That capital comes in five different formsPosted on: April 15, 2020, by : g3wgj
1. Social Capital
Social capital is the quality of laws, the cultural and social institutions, infrastructure, education, healthcare, and environment. When a business contributes to social capital, it is acting responsibly and ethically.
2. Reputational Capital or “Goodwill”
Reputational capital adds value to a business by attracting and keeping customers, employees, investors, and suppliers committed and loyal. All these are important, critical stakeholders.
3. Finance capital is the classic form of capital. Every company needs access to money.
4. Physical capital is the land, plants, and equipment of a company.
5. The most important form of capital is Human Capital
The creativity, loyalty, and productivity of employees constitute human capital. A business invests in its human capital when it provides better lives and working conditions for its employees and their families.
The successful road for any business that wants to become a CSR company is not a romantic, flower-strewn path with an expansive vista, nor is it easily navigable. The successful CSR company must navigate down the narrow and winding lane of business ethics with its many procedures and laws, avoiding the potholes of sloppy and ineffective business practices, and the soft-shoulders of greed and unethical behavior.
In preserving its access to these necessary five forms of capital, and by paying a return on capital from earnings, a business acts from self-interest but promotes social well-being and social justice at the same time.
The subject of corporate social responsibility has become big business, with a barrage of informational courses, books, articles, and conferences. But all of these are simply words, fashionable and politically correct rhetoric. Without action, without the implementation of these ideas, the words remain empty. Let us not be blinded or misled by the hopes and grandiose visions that we are promised by romantic notions of CSR businesses. A huge gulf separates words from deeds, much like the difference between the Greek phrases, “tha doume” and “egine.” The actual transformation of a business into a CSR business can be very difficult and time-consuming. Companies that actually achieve these lofty goals should be congratulated and applauded for reaching the goal of eudaimonia, for they have delivered material and spiritual well-being to the community. This is the ultimate good or telos of society.
However, as we discuss corporate social responsibility, let us not lose focus of one of the most critical elements, business ethics which, in effect, are a set of moral principles. What values will the moral principles be based on? Religious? Cultural? Political? Western or non-western values? In order for business ethics to be effective, the global business community must establish a set of standards and principles acceptable to all businesses worldwide.
I would like to submit for your consideration a few business principles and practices that I believe contribute to the basics of becoming and sustaining a socially responsible business. These are based on my own experience of starting a small company in a garage with two employees, and over a number of years growing it to become recognized as a successful socially responsible business with sales of approximately $200 million—highly profitable—and with over 2,000 employees and plants worldwide. A few of these basic,
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