Introduction
Organisations are fundamental to the structure of modern economies and societies, serving diverse purposes and undertaking significant responsibilities. Within the business environment, understanding the purposes and responsibilities of organisations is essential for grasping how they operate, contribute to economic growth, and address societal demands. This essay examines the core purposes of organisations, primarily focusing on profit generation, societal value, and innovation, while also exploring their responsibilities towards stakeholders, ethical practices, and sustainability. Through a critical lens, albeit limited in depth, the discussion will draw on academic sources to evaluate these aspects, highlighting their importance in shaping organisational behaviour and societal impact.
Purposes of Organisations
The primary purpose of many organisations, particularly in the private sector, is to generate profit. Businesses exist to provide goods or services that meet consumer needs, thereby earning revenue to sustain operations and deliver returns to shareholders. As Porter and Kramer (2011) argue, profit-driven motives often underpin strategic decisions, ensuring financial viability and market competitiveness. For instance, a retail company like Tesco focuses on maximising sales through effective supply chain management, illustrating how profit orientation drives operational efficiency.
However, not all organisations prioritise profit. Public sector entities, such as the National Health Service (NHS) in the UK, aim to deliver societal value by providing essential services like healthcare. Their purpose is rooted in addressing public needs rather than generating financial returns (Ferlie and Ongaro, 2015). Similarly, non-profit organisations focus on social impact, tackling issues like poverty or education, often relying on donations or grants to achieve their goals. This diversity in purpose highlights that while profit is a key driver for some, societal contribution is equally significant for others.
Furthermore, innovation emerges as a critical purpose, particularly in technology-driven industries. Organisations such as Apple invest heavily in research and development to create cutting-edge products, thereby maintaining market leadership (Porter and Kramer, 2011). Innovation not only ensures competitiveness but also contributes to economic progress by introducing new solutions to complex problems. Thus, the purposes of organisations are multifaceted, shaped by their sector, structure, and strategic vision.
Responsibilities of Organisations
Organisations bear significant responsibilities towards their stakeholders, including employees, customers, communities, and the environment. Stakeholder theory, as proposed by Freeman (1984), suggests that organisations must balance the interests of various groups to maintain legitimacy and long-term success. For example, ensuring employee welfare through fair wages and safe working conditions is a fundamental responsibility, as neglect can lead to reputational damage and reduced productivity.
Ethical conduct is another critical responsibility. Organisations are increasingly expected to operate transparently and avoid practices that harm society, such as exploitation or corruption. The 2013 collapse of the Rana Plaza building in Bangladesh, which housed garment factories supplying global brands, underscored the consequences of neglecting ethical responsibilities in supply chains (Crane and Matten, 2016). Such incidents highlight the need for organisations to prioritise ethical standards, often under pressure from regulatory bodies and public opinion.
Moreover, sustainability has become a pressing responsibility. Organisations are urged to adopt environmentally friendly practices to address climate change and resource depletion. The UK government, through policies like the 2050 Net Zero target, encourages businesses to reduce carbon emissions (UK Government, 2019). Companies like Unilever have integrated sustainability into their business models, demonstrating that environmental responsibility can align with profitability. Nevertheless, challenges remain, as smaller organisations often lack the resources to implement such initiatives effectively, revealing a limitation in the universal application of sustainability responsibilities.
Conclusion
In conclusion, organisations serve varied purposes, from profit generation and societal value creation to fostering innovation, each shaped by their operational context. Concurrently, they hold substantial responsibilities towards stakeholders, ethical practices, and sustainability, which are integral to their legitimacy and success. While profit remains a dominant purpose for many, the growing emphasis on societal and environmental impact suggests a shift towards more balanced objectives. The implications of these dual aspects are significant; organisations must navigate complex expectations to remain competitive and socially relevant. Arguably, addressing these purposes and responsibilities effectively not only enhances organisational performance but also contributes to broader economic and societal well-being, a perspective that warrants further exploration in the dynamic business environment.
References
- Crane, A. and Matten, D. (2016) Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization. 4th ed. Oxford University Press.
- Ferlie, E. and Ongaro, E. (2015) Strategic Management in Public Services Organizations: Concepts, Schools and Contemporary Issues. Routledge.
- Freeman, R.E. (1984) Strategic Management: A Stakeholder Approach. Cambridge University Press.
- Porter, M.E. and Kramer, M.R. (2011) Creating Shared Value. Harvard Business Review, 89(1/2), pp. 62-77.
- UK Government (2019) UK Becomes First Major Economy to Pass Net Zero Emissions Law. GOV.UK.
