Independent Article Report:
“Why Companies Can No Longer Afford to Ignore Their Social Responsibilities” Theme of the Article
Over the years, the perspective of corporate social responsibility has evolved in Corporate America. Today, many businesses have made promises to contribute to current social problems, such as the environment and labor standards. Companies are now looking at corporate social responsibility as a sustainability tactic that can benefit their overall market value. Companies that do not pay attention to their social and ethical responsibilities are more likely to be shunned by consumers and other stakeholders as well as “stumble into legal troubles, such as mass corruption or accounting fraud scandals” (Wharton 1). In simple terms, it is nearly impossible for businesses to get away with ignoring the social and ethical standards that they need to go by.
The article also points out that many businesses do not have separate corporate social responsibility departments because they use corporate social responsibility by “closely relating social causes to their core businesses” (Wharton 2). One example given was the Coca-Cola Company and how they created the “5x20 Program.” The objective of this program is to bring five million women into Coca-Cola’s business by the year 2020 as local distributors and bottlers of Coca-Cola products. The whole point of this program is to not only empower “young women entrepreneurs,” but to also “increase revenues and more workers for business” (Wharton 2). Another example is Visa. They have organized partnerships with nonprofit organizations and local governments that are financially focused. This gives people in the developing world a way to finance themselves through electronic and mobile payments, using Visa’s services. While this benefits people in the developing world, it also benefits Visa by increasing the amount of users of its services. For both Coca-Cola and Visa, the article uses a quoted phrase from C.K. Prahalad, saying that “these corporate social responsibility efforts seek to capitalize on ‘the fortune at the bottom of the pyramid’” (Wharton 2).
Another view that the article touches on is the approach to corporate social responsibility that other companies are taking on, which is cost-saving. As a result, corporate social responsibility practitioners in these companies serve as “internal consultants providing counsel to colleagues…” as well as “helping other departments understand the financial rewards of more sustainable operations” (Wharton 3). Relationship to Business Ethics
This article relates almost directly to business ethics, because corporate social responsibility is one of the main factors when looking into ethical standards of businesses. The article clearly touches on a lot of things that are happening currently in businesses regarding the reflection of society on the perception of business operations. Many companies are changing their business strategies based on corporate social responsibility and now have more of a sense of what exactly their social and ethical responsibilities are. The article is mainly explaining that not only are companies starting to be more assertive with corporate social responsibility; they cannot afford not to. Investing in businesses that do not address their social responsibility is more risky than investing in businesses that do, so this can affect the market share of these companies. What is interesting, though, is how the corporate social responsibility of businesses is essentially crucial towards their overall existence. In the long run, if a company ignores its social responsibility, the company could result in failure. However, the result would have been different back in earlier decades, as the general perspective of corporate social responsibility barely existed.
The Theories of Business Ethics Mentioned
The article brings out some theories that are also explained in...
References: Knowledge@Wharton. (2012, May 28). Why Companies Can No Longer Afford to Ignore Their Social Responsibilities. TIME Magazine.
Schnietz, K. E., & Epstein, M. J. (2005). Exploring the Financial Value of a Reputation for Corporate Social Responsibility During a Crisis. Corporate Reputation Review Vol. 7, 327- 331.
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