corporate social responsiblity and new zealnd business
The concept of corporate social responsibility has been developed rapidly in last century. Milton Friedman, the famous Noble Prize-winning economist, who indicated that the corporation’s social responsibility is to maximize profit which has addressed a heated debate about corporate social responsibility in last forty decades. This article is going to discuss different positions toward Friedman’s theory and whether it is suitable for New Zealand firms or not.
The most important points on CSR has found in Friedman’s article is that a business’s responsibility is to get as much profit as possible without against the law and ethic custom (Friedman, 1970). There are several arguments about CSR which support Friedman’s points. First, manager’ obligation is to expend shareholders or owners wealthy thus he is representative of shareholders and owners. That is to say, Shareholders and owners should take control of their possession which is considered as their ethical right as they invested the business. The ethical right creates responsibility of directors of their organization which is to maintain and increase shareholders’ wealthy. It is irresponsible if manger spends shareholders’ money without their permission. But if the manager spends money in a way that shareholders would have spent it, he imposes tax. Second, when firms are trying to focus on their own interests, they can eventually lead to the best interests to whole society. “Lacking profit for extended periods, a firm’s funds (and funding sources) can dry up very quickly, leaving the firm unable to conduct business.”(Ahlstrom as cited in Globerman, 2011, p. 512). When companies lack of money to do business, lack of money to employ people, how could they contribute to society. It intelligibly describes Friedman’s position. Thirdly, government officials should make social decisions instead of directors who work for an enterprise. For example, considering air pollution, training those people who have lost their jobs. Needless to say, managers and directors can give their money to charity as individuals, like Bill Gates (Schwartz & Saiia, 2012).
In contrast, there is another theory which is opposite with Friedman’s position has been developed in several business and society field (Schwartz & Saiia, 2012). Above all, societal expectations for firms have increased since 1970 as the relationship and the position of business in society has evolved (Schwartz & Saiia, 2012, p. 13). Firms must consider their decisions which affect their shareholders and owners as firms are allowed to have similar rights to citizens. Those negative effects which are caused by firms’ action such as pollution and oil spills can’t be fixed only by paying taxes. In today’s society, firms have ability to contribute toward social problems and can’t be replaced by government. Ahlstrom believes that good firms supply far more than just profits for their owners, they bring innovations to the markets, which in turn provide economic growth, employment and significant improvements to people’s lives (2010, p. 11). Many studies indicate that economic growth largely and rapidly in recent decades because of disruptive technology. Disruptive technology makes notable growth in manufacturing and provides products and services which are cheaper, of high quality and more convenient to customs. In past centuries, disruptive innovation has created millions of jobs and increased living standards. For example, the uncomplicated computing artifacts increased the number of new users of computers both in developed and developing markets which created by the innovation of microcomputer. Those products satisfy human needs and also bring huge revenue to companies. As for those social problems, can’t be fixed without those firms. For instance, the worst impact caused by the growth of economic is global warming. Although increasing of taxation may help to decrease...
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