Social Responsibility in Business

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In examining the mission statements of multiple companies, it is apparent that corporations claim to prioritize social responsibility. Companies like Whole Foods, Ben &Jerry’s, Camano Island Coffee Roasters all actively contribute to different social causes. Even Philip Morris prioritizes “actively [participating] in societal concerns that are relevant to [its] businesses” over generating returns for its stockholders (Philip Morris, 2011). There are many different views on the extent to which corporations should be involved in societal concerns. The three most prominent are the stockholder theory, the concept of social business, and the stakeholder theory. Of these, the stakeholder theory is the most appropriate. Because corporations are considered to be individuals within our society, they bear a certain amount of responsibility to their fellow citizens, so it is not enough for them to act only in the interest of their stockholders. However, corporations are entitled to earn profits, and therefore cannot be expected to act as purely social businesses. Consequently, businesses must look for a happy medium within the stakeholder theory, acting in the interests of the stockholders, customers, employees and civil society. Milton Friedman, a major proponent of the stockholder theory, argues that beyond legal compliance, “the social responsibility of business is to increase its profits,” meaning corporations hold responsibilities only to their shareholders and the law (Friedman, 1970). One of the main points he addresses is the fact that when a company manager spends the company’s money on a social cause, he/she takes away from the maximum possible returns to the stockholders. In addition to taking from the stockholders, the price of the product may rise, taking away from the consumer, or wages might fall, taking away from the employees. Because of this, the manager “is in effect imposing taxes, on the one hand, and deciding how the tax proceeds shall be spent, on the other” (Friedman, 1970). Friedman claims taxes are the responsibility of the government and giving the corporation’s money to a social cause is a form of taxation without representation. This would be the case if the manager were merely donating the funds to a cause of his/her choosing. However, Camano Island Coffee Roasters (CICR) supports its own industry by ensuring that they participate in Fair Trade. In addition to participating in Fair Trade, CICR helps the coffee farmers by making sure they own the land they work, as well as helping to keep their children well nourished (Gunter, 2007). By helping the farmers from whom CICR buys its coffee, it ensures that it can use “the top 1% of the available coffee market” (Gunter, 2007). As a result of its acts of altruism, Camano Island Coffee Roasters has been able to ensure a top quality product and consequently has been a very successful corporation. Friedman’s theory is also similar to the “trickle-down” theory. He believes that by maximizing profits, corporations will help the less fortunate by providing better goods and services as well as higher wages. However, like the “trickle-down” theory, the result is the CEOs of corporations make millions of dollars, whereas the lower level employees barely make enough to survive. Ben and Jerry’s is a perfect example of a company that does not abide by Friedman’s philosophy, and yet has been extraordinarily successful. They manage to provide the highest quality product possible, in addition to paying their employees what they call “living wage,” making sure the lowest paid employees are still making well above the minimum wage (LEDA article). For Ben and Jerry’s, the tax, as Friedman would call it, is taken from the highest paid employees of the company. An article reviewing Ben and Jerry’s business ethics says: “Consistent with [their mission for social responsibility], the highest paid employees of Ben & Jerry's would not earn more than...
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