Professor: Dr. Marie Gould
June 18, 2011
In a 1970 Times Magazine article, economist Milton Friedman argued that businesses’ sole purpose is to generate profit for shareholders. Friedman maintained that companies that chose to adopt “responsible” attitudes would be faced with more binding constraints than companies that did not take a socially responsible position, rendering them less competitive. Unfortunately, not everyone accepted Friedman’s view on social responsibility. In 1979, Quaker Oats president, Kenneth Mason stated, “Friedman’s profits-are-everything philosophy are a dreary and demeaning view of the role of business and business leaders in our society. Making a profit is no more the purpose of a corporation than getting enough to eat is the purpose of life. Getting enough to eat is a requirement of life; life’s purpose…likewise with business and profit (Makower, 2006).” The purpose of this paper is to weigh the pros and cons of social responsibility in today’s global economy.
Corporate Responsibility Defined
Corporate Responsibility is a manager’s or corporation’s duty or obligation to make decisions that nurture, protect, enhance, and promote the welfare and well-being of stakeholders and society as a whole (Jones, G., 2010, pg. 200). Stakeholders are important in reference to corporate social responsibility because stakeholders are people who have an interest, claim, or stake in an organization, in what it does, and how well it performs. It can easily be said that social responsibility is the “do the right thing” of business. There are four different approaches that corporations can take in reference to social responsibility:
- Obstructionist Approach where managers choose not to behave in a socially responsible manner. As a result, they behave unethically and illegally and do everything in their ability to prevent outsiders and stakeholders and other organizations from finding out about their behavior (Jones, G., 2010). Prior to the enforcement by the Surgeon General of the United States, cigarettes manufacturers, i.e., Philip Morris, took an obstructionist approach. Cigarette manufacturers had full knowledge that the nicotine in cigarettes was harmful to the lungs and refrained from informing the public.
- Defensive approach is when managers and corporations have at least a commitment to ethical behavior. When managers take a defensive approach to social responsibility, they ensure that they abide by all laws; but, they make not attempt to exercise social responsibility beyond they legal requirements. In the defensive approach managers also ensure that their employees behave ethically and do not harm others. Yet, these same managers always put the claims and interest of the stakeholders first—even if it is at the expense of other stakeholders (Jones, G., 2010, pg. 201). Again, the cigarette manufacturers are a good example of taking a defensive approach. After it was mandated that the public be warned (legal requirement), the cigarette manufacturers placed the following warning: Warning: smoking causes lung cancer, heart disease, emphysema, and may complicate pregnancy. The manufacturers at this point had met the legal requirement; but, absolutely did nothing else, i.e., setting up a fund for patients with lung cancer or funding programs to prevent teen smoking.
- Accommodative approach is basically the acknowledgement of the need to support social responsibility. Managers using this approach realize that the organization should act in a socially responsible manner and should behave legally and ethically. The accommodative manager does his best to balance the interest of different stakeholders against one another in order to insure the claims of stakeholders and seen in relation to the claims of other stakeholders (Jones, G., 2011, pg. 202). In these...