Tuesday, May 5, 2020

Legitimacy of Social Entrepreneurship †Free Samples to Students

Question: Discuss about the Legitimacy of Social Entrepreneurship. Answer: Introduction Predates the European Enlightenment and in the late 17th Century and the concept of social contract theory is developed. Thomas Hobbes (15881679) was known as first English philosopher that explained social contract theory and after that John Locke and Jean-Jacques Rousseau contributed into this theory/philosophy. Social contract theory is related to moral values and political science that also relevant in the current business environment. True and fair view (TFV) is an accounting concept/principle that explained it is essential for firms to prepare and present fair and true financial statements. The social contract theory is relevant or application in TFV principle and different accounting principles/standards/concepts. This paper describes Hobbes, Lockes and Rousseau viewed related to social contract theory and then explains this application in the accounting. The main aim of this paper is to explain the social contract relevant and application in accounting profession in the context of TFV principle. In this, considers the assessment item 1 literature review finding to discuss TFV represents or nor present a social contract between the accounting profession. In addition, another main aim of this paper is to describe the social contract relevance and application of Legitimacy Theory in accounting. In this, conducts literature review to explain the both topics and reaches an outcome of this study. According to Vladu, Salas Matis (2012), TFV accounting means the prepared the true, fair and error free financial statement to present the accurate financial position or situation of the company in front of stakeholders. The TFV is played important role in accounting, auditing and financial reporting to present the accurate or correct financial situation of the company in the market. Stakeholders such as business partners, suppliers, investors, shareholders, distributors and customers decision is based on the current financial position of the company, so that it is essential for it to prepare and present correct or accurate financial statement through applied the TFV principle/standard of accounting (Vladu, Salas Matis, 2012). In addition, it is the social responsibility of the companies to prepare and present the fair, true and correct financial statements for preventing the stakeholders interests. In addition, Albu, Albu Alexander (2013) stated that the Generally Accepted Accounting Principles (GAAP) is accounting standards principles, and procedures that companies must follow to prepare financial statements. The GAAP standards explained that the companies are preparing full, true and fair financial statements (i.e. Profit Loss statement, Balance Sheets and Cash Flow statement) to present the accurate financial position, liquidity position, assets-liabilities position and cash inflows and outflows position in front of stakeholders. The legal view of a TFV has bounded the companies to prepare fair, true and accurate financial statements in the each year (Albu, Albu Alexander, 2013). Moreover, TFV is considered the concept of business ethics and social contract as through prepare and present the fair and true financial statements the companies able to prevent the interest of all stakeholders and contribute for society. Historical Background of Social Contract in Accounting: The idea of social contract is based on the social contract theory/philosophy that predates the European Enlightenment and has originated in the late 17th century. Leonard Samantar (2011) stated that Thomas Hobbes at the dawn of the Enlightenment or social contract theory, then John Locke also contributed in and Jean-Jacques Rousseau at the end. Although its origin is unknown, but Thomas Hobbes was considered first proponents and he that have developed social contract theory in the late 17th century that generated related to the political theory and moral or values. Thomas believed that as a social contract theory, an individual or organization behaviour, activity or decision is the greater good of society (Leonard and Samantar, 2011). Lee, Walter?Drop Wiesel (2014) stated that the key idea of social contract theory is presented by Thomas Hobbes (1588-1679) that was faced the English Civil War (1642-1648) and witnessed the overthrow of Charles II. Hobbes' explained the human motivation theory and social contract theory that are part of his main political theory. He has described the human motivation factors and human social contract that produces a particular view of people moral values and political lives. In addition, John Locke (1632-1704) presented that men's generally uniting into common-wealth that is totally different viewed from Hobbes social contract theory and political theory (Lee, Walter?Drop Wiesel, 2014). According to John Locke philosophy of social contract, people are united for preservation of their wealth, liability and well-being as well as preserving their lives from the civil government or King. Furthermore, Evans, Baskerville Nara (2015) expressed that Jean-Jacques Rousseau (1712-1778) presented his idea of the social contract in the different way. Rousseau's social contract theory or idea is based on the social justice, equality freedom and human rights. He conceived outcome of the individual or organization action should be benefits for all, equally. He believed that and the social contract must enforce that all men were free and equal. Rousseau's idea or theory inflamed the passions that led to the French Revolution and the constitution of the US. According to social contract theory, all member of society agree to social contract as well as universally applicable moral or ethical rules simply by participating in the making of these rules (Evans, Baskerville Nara, 2015). He stated that social contract as a social agreement between member of society to follow the mutual decided rule, regulation, ethics and moral values. TFV indicates a social contract among the accounting profession and the business community: Salihin, Fatima Anam Ousama (2014) pointed that the TFV principle has been researched in assessment item 1 that finding indicated the social contract among the accounting profession. In addition, TFV principle is related to business ethics and support the accounting profession related to social contract. In addition, the assessment 1 finding expressed that accounting profession does not misused of their power to present misstatement, but to support the social contract. The social contract is an idea based on social contract theory that explains so much of accounting theory. Social contract theories have implications in the number of areas of accounting theory. Annisette and Richardson (2011) stated that in recent times, social contract theories and TFV principle applied in accounting professions to study of business ethics issues related to financial misstatements. Many organizations, CEO and accountants have presented financial misstatement of the companies in the past few years that required discussion of the TFV principle and social contract relations with accounting profession. The unfair and misleading financial reporting by the companies, CEO and accountants indicated the ethical dilemma situation and they have not followed the laws and accounting regulations. The TFV principles represent the social contract between the accounting professionals to prepare and present the financial statement true, fair and accurate (Annisette Richardson, 2011). The social contract between accounting professionals helped them to understand the importance, need, relevant, and application of TFV principles. Christensen, Nikolaev Wittenberg?Moerman (2016) stated differently that according to the social contract, employees those working related to accounting professionals cannot right to misuse their power while prepare financial statement or perform financial reporting and always prepare or present fair, true and right financial statement. TFV indicates a social contract among the accounting profession through explained the accounting professionals always consider the benefits of society and stakeholders while perform their task or duties. Moreover, it is essential for the accounting professionals to behave ethically and consider social benefits while perform their duties and prepare financial statement (Christensen, Nikolaev and Wittenberg?Moerman, 2016). Social contract between accounting professionals motivated and encouraged them to behave ethically and socially through prepare and present true, fair and accurate financial statements. Jacobs (2012) stated that according to the social contract theory/philosophy, the basic of the accounting professionals is maintaining balance both businesses and social benefits. The impact of business on social welfare, both positive and negative is felt primary through employees, consumers and stakeholders. In recent times, many organization benefit to society and enhance society welfare through producing or delivering of valuable goods and services. Harmful results include depletion of natural resources, pollution, high wastage, and reduction of personal accountability on the providers of goods and services (Jacobs, 2012). The harmful effects of business on employees include low wages, worker alienation, dehumanization, dangerous working conditions, and lack of control over accidental working condition. Mkel Nsi (2010) stated that since public accountants, TFV and social contract has important implications for the public accounting profession to organize themselves into firms in order to produce fair, true and accurate auditing services. The general conditions of the social contract apply by accounting professionals to all productive organizations. The social role of public and private accounting professionals is prepare and provide the fair, true and correct financial statements. The social contract between the public accounting professionals indicated their social role similar as auditor role through focus on fair and true financial reporting. In the context of the social contract, accounting professionals, auditors and their clients may make special contracts that are mutual self-interest (Mkel Nsi, 2010). The social contract between accounting professionals are not allowed them to violate the norms and ethics and followed the auditors role through present the fair and true fin ancial statements. Moreover, Lanis Richardson (2012) presented similar viewed and justified that the TFV represents a social contract essential among the accounting professions to encourage accounting professionals to prepare and represent the fair and true financial statement of the firm. Social contract created pressure in accounting professionals that if they present misleading statement then its reputation and image is affected in the social and corporate world, so they focused on the prepare and show fair, true and accurate financial statements of the firms (Lanis and Richardson, 2012). In addition, Wiseman, Cuevas?Rodrguez Gomez?Mejia (2012) predicted that the social contract theory also point out ethical foundations of the accounting professionals implicit in the specification acceptance of social role and social mutual interest. The social contract approach/philosophy explained that auditors or accountants are obliged to act in accordance with the dictates of social roles. The balance between the social and organization benefits are considered by auditor or accountant to fulfill their social and professional obligation (Wiseman, Cuevas?Rodrguez Gomez?Mejia, 2012). In the word of Perks, Farache, Shukla Berry (2013), an agreement between accounting professionals and society as evidenced through legislation recognizing of the professional organizations of public accounts and auditor. Most of the countries accounting standards required the publicly held corporation financial statements can be examined by independent auditors. The auditing profession have agreed to act in a social responsibility way for providing benefits of the society by applied TFV principle while auditing of financial statements or reporting (Perks, Farache, Shukla Berry, 2013). Social Contract and Its Relevance to Legitimacy Theory in Accounting Orij (2010) described that the social contract is an unwritten agreement, but the people agreed to follow it to maintain social and business environment. The idea of social contract is not new, it is developed in 17th century by Thomas Hobbes. Hobbes believed that a social contract is not an actual contract and developed by mutual agree of people or participants, but it was essential for the greater good or beneficial of society. The social contract develops a legitimacy theory while business communities and the many groups agree on an agreement that benefits for the society or people (Orij, 2010). Social contract philosophy explains the individuals ethical and political obligations related to accounting that has beneficial for society. Social contract cannot be written form of law, but related to accounting professionals ethics, moral values and political obligations. In addition, Jahn Brhl (2016) submitted that social contract is played a significant role in explains of legitimacy theory in accounting. The term legitimacy in accounting is associated with use of valid codes, rules, and standards during perform accounting practices. The use of international accounting standards when run business in different countries is also raised the legitimacy theory concept in the accounting. The focuses of legitimacy theory in the accounting in accounting practices may help organization to behave ethically and morally with maintain the transparency, fairness and accuracy of the financial reporting. The fairness, accountability and transparency in the financial reporting is also essential for the ethical and social business practices (Jahn Brhl, 2016). The legitimacy in accounting is related to the overall welfare of the business that associates with social contract. According to Ieng Chu, Chatterjee Brown (2012), the legitimacy theory means the widely used theory. Legitimacy theory in accounting means the widely used accounting principles, standards or concepts in the business communities in all over the world. Business ethics related to accounting such as fair and true financial statement preparation is widely used in the worldwide. In recent times, social contract theory is applied in the accounting fields and many accounting legitimacy theory is relevance with social contract. The social contact is an idea that relevance with many accounting theories and it has implications in the several areas of accounting theories (Ieng Chu, Chatterjee Brown, 2012). This section provides opportunities to explore social contract implications in different accounting legitimacy theory. In this part, discusses the social contract theory application and relevance in the different accounting legitimacy theory including stakeholder theory, environmental and sus tainable reporting, business ethics, corporate governance, and corporate social responsibility (CSR). Carroll Shabana (2010) presented similar viewed and stated that the legitimacy theory in accounting defined the organizations can maintain their financial reporting to focus on business ethics and social contract relevant accounting theories. In recent times, social contract between accounting professionals that encourages them to consider both organizational and social benefits while financial reporting and maintain accounts of the organization. Organizations are required the followed the legitimacy theory in accounting and financial reporting to provide benefits of society (Carroll Shabana, 2010). Organizations are applied the business ethics, stakeholder theory, accounting standards/concepts, environmental and sustainability reporting, corporate governance, and CSR to provide benefits of the society. Social contract relevance to stakeholder legitimacy theory in accounting: In the word of Carnegie Napier (2010), social contract relevance and application of stakeholder legitimacy theory in accounting as the auditor and accounting professionals are required to consider the interest of all stakeholders through prepare and represent the true, faire and accurate financial statement. According to stakeholder theory, it is unethical to provide misstatements of the organization, due to it affected the stakeholder and harm their interest. Many stakeholders such as business partners, investors, creditors, shareholders, suppliers or distributors and customers decision related to business depended on the financial statements and current financial position of the company (Carnegie Napier, 2010). In the case of misstatements, their decision are wrong and harm that, so that shareholder legislative theory in accounting applied by accounting professionals to prevent the rights and interest of all stakeholders. Nicholls (2010) justified that according social contract, business organizations does satisfy the stakeholders and society through business operations in legitimacy manner. Business organizations always considered the interest of stakeholders and social benefits before taking any business decision. Business organizations explains accounting professionals their social role, so they able to prevent right or interest of all stakeholders and contribute into the development and wealth of society (Nicholls, 2010). Stakeholder theory legitimacy in accounting also required the accounting professionals maintained social contract with each others to understand the social need or requirement of the people and try to meet it with business operations. Social contract relevance to corporate governance legitimacy theory in accounting: According to Li, Gupta, Zhang Sarathy (2014), social contract relevance and application to corporate governance and environment sustainability in business organization by ensure that operations or functions cannot harm society, community, environment and planet. Corporate governance and business ethics are relevance with social contract and the organizations applied these accounting/business concepts to follow the ethical path to ensure sustainability of society, community, environment and universe. Corporate governance legitimacy accounting concept is applied by firms to creating stakeholders trust and social value through given message that it has not harm environment and people during producing and delivering product or services (Li, Gupta, Zhang Sarathy, 2014). In recent times, many MNCs preparing and presenting their corporate governance report each year that given message in stakeholders regarding investment and strategies use by MNCs to ensure sustainability of the business and environment. According to Bebbington, Unerman O'Dwyer (2014), corporate governance and sustainability related main strategies currently applied by companies are reduce pollution or CO2 emission, use natural or renewable source of energy, waste management, green house offices, and develop environment friendly products or services to provide benefits of society and ensure sustainability of people and planet. Corporate governance legitimacy theory is similar as social contract as it is different from country to country (Bebbington, Unerman O'Dwyer, 2014). Islam (2014) also stated that different country people have different culture, ethics, moral values, political thinking or view, living standard and social lives that vary corporate governance legitimacy. Developing countries and developed countries different business environmental factors such as culture, social, economical, political, legal and technical vary governance (Islam, 2014). The literature has confirmed that the business communities w ould bring different perception on social contract and its application or relevancy in corporate governance and environment sustainability theory. In the word of Aribi Gao (2010), social contract relevance and application to CSR legitimacy theory in accounting as through apply this theory or concept business organization able to fulfill their responsibility for the society, community, people and planet. CSR is applied by companies to invest in society through invest in education program, health care program and welfare activities of the people, die to they understand their corporate responsibility for society and people. Organizations are running their business that generated harmful gases or wastage, which harm people and environment. Therefore, it is social responsibility of organizations to contribute into the social welfare and prevent the environment. The organizations spend in charity and run social activities such as provide education and health care services of local people to fulfill their social responsibility for the people and planet (Aribi Gao, 2010). CSR legitimacy theory is relevant with social contract theory as both main aims are to provide benefits of the people and society. In addition, Frynas Stephens (2015) presented similar viewed as Aribi Gao (2010) and stated that CSR legitimacy theory is based on the social contract theory that applied by most of the organizations to understand their responsible for the society and environment. Environmental and sustainability reporting and renewable products or business solutions are some features of CSR policy that applied by many MNCs and large organizations to prevent the society, people and environment. Social contract and CSR legitimacy theory applied by the companies to understand social need of the people and then try to fulfill this need to create social value of the business. Social contract and CSR strategies also utilized by companies to develop their reputation, image and social value that may help it to take competitive advantage in the market (Frynas Stephens, 2015). The most of the companies currently are focused on invest in society through run education, training and development, health care a nd social welfare schemes. Moreover, Matuszak, R?a?ska Macuda (2015) described different thoughts through explained that it is also social responsibility of the firms to prepare and represents true, fair and correct financial statements in from of all stakeholders in the market. The financial misstatement indicated the accounting professionals have not considered their social obligation and social role that affected the stakeholders interest. Currently, CSR legitimacy theory is becoming essential business concepts that applied by firms to develop their social values among stakeholders in the competitive market (Matuszak, R?a?ska Macuda, 2015). Albu, Albu Alexander (2013) described that the social contract concept is applied by business communities to solve business ethics issues related to accounting and business other activities. In the accounting, the employees or professionals of accounting department must follow their moral values and behave right or ethical to benefits society and consider the interest of stakeholders. The concept of corporate governance, stakeholder theory, environmental sustainability, and CSR is required the accounting professionals considered moral values, right or wrong and ethics to provide benefits of society and organization in balance way. Moreover, Jones (2010) explained that business ethics is related to society or community through it bounded account professionals and management to considered interest of all stakeholders while perform their jobs or while taking business decision. Social contract theory is relevance and application of business ethics as ethics indicated an individual perso n and organization morality and values relates to society. Social contract theory is also relevant and application in CSR, governance, and environment sustainability as these business concepts represented the social activities or functions of organizations to meet the social expectation of the people. The above section explained the social contract relevance and application in the different accounting legitimacy theories include stakeholder theory, corporate government, environment sustainability, CSR and others. The above literature reviewed explained the social contract is relevance and application of the different legitimacy accounting theories, due to currently business organizations focused on contribute in social welfare. Conclusion On the basis of the above literature review, it can be stated that TFV explains the social contract is required between the accounting professions. The literature explanation indicated that social contract among the accounting profession and the business communities helped them to understand need and importance of true, fair and correct financial statement of the company for the society. This paper conducted literature review that would be achieved aim of this paper of develop understanding on social contract theory and its application or relevance in legitimacy accounting theories. This literature review presented several controversies and debates regarding TFV represented and represented not a social contract among the accounting profession. 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