In the business world today, there is an occasional tradeoff between businesses achieving their main objective being to generate capital and conducting business activity in an ethical manner.

In order for a business to be operating ethically, it is essential for the business to balance corporate interests and aims with societal welfare. Businesses that embrace ethical behavior in their business objectives are said to practice corporate social responsibility, being the voluntary activities undertaken by a business to operate in a social, economic and environmentally sustainable manner.

Indofood, is a major Indonesian company involved in the food industry. The business is widely recognized as a large producer of instant noodles. In June of 2016, Indofood had been reported to be violating the fundamental rights of its workers, thus operating in an unethical fashion. Investigations conveyed that Indofood, actively uses child labor, practices worker intimidation and exploitation and workers receive low wages. Indofood refused to comment on these findings and have stated that they have abided and complied by the regulations and laws of Indonesia. In addition, these child workers have no job security as they are offered limited duration contracts.

This is a clear depiction of a company that does not take corporate social responsibility into consideration when manufacturing its products as they have significantly violated workers’ rights. Stake holder theory states that a business is performing ethically when all stakeholders in a business, being any party with a direct interest in a company’s activity is satisfied. Therefore, Indofood, has diverted from this as the company’s worker’s interests, being job security, adequate safety and a sufficient salary has not been met.

Statistics show that businesses concerned with corporate social responsibility will have success in the long term and can attract more potential customers that have noticed its efforts to do so.

An argument frequently brought up against businesses performing ethically, is that people may suggest that the ultimate purpose of a business should be to make a profit and therefore corporate social responsibility should be left to nonprofit organizations. In addition, Corporate social responsibility is expensive and businesses may be reluctant to invest.

Ultimately, when businesses opt to practice ethically, they may have success in the long term and attract more consumers and avoid future altercations with the law. However, in undertaking ethical business activity it can be quite expensive and stray the company away from its primary objective which is to make a profit.

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References

Shah, Vaidehi. “Indofood Accused of Child Labour Violations.” Eco-business. N.p., 10 June 2016. Web. 8 Sept. 2016.