Corporate Social Responsibility

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Introduction
Corporate social responsibility (CSR) is concerned with the relationship between the corporate sector and society, and focuses on particularly good corporate citizenship. The World Business Council for Sustainable Development defines Corporate Social Responsibility as the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large. Increased visibility of corporate actions, customers’ perceptions of companies and their consequent purchasing behaviors are fundamentally changing. Due to the significant financial impact for businesses, CSR is no longer viewed as just a regulatory or discretionary cost, but an investment that brings financial returns. There are two main views in relation to CSR that explain how a corporation should act and what they should be accountable for. The narrow view of corporate social responsibility places profit making at its forefront and the ability to deliver to its stakeholders. This view suggests profits first then the following other responsibilities should follow: to abide by societal expectations and ethical principles, to meet legal standards and to indulge in discretionary charitable actions (Carroll, 1979). The broad view of CSR places emphasis first and foremost on the responsibility of business to support individual managers to make socially responsible decisions, followed by the imperatives of conforming to ethical behaviors and obeying the law, and lastly, making a profit. As Wood states, "It is of no importance at all whether a particular business remains competitive or not. Businesses that cannot remain competitive while fulfilling legal, ethical, and discretionary social responsibilities should not be in business at all." The importance of a broad view approach to CSR will be argued in favor of and I will show how a sustainable future will result from such a view.

Corporate Social Responsibility
CSR is not an entirely new issue, but one that can be traced back from the turn of the century. From about the early 1930s through to the 1960s, social responsibility started to become an important issue not only for business but also in the theory and practice of law, politics and economics. In the early 1930s, Merrick Dodd of Harvard Law School and Adolf Berle of Columbia Law School debated the question “For whom are corporate managers trustees?” Dodd argued that corporations served a social purpose, as well as a profit-making function. This debate simmered for the next 50 years, according to Gary von Stange (Hopkins 2004), before it once again sprang into prominence in the1980s in the wake of the “feeding frenzy atmosphere of numerous hostile takeovers”. This concern for the social responsibility of business has even accelerated since the fall of the Berlin Wall, which symbolized the collapse of communism and the onset of rapid globalization. This broad view has found its place in today’s large corporations and is firmly integrated into the way they are run.

Narrow vs. Broad view: Which way to go?

Corporations may be seen as essentially private activity for the purpose and benefit of those private citizens who own them (Shaw 2009). Friedman forcefully argued that business has no social responsibilities other than to maximize profits. Friedman argued that social issues are not the concern of the corporate world and that these problems should be resolved by the unfettered workings of the free market system. Furthermore, this view holds that, if the free market cannot solve the social problems, it falls not upon business, but upon government and legislation to do the job (Caroll, 1979). A second objection to CSR has been that business is not equipped to handle social activities.

What are the benefits to society when business increase profits? Business has resources at their disposal to participate in...
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