The Drucker Difference
Peter Drucker differed with most of those who thought and wrote about the social responsibility of organizations. Here are five of his corollaries to corporate social responsibility. 1. Government cannot solve many social problems
2. The corporate mission comes first
3. There is an unlimited liability clause
4. There are unique ethics of social responsibility
5. There are opportunities for competitive advantage in fulfilling social responsibility Government Can’t Do It
Drucker analyzed the issue and found increasing disenchantment with government’s ability to successfully initiate or successfully implement social programs. Although government coordinates 4-H Club activities in the U.S. today, it was a businessman, Julius Rosenwald at Sears Roebuck, who initiated and developed this concept. Drucker noted: “There is now no developed country — whether free enterprise or communist — in which people still expect government programs to succeed.” He gave a number of reasons for an increasing failure of government to assume responsibilities for social problems and to be successful in achieving worthwhile results. However, the overriding reason for Drucker’s belief was that government, by necessity, served too many constituencies. This made it extremely difficult, if not impossible, to set specific goals and objectives, since powerful constituencies had different goals, and different values. Frequently their goals and objectives were mutually exclusive and without agreed goals and objectives, any social program was hopeless from the start.
Corporate Mission First
If the effort to achieve a positive benefit resulted in harm to the organization initiating it, this is not socially responsible, regardless of good intentions. According to Drucker, the organization’s first responsibility must always be to its own mission regardless of other factors. The first “social responsibility” of the business is to make a profit sufficient to cover operational costs in the future. The logic in this is that if the organization failed in its own goals because of misallocation of time, resources, or personnel in attempting to fulfill a particular social responsibility, not only would it be prevented from solving any particular social problem, or future social problems, but would fail society in the organization’s mission and waste society’s resources. Once the organization failed in its primary mission, there was no need for it and it would go out of existence. So if this basic “social responsibility” of fulfilling the organization’s purpose is not met, no other “social responsibility” can be met either.
Unfortunately advocates for various causes frequently demand and pressure organizations to resolve social issues or solve social problems which are totally outside the organization’s area of expertise or ability to comply. These demands are made even though the actions desired by these groups, if adopted, would hurt the organization of which the demand is made and in some instances, society as well. Failing to take the action desired, these organizations are sometimes termed “greedy” or “unethical” or worse.
Drucker recognized that while non-governmental organizations must assume responsibilities for solving social problems, they must above all do nothing which would impede their own capacity to perform their obligations which are the rationale for the organization’s existence.
The Unlimited Liability Clause