Critically evaluate how and to what extent should management recognise corporate social responsibility extending beyond the boundaries of the organisation
Corporate Social Responsibility (CSR) is a wide ranging area of study. All companies have-
“Economic, social, ethical and environmental responsibilities, some of which require compliance with the law others requiring discretionary action to ensure that the company does not knowingly operate to the detriment of society” – McIntosh et al, 1998, Pg. 284
Social responsibility is an organisations responsibility towards those who are directly and indirectly affected by its activities. This means that firms don’t just have a responsibility and accountability to shareholders but society also.
In theory, society is built on a number of common social values and beliefs upheld by the majority. If society grants existence and protection to organisations they must be seen to ‘aligning their business operations with social values’.
There are 5 views of business ethics which are relevant to the case for and against CSR. The first view works off the rule that ‘Business is Business’ where only purely commercial aims are relevant, anything else comes second. This advocates Friedman’s view (illustrated overleaf) that the prime “responsibility of business is exclusively to maximise profit for shareholders”- McIntosh et al, 1998, Pg. xi.
Freidman’s Efficincy Perspective of Ethics
Shareholders Hurt Shareholders Benefit
The next two views are that the firm act consistently with the law and that good ethics means good business- this is the approach that appears to be taken by most businesses. The final two are based on morality- conventional reality being the morality of the moment and what is acceptable now, conventional wisdom cannot always be trusted or deemed relevant(e.g. Friedman’s view). Universal morality is doing what you believe to be the right thing, this offers a general view of making ethical decisions- but that’s what ethics is. There is no right or wrong, as long as you are confident in your judgment and its consequences you should be making the right decision. Judgements can be made using two ethical themes Kantianism and Consequentialism. Kantianism considers decisions in terms of society, would all be able to survive it everybody acted this way? Consequentialism is to do with outcome, based on the all the different possible consequences of actions and pick the one of ‘greatest good to the greatest number’.
But who is responsible and do firms really have to operate in such an ethical way unless it is enforced by the law? The dilemma is faced by management and has become a very ‘live’ issue in the past decade. Hawkins states- “Ethical conduct is a requirement for all businesses, respecting the rights of others in all spheres of operations. In the long term, operating in an ethical manner is a crucial part of maintaining relationships, with customers, suppliers, investors , employees and the wider community” -Hawkins, 2006, Pg. 76 -A plethora of stakeholders all of which have the potential to ‘make or break’ business.
The management of an organisation has to establish its position in ethical management and adapt this to suit their organisation in the form of a code of practice and using various policies and models.
McIntosh et al set out company approaches to social responsibility as a continuum towards full citizenship- •
Minimalist- compliance with legislation.
Discretionary- Philanthropy/ charitable giving
Strategic- Citizenship integrated in to business
Many firms have begun to adopt the Strategic approach in a climate of growing importance and emphasis towards CSR. One of the main reasons to account for the growing importance of ethical behaviour by...
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