Corporate Social Responsibility (Management)

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For my purpose here, I would like to examine the case for which the two views of Corporate Social Responsibility (CSR) are positioned in. One of these viewpoints is that CSR is practiced ethically in businesses simply because it is the right thing to do, through being moral and just by following a Values-based management system. The other perspective on CSR is that it is simply a ‘do-gooder’ ploy, and that it is only practiced within firms to impress society and those around them. For the duration of the following essay, both viewpoints will be discussed and analysed to then predict which view is more valid, acceptable, and realistic in today’s society.

In order to do this, we first need to expand upon the interpretation of what managing for sustainability means in this context. Often viewed as a new management tool, sustainability recognises that while “corporate growth and profitability are important, it also requires the organisation to pursue societal goals, specifically those relating to sustainable development – environmental protection, social justice and equity, and economic development.” (Wilson, 2003 p.1) In other words, an organisation cannot hope to achieve long term prosperity for all of its stakeholders without recognising that it is operating within a society which will scrutinise and judge it upon its moral and social actions. Wilcox (2007, p.2.7) takes this further in the notes by highlighting that all organisations are embedded in societies and communities.

So from this information, is it simply expected from businesses to act socially just, through it becoming a social norm of recent?, or is it just that because so many firms practicing this to ‘do-gooder’ ploy to look good, that now all businesses are practicing it as well? There are two specific opposing views of Social Responsibility; known as the Classical View and the Socioeconomic View.

The ‘Classical View’ sees that a businesses’ one and only social responsibility is to itself, to maximise its profits. The ideologist that supports this is theorist Milton Friedman. Although he does think businesses should be socially responsible, he does not believe that it is the core role for businesses to abide by. Instead, he argues that the main reason for a businesses’ operation to exist is for the return on investment for the shareholders of a particular business. He also argued that businesses should not spend their own money on attempting to be socially responsible, as that only causes money to be taken from dividends (leaving shareholders with a smaller portion of the initial return) or the money coming from consumers paying extra due to the higher price of their product. In brief, he asserts that “the only responsibility businesses have towards society is to pursue the interests of the owners of the business – the shareholders”. (Quoted in Wilcox, 2007 p.2.11). Whilst other advocates of this school manipulate some of the contentious statements adhered to by Milton, I personally find this line of thought to be antiquated by today’s standards. What worked in business even twenty years ago, will no longer stand up to the intense scrutinisation of the media, and the messages that it can now convey to many of the primary and secondary stakeholders involved.

The ‘Socioeconomic View’ explores the theory that a businesses’ role is to not only maximise profits, but to focus on convalescing society’s welfare as well. It argues that a businesses’ CSR is to not only shareholders through maximising profits for them, but also to the society as a whole. An example of this would be James Hardie Industries. They did not fulfil their CSR duties during a major scandal during the majority of the 20th century, involving past employees attempting to sue the company. This is due to the business attempting to escape compensation claims made by previous builders for the company, who had worked with products that have exposure to Asbestos, a...
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