Corporate Social Responsibilities
1. Introduction
Social responsibility of business has been a subject of intense controversy and interest over the past four decades (Jamali 2008). The purpose of this paper is to critically analyze the two different views of social responsibility of business among scholars and business practitioners. The first is the shareholders view of Milton Friedman and another one is the stakeholder view of Bob Dudley, Group Chief Executive of BP Corporation. I will outline key arguments and point out drawbacks of the two perspectives to clarify the underlying principles of business responsibility to society in theory and practice. These analyses will facilitate my recommendation of a mixture model of the two theories so that business not only obtain profits but also maintain sustainability development in the long term.
2. Review of the literature
2.1. Defining
The academic literature has highlighted the lack of consensus and the prevailing confusion in defining social responsibility of business (Ramachandran 2010). Levitt (1958,) in his article ‘The Danger of Social Responsibility’, emphasized that social issues are the function of government, not job of business. Until between 1960s and 1970s, this period witnessed a significant expansion of academic interest in literature of corporate social responsibility. The theory was discussed and examined in depth, which lead to many debates on business managerial implications as well as introduction of related concepts of business ethics (Kakabadse et al. 2005). The literature has been presented in various ways from the narrow economic perspective of maximizing shareholders’ wealth (Friedman 1970) or economic, legal and ethical aspect of responsibility (Carroll 1979) to a wider stakeholder perspective which involves other parties such as suppliers, customers and employees besides company shareholders (Freeman 1984). In the past ten years, social responsibility of business has been considered long term development of
Social responsibility of business has been a subject of intense controversy and interest over the past four decades (Jamali 2008). The purpose of this paper is to critically analyze the two different views of social responsibility of business among scholars and business practitioners. The first is the shareholders view of Milton Friedman and another one is the stakeholder view of Bob Dudley, Group Chief Executive of BP Corporation. I will outline key arguments and point out drawbacks of the two perspectives to clarify the underlying principles of business responsibility to society in theory and practice. These analyses will facilitate my recommendation of a mixture model of the two theories so that business not only obtain profits but also maintain sustainability development in the long term.
2. Review of the literature
2.1. Defining
The academic literature has highlighted the lack of consensus and the prevailing confusion in defining social responsibility of business (Ramachandran 2010). Levitt (1958,) in his article ‘The Danger of Social Responsibility’, emphasized that social issues are the function of government, not job of business. Until between 1960s and 1970s, this period witnessed a significant expansion of academic interest in literature of corporate social responsibility. The theory was discussed and examined in depth, which lead to many debates on business managerial implications as well as introduction of related concepts of business ethics (Kakabadse et al. 2005). The literature has been presented in various ways from the narrow economic perspective of maximizing shareholders’ wealth (Friedman 1970) or economic, legal and ethical aspect of responsibility (Carroll 1979) to a wider stakeholder perspective which involves other parties such as suppliers, customers and employees besides company shareholders (Freeman 1984). In the past ten years, social responsibility of business has been considered long term development of