Theories Of Corporate Social Responsibility Commerce Essay

In the olden days, businesses were mostly with the idea of making profits and existing into the unforeseeable future. Gradually, it has changed dramatically and has shifted attention to responsibilities that firms have. For many years scholars have learnt firms’ public concerns (e.g., Berle, 1931; Bowen, 1953; Davis, 1960; Dodd, 1932; Frederick, 1960). Still, it is only currently that attraction in Corporate Social responsibility (CSR) has become extensive (Serenko & Bontis, 2009; Wagner, Lutz, & Weitz, 2009). CSR is a practice with the purpose of embracing responsibility for organisations conduct and supporting a definite impact through its activities on consumers, employees, shareholders, environment, communities, and all other members of the public scope who may also be considered as stakeholders. Other names for CSR include social performance, corporate citizenship, corporate conscience, or Responsible Business or sustainable responsible business (D Wood, 1991). Part A of this paper describes the three theories of Corporate Social responsibility, which are the managerial, utilitarian and relational theories (Secchi, 2007). The practice and significance will also be discussed as CSR seeks to pay attention to efforts that is being put to communities which they are situated, and whether they are been used for the right purposes. The discussion will be on how Anglo-gold Ashanti, Obuasi mining operations has impacted the community both positively and negatively. A personal analysis will be made on whether company pratices the stakeholder theory and a conclusion at the end.

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Theories of Corporate Social Responsibility

Utilitarian Theory

The hoary idea of laissez faire business gives way to determinism, individualism to public control, and personal responsibility to social responsibility. Instrumental theories could also be taken evenly with Utilitarian theory (Garriga and Mele, 2004; Jensen, 2002) in which the business is perceived as simply a mechanism for wealth making, as well as its public actions are only a means to attain profitable outcomes. The business is considered as part of the environment that it is situated in. This theory assumes the business has a responsibility to incorporate CSR in their daily working business ethics. Part of the utilitarian approach which is the functionalist also describes the business as part of the echo system therefore has a duty to make profit for its stakeholders through investment in profitable ventures.

Managerial theory

Secci (2007) examinations explained the reasoning of managerial theory that points out corporate management in which CSR is approached within the corporation. The distinction between the two theories is that, managerial theory suggests that all things outside the scope of the business be taken into account when making decisions. Corporate Social Performance (CSP), theories on social accountability, auditing and reporting and social issues in international business are the divisions in the Managerial theory. This theory is connected to political theories based on bringing out an idea, explaining and planning it mentally, Garriga and Mele (2004), and supported by Wood and Lodgson (2002). It explains that the greatness and power a business has should show in his involvement in the community it is situated and that the business itself is a citizen in that community.

Relational theory

Relational theory has a root from the complex firm-environment relationships. The theory was unfolded by Garriga and Mele’s (2004) analysis of stakeholder approach and was backed by the work of Mitchel, Agle and Wood (1997). The focal point of this theory is between the business and the environment. It has four sub-divisions mainly the business and society, stakeholder approach, corporate citizenship and theory of social contract. It talks more about the business and its society and also emphasizing on the stakeholder approach.

Anglo-Gold Ashanti, Obuasi

Obuasi Gold mine started its operations in 1897 when it was known as the Obuasi mine. Since 1975, the mine has been severely condemned for its environmental pollution, but still continues till date. In 2004 the company merged with Anglo gold Ashanti- South Africa and changed its name to Anglo-gold Ashanti, Obuasi. The company employed over 5700 people in 2009, http://www.anglogoldashanti.com/subwebs/InformationForInvestors/Reports09/AnnualReport09/f/AGA_AR09.pdf (Accessed on 04/12/2012). Mr. Kwesi Enyan is currently the managing director of the company.

Positive Impact of the company on the community

Anglo-Gold Ashanti has a trust fund that was created by the government of Ghana and the company. One percent of the company’s profit at the end of every year is directed to the fund which would be used to develop the community. The company built AngloGold-Ashanti (AGA) primary and junior secondary school. The school is still one of the largest and well-designed junior secondary schools in Ghana. The school developed many talented people with some going on to become managers and CEO of big companies in Ghana.

The company also built a hospital near one of its shafts which attended to needs of people of staffs. The hospital was linked to the government as part of an inter-governmental HIV AIDS treatment program. The company distributed condoms with pay slips and also at maternity and child care sections at the hospital. The hospital proved very vital to the community as there were not many hospitals when it was built. The hospital treated a lot of diseases and infections of employees and their children.

The company recently opened the Malaria Control department which is independent from the company now but works hand-in-hand with the company. The Malaria control programme has reduced the rate of malaria deaths drastically and also given opportunity to a lot of job opportunities for people in the community.

Negative impact of the company on the community

During the process of mining there are many gases which are released which pollute the air and spread a lot of diseases to the community. Many people fall sick and die due to some of these unbearable gases used in mining. Mining has accounted for a lot of deaths in communities that they operate. Companies still do not care because as long as they make profits for their shareholders and if company keeps growing, they are alright. The company has also been heavily criticized of mostly employing dependants of its workers. This has resulted to a lot of youth in the community practising illegal mining popularly known as “galamsey”. There are almost 500,000 small scale miners composed of illegal and legal miners. There have been clashes between company workers and “galamsey” boys which the workers were wounded. This epitomizes the tense relationship between the two parties.

Immoral issues are raised against some managers of the company. There is criticism levelled against recruitment policies of the company. Some ladies are sexually abused before being employed. There are also issues of tribalism and how there is inequality in recruitment policy and bias on the part of some managers in awarding promotions. Many farmers also have to leave their lands because of mining activities, these mining activities has destroyed a lot of vegetation.

Mining activities also destroys water bodies and other natural resources which deprive the society and government of required revenue.

The company surprisingly also employs huge numbers of foreign labour which really worsens and increase unemployment rate in the community and the country as a whole. The unemployment rate in Ghana including the informal sector is estimated 11% with about 28% of the population living below the poverty line.

Is the company practising relational theory and the Stakeholder approach?

From 2007-2009, there were no deposits added to the trust fund and as at January 2010, no funds had been disbursed. People started raising question marks to the real usefulness of the funds and whether the projects were just made out of just the company being generous.

Some of the company’s corporate social responsibilities were not purposefully for the Obuasi community, but for the company itself. This is because the Anglo-gold school only admits dependents of workers and does not give opportunity to other children in the community. This is an unfortunate situation and is unethical because the company’s pollution and waste it disposes affects the whole community. The hospital also only benefits the employees and those that the company has relations with.

The company argues that the hospital also provides counselling and testing for other community members and also the education giving to the dependents of workers is turn is educating the community because the children are also part of the community. With the theories discussed above and the stakeholder theory, the company view of responsible business is not really geared towards the improvement of the society but making profits and the welfare of its workers only. It is also unethical to destroy the land and vegetation of the community with them not getting so much in return. This depicts the current situation of Anglo-gold Ashanti (Johannesburg) compared to Obuasi, since 2004 when the two companies merged. The city has had massive improvement due to a good CSR towards the city with Obuasi not seeing any major development.

Conclusion

The company has a point when it employs foreign labour because there are not so much skilled personnel in the country to handle certain job aspects but saying that there must be a win-win situation. The community cannot just be suffering whiles foreigners will be enjoying, so there must be intensive training of human resource in the country to be able to acquire the needed skills to take up these positions. There should be training on plants, chemicals and awareness also made for people in the community to participate in these training programs. There must be the need for our own local resources so that most of the machinery used for mining would not be imported. There must be laws to help improve the lives of the local people and the society as a whole.

Government should also play his part in ensuring the company comply with all rules and acts concerning the human rights of people in the community.

Finally, companies should see corporate social as a growth engine and not a form of something charitable.

PART B (SECTION A)

Introduction

As individuals we work with people, interact with them and might disagree or agree with them on issues. Conflict management means putting in place ways that reduces bad aspects of conflict and raising the good aspects of it at standards the same or higher than the place where the conflict took place. Additionally, conflict management seeks to improve learning and group results, that is capability or performance in a business environment (Ra him, 2002). People might disagree in decision making because they might have ideas of their own. Conflict may be important to groups and businesses, when managed well; it increases group results (Alpert, Osvaldo, & Law, 2000; Booker & Jame son, 2001; Ra-him & Bono ma, 1979; Kuhn & Poole, 2000; Church & Marks, 2001). Part B of this paper is divided into two, section A and B. Section A explains conflict, it’s theory and my experience of it at Mining Building and Contractors Ltd (MBC,Obuasi), Ghana and a conclusion at the end. Section B of this paper explains building trust, relationships and communications, theories of building trust, relationships and communication as well as a personal reflection on these skills and a conclusion.

Theory of conflict management

Conflict is defined as disparity amongst people. It sometimes differs from a slight misunderstanding to a win-or-lose or agitated clash (Kirchoff and Adams, 1982). There are two types of theories under conflict management.

The traditional theory is centred on the theory that conflict is immoral, is instigated by troublesome people, and should be subdued.

Contemporary theory identifies that conflicts amid people is unavoidable. They can be beneficial to an individual and emerge as a natural result of change and therefore should be managed efficiently (Kirchoff and Adams, 1982) reflects origination as a device for conveying collectively several thoughts and perspectives into a fresh and changed combination. An environment of tautness and resulting to conflict is therefore vital in every business devoted to emerging or operating with new thinking.

Personal reflection

I worked at MBC Ltd, Obuasi with a colleague at the Accounts Office. My colleague’s uncle was the Marketing Manager but wasn’t in good terms with Mr. Ocloo, the Accountant, who was our boss. I got to know our boss was someone who was really passionate about his work and disliked lazy and insolent people. I built a strong relationship with my boss and always listened to and respected his views. My boss observed my colleague most of the time missing at the office, this continued for a few weeks. My colleague had been visiting his uncle during periods which there were no work at the office. One day I returned from an errand to find out my colleague had had a confrontation with our boss because of his continuous absence during working hours. He also had reported the case to his uncle who had come and exchanged words with our boss and had worsened the situation. I quickly called my colleague and spoke to him about the way our boss had observed him for a long period before voicing out his frustration. I recommended to him outside apologizing to our boss. I also advised him to go back to his uncle’s office to calm him down. I then ensured he explained things to his uncle and admit it was his fault to make peace. I later talked to my boss for hours explaining that, my colleague was at fault but he really left when we had finished with our work. I wanted to make sure the case does not escalate to higher levels and wanted it solved that day. It wasn’t easy because we had to stay behind after office hours when everyone had left to resolve the issue. Both my colleague and his uncle came back with my colleague apologizing and acknowledging the mistake that brought about the conflict. I helped solve the solution because it would have really developed into a real mix-up which would have brought other parties and disciplines into the matter.

Conclusion

Every day we work with people, who might wrong us or rub us in a way. I personally think conflict is unavoidable but can be managed. At the workplace individuals should always be thoughtful and always try to negotiate with fellow workers to resolve conflicts. Workers must be sensitive to the feelings of other workers and understand that individuals may react to anger, fear and frustration. Workers should provide viable solutions to problems amongst themselves. Mangers should identify and analyse the reason for conflict to understand the root cause of conflict. Any solution for resolving the issue should be aimed at doing away with the root cause. Managers need to have good communication skills to be able to empathize with all the concerned parties and put across their solutions convincingly. Conflicts should be resolved in a healthy way without favouring any individual; all parties involved should be treated with respect and spoken to politely. Managing conflict effectively is valuable in the progress of an organization.

SECTION 2

Introduction

Nowadays, businesses are looking for ways to help maintain trust, build good relationships and acquire communication skills in helping them achieve growth in their workplace. Trust is explained as the condition of preparedness for an interaction with something or someone without protection (Duane C. Tway, Jr.,1994). Trust, relationships and communication at the workplace is very essential to the success of a business and wellbeing of people at work. Trust is seen by others as equivalent to trustworthiness, explaining trust in the subject of individual traits that stimulate positive expectations on other individuals behalf(e.g., Butler & Cantrell, 1984; McKnight et al., 1998).Organisational relationships can be grouped into functions, departments and teams; union, staff and the management. These relationships are influenced by how people individually treat each other in the workplace, http://www.dol.govt.nz/er/bestpractice/prc/infosheets/GPG-WP-RELATIONSHIP.pdf (Accessed on 03/12/12). Culture of trust is beneficial in disorganized and uncertain places, (Bjerke, 1999).

Theories of Building Trust, Relationships & Communication

Trust is the “anticipation by an individual, group, or a business of moral activities, that is, ethically truthful judgments and ways built upon principled values of scrutiny in favour of another person, group, or business in a mutual effort or pecuniary dealing. This explanation highlights the significance of trust in private and workplace relationships, Hosmer (1995).

Trust gives way to developing a relationship more effective between the trustor and trustee (Blau, 1964).

Jarvenpaa and Leidner (1998) explained that a very fast trust cannot be maintained if there isn’t sequential communication. As a result, swift trust is important but doesn’t guarantee a situation for communication of trustworthiness.

(Meyerson, Weick, & Kramer, 1996) explain communication of trustworthiness as a joint way of controlling and directing peoples behaviours and ways in their interplay with each other, and that eventually shows the standard trust that exists between them.

Personal Reflection

When I started work at MBC Ltd, (Obuasi), the first thing I did was to learn and quickly adapt to the organisational behaviour and culture. The next thing was to win the trust of fellow workers and build good communication levels and relationships with them. I was humble, obedient and was always eager to work. I became more involved in issues of workers in the company. This made me my boss favourite and made him sometimes go to the extent of discussing his personal issues with me. I had already won his trust and had built a vibrant relationship with him. As a new worker of the company, it was not done overnight but through hard work I was able to achieve it. If I saw workers not in good terms at work, I will quickly try to address it. I will have a conversation with the people involved and if it was still not working, I will try a higher authority. I always made sure that no party felt betrayed or offended but it was always a win-win case. I also kept private information from others confidential. When we had finished with work and the place seemed boring I would suggest a group meeting where we thrived on issues to be addressed at the office. We did this at least two times and really helped us a lot and always brought the best in us. I suggested this to fellow workers but did not work at start because some managers did not agree with the idea. Gradually interest for it grew and the company now holds a special meeting once every month where selected workers from various departments share views and discuss problems facing them to managers. This really improved communication and enhanced good relationships and trust in the organization.

Conclusion

Communication, trust and relationships can be improved in all workplaces, no matter the size of the company. The basis of an individual’s interaction in the workplace is through these skills. These skills are very important and should be amalgamated into team building in every organization. Individuals should be encouraged to stop engaging in activities that will reduce trust existing between workers. Workshops and meetings should be organized to prepare and educate workers on developing good communication skills and fostering healthy relationships among themselves. It is never easy to impress or satisfy everyone at the workplace because we are human but we must also know that it takes a lot of effort to fix a broken relationship or trust that existed between workers than to prevent it from happening. If any company wants to move from being just a working group to a high performing one these skills must be taking seriously. None of us is perfect but we can be much more effective and efficient if we work on building good relations, having easy and simple communication systems and being trustworthy. This will inspire and influence others to help build a successful business environment.

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