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VIEWS AGAINST THE NEOCLASSICAL ECONOMICAL SHAREHOLDER APPROACH

SWAPNA NANDHAKUMAR
G20613641

INTRODUCTION

Corporate Social Responsibility (CSR), defined as “the broad array of strategies and operating practices that a company develops in its effects to deal with and create relationships with it numerous stakeholders and the natural environment” (Waddock, 2004). Globalization and liberalization has reinforced with the introduction of corporate social responsibility, Developing countries need to focus more about the corporate social responsibility planning and implementation process (Kiran and Sharma, 2011). Corporate social responsibility is one of the most important issues and developments of 21st century as the organization in 21st century faces problems for which corporate social responsibility is an answer (Horrigan, 2010). Davies (1973) says social responsibility starts when the law ends. Any organization is not socially responsible if it simply complies with the minimum requirement of law, as this is what any good citizen would do.

Milton Friedman argues that people responsible for decision and action in business should not exercise social responsibility in their capacity as company executives. Instead, they should concentrate on increasing the profits of their companies (Mulligan, 1986). Friedman (1970) the one and only social responsibility of business is to use its resources and involve in activities focused to increase its profit as long as it stays with in the rules of the game, which is to say engages in open and free competition without deception or fraud.

This essay focuses on the views against the neoclassical economical stakeholders approach which states profit is the sole social responsibility of any business in comparison with Kellogg’s corporate social responsibility and also discussing the views and theories supporting corporate social responsibility.

CORPORATE SOCIAL RESPONSIBILITY

The concept of corporate social responsibility is considered to be a powerful way of achieving sustainable competitive profit and for achieving long term value for the investors, shareholders and stakeholders. Entrepreneur can consider corporate social responsibility as a win-win strategy or opportunity for business, financial investors and society. Accomplishment of proper corporate social responsibility practices can affect the perception of stakeholder’s customers, investors, local communities, environmental groups, government, suppliers and competitors (Kiran and Sharma, 2011). Organization should arrange its corporate social responsibility goals and decision making with the companies goal and strategy that makes corporate social responsibility natural as customer’s perspective (Maon et al., 2008).

A number of companies identify corporate social responsibility practices to its main strategy and the policy of the company based on the importance give to a) defining a plan for social action, b) intensity of investment in social programs, c) commitments of employees, d) perceived impact of social action on competitive position and e) measuring outcomes of programs (Husted et al., 2007). Previous research has shown that corporate social responsibility enables a firm to appeal to the socio-cultural norms of its institutional surroundings and contributes to its socio legitimacy (Handelman and Arnold 1999; Palazzo and Scherer 2006; Scott 1987). The moral and ethical case of corporate social responsibility has been described the “pure” case for business acting responsibly; it is the right thing to do as a member of the society (Osuji, 2011). Institutional corporate social responsibility helps to create strong relationship with stakeholders, a positive corporate image and goodwill.

Shaw (1988) there are some principles that are considered to serve direction and coherence into corporate social policy a) need - the increase in responsibility even when it has been caused by...
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