Business Organization Shareholders vs Social Responsibility

Topics: Social responsibility, Corporate social responsibility, Company Pages: 6 (2089 words) Published: June 9, 2015
In this essay, I am going to prove that a business organization should be socially responsible in a successful or an effective manner which will eventually benefit the company’s owners or shareholders. I will do so through illustrating the different potential effects of a business organization engaging in Corporate Social Responsibility (“CSR”). The effects that will be shown in this essay would be an increase and decrease in the company’s expenses, sustaining and harming the environment, increase and decrease in sales and customers, improve the lives of people inside and outside the company, and the practice of social irresponsibility. I will also be providing actual companies engage in CSR, and its effects on each company. I will be citing several companies such as Petite Four Legs, Panga Organics, Verdigris Group, Cisco, British Petroleum, DLA Piper, PepsiCo, and Enron. All of these companies engage in some kind of social responsibility and may or may not have a positive effect on them.

Business Organization Shareholders vs. Social Responsibility A business organization is owned by shareholders or owners. They supply the capital or money for the organization. The money will then be used to create goods or services that will be sold to reach goal of the business which is to enhance the entity’s profits and the gains of the owners or shareholders (Magaro, 2010). Being socially responsible is beneficial to the shareholders or owners of a business. This is because social responsibility is being ethical and sensitive towards cultural, economic, environmental and social issues (Enevoldson, 2014). For a business organization to practice being socially responsible, they engage in Corporate Social Responsibility (‘CSR’). It means that the ‘business does more for the well-being of others than required in an economical and legal sense’ (van de Lingen, 2011). This will eventually create profit for the company. Therefore, a business organization should be socially responsible which will benefit its owners or shareholders. Business organizations can do several activities when they engage in CSR. Some example are protecting the environment, and more conscious toward people inside and outside the company in an ethical or sensitive way. These actions may either be beneficial to the company or not. Organizations that practice CSR can preserve and sustain the environment. A way that companies can do this is through switching to more eco-friendly products or packaging. An illustration of this is Petit Four Legs, a Seattle-based maker of high-end pet treats. They switched from regular cellophane bags to compostable cellophane packaging. This switch increased the packaging cost by 30 percent (Barrett, 2011) which shows that switching to a more eco-friendly product or packaging can increase the company’s expenses creating a short-term negative cash flow (Lemon et al, 2011). In addition to that, the company did not increase it selling price and was said to be ‘eating the extra cost’ because they did not want to raise the prices until more people start to buy their product (Barrett, 2011). However, if the company is making it known to their future customers that they are implementing CSR and they are getting recognition for that, then there would be more people who would be interested in buying the products or services of the business. This is because many customers now are not only looking at the price and quality of the product or service being sold, but they also look at how the business will use the profits made and if it will make a ‘positive impact on the world around them’ (Fallon, 2014). An example of the illustration above is Panga Organics – a Colorado-based maker of skin care products. They changed the packaging of their soap products. It now uses recycled newspapers and seeds to create biodegradable carton which you can plant wherein a flower or herb can sprout. Within the first year of...

References: Barrett, A., 2011, ‘Should you switch to green packaging?’ INC., viewed on 9 August 2014,
Belsky, G
Enevoldson, N. 2014, ‘What is social responsibility? ’, How to become a social entrepreneur, OptimizePress 2.0, viewed 17 July, 2014,
Fallon, N
Lemon, K. et al., 2011, ‘Measuring the effects of corporate social responsibility,’ vol. 3, no. 7, p. 1, viewed on 5 August 2014, <>
Magaro, M
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