacious than expected by their developers. In the contemporary money-oriented society in which money may generate the same effects as drugs or sex, the unanticipated effects of financial performance plans that reward recommended behaviors with cash has increased than expected. Polk states that people clamor for more and more money even though they may not have a lot of bills to settle (2). Since money serves as an incentive, it is distinctively positioned to adversely affect behaviors in ways that are unexpected.
The modern popular culture places a lot of emphases on primitive accumulation of wealth. However, as DeAngelis cautions, the material nature of human beings can potentially result in unhappiness and dissatisfaction with the self (52). The feelings of financial and emotional insecurities are the leading causes of materialistic cravings. The materialist nature of human begins can be observed in the way that corporate executives seek to amass money. According to Holmberg, CEOs still get huge bundles of salaries while subordinates’ payment cannot sustain their basic living. Therefore, organizations should enact policies to safeguard others from losses that stem from the self-seeking nature of corporate heads.
DeAngelis, Tori. “Consumerism and its discontents.” (2015), pp. 52-56.
Clarke, Clifton, and Hershey H. Friedman. “‘Maximizing Shareholder Value’: A Theory Run
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