Corporations—or business organizations—are being (re)defined at this very moment.
Presently, there’s a case before the U.S. Supreme Court that involves human rights violations committed by a corporation in a foreign country. Proponents of human rights are concerned that the Supreme Court’s decision will indicate that corporations have many rights but limited legal responsibilities.
During this election year, citizens are concerned about how corporations influence politics by spending money on campaigns. Shareholders, as investors, are stating that they are entitled to know how companies are using their financial resources to support political campaigns and legislation. They are asking for a greater level of transparency and more accountability.
These issues revolve around the corporation being perceived as a “human collective that acts.” Corporations are increasingly being considered “persons” in the eyes of American law. With that shift, more and more rights are being attributed to them. But, with rights, don’t responsibilities also follow?
From an ethical perspective, if corporations are considered “persons,” they are to be held accountable for their actions in the same manner as individuals. Business enterprises, more than they presently do, need to systematically be aware of, assess, and take responsibility for their impact upon the individuals and communities affected by their strategies, values, decisions and behaviors.
Following this line of thought, should business organizations not have civic roles and be expected to assume reasonable responsibility for being good corporate citizens and organizational members of the communities where they reside as well as the larger global society whose markets they serve and profit from? If they are civic members, are they not to contribute to the enhancement of the well-being of communities—local and global—beyond generating revenue for them?
There are no easy answers to these complex and multifaceted questions. But in light of the devastating global impact of the current economic downturn, it is time to courageously engage in a dialogue that explores them and begins to surface some solutions. With that thought in mind, here are some initial points about organizations as responsible members of communities.
First, it can be said that organizations are part of a social ecosystem, and their success depends upon the viability and health of the entire system. As Kathia Laszlo discusses in her blog article, Evolving the Responsible Business, the ecosystem has many stakeholders—customers, co-creators, the community, the Earth, and investors. Besides being members of and having roles within that system, their goals, decisions and actions have far reaching ramifications for the overall system in both the short and long term.
Thus, business organizations do not exist in isolation. Nor do they achieve their goals without the assistance of others. They function as a complex system of stakeholders—an intricate, interdependent web of networks. They routinely interact with customers and increase their financial holdings because of them. They draw upon local and global communities for human talent, and the environment for natural resources. They engage businesses as partners and form supply chains with vendors. Business organizations usually reside in one or more local communities and operate to varying degrees in national and global arenas. Since organizations prosper because of this system, they have a responsibility to give back and help maintain the human communities of which they are a part. This is in addition to the ethical responsibility to treat people and the environment with respect in accordance with their inherent dignity.
From this follows that the focus of a business enterprise’s purpose and sense of ethical integrity is to be concerned not just with the vitality of the organization itself, but with the care and enhancement of the entire system. Its role and function entails enabling the whole community ecosystem to thrive, not only its own survival. It has a responsibility to do so because it is an integral component of the system. It is to be an active, contributing ethical citizen. Such a notion of business organization is emerging in the new notion of (certified) benefit corporation.
From this vantage point, organizational integrity involves assuming appropriate responsibility for the community’s well-being. Organizational integrity is characterized by:
- Understanding and valuing the entire human and environmental ecosystem in which a business enterprise exists, as well as its role in it.
- Seeking reasonable mutual benefit for all stakeholders, including the environment.
- Critically reflecting on the organization’s impact upon the overall system—individuals, organizational partnerships, families, communities, global societies, resources, for instance—and taking ownership for enabling the system to evolve.
- Being an engaged civic member, enhancing the various communities in which it is a member by fostering quality of life, promoting the health of the overall common good, and enabling prosperity by encouraging the flourishing of life in all of its forms.
Thus, when determining a business organization’s purpose and responsibilities, it is not merely about the organization increasing revenue and doing no harm, but about how the organization can be an engaged citizen, improve the local and global communities, contribute to their growth, and enable the flourishing of human potential.