Corporate Social Responsibility in the Marketplace

Topics: Corporate social responsibility, Social responsibility, Business ethics Pages: 10 (3112 words) Published: October 18, 2008
In understanding the subject of social responsibility in business, there are many varying views and theories presented. The argument, at the extremes, is one that is purely economic in nature and the other that requires corporation’s responsibility to society. Today society demands social responsiveness of businesses in the marketplace. A businesses’ failure to act socially or ethically responsible, in some cases, could form the foundation for its own peril. My paper attempts to define social responsibility, discuss views and theories, and provide case examples where businesses respond to situations in the global marketplace. The argument that corporation’s responsibility to shareholders to maximize profits as a sole objective is no longer acceptable by society. The purely economic view of the issue will not suffice. Businesses will always seek to maximize profits, but companies are increasingly aware that organizational values and social responsiveness play to the very heart of their goals in the pursuit of profits.

“What does it mean for a corporation to be socially responsible? The concept is described by many terms. It has been called, “profit making only”, “going beyond profit making”, “voluntary activities”, “concern for the broader social system”, and “social responsiveness”. “Most focused attention is on the two extremes. On one side, there is the classical-or purely economic view, and on the other side, there is the socioeconomic position” (Robbins/Coulter 100). First, we will explore four theories of social responsibility. The four legal theories surrounding the issue are maximizing profits, moral minimum, stakeholder interest, and corporate citizenship.

Maximizing profits is the traditional or classic view. This view is concerned with maximizing profits for shareholders. “This view, which dominated the nineteenth century, holds that the interests of other constituencies, (e.g., employees, suppliers, residents of communities) are not important in of themselves” (Cheeseman 156). “The classical view says that management’s only social responsibility is to maximize profits. Milton Friedman an economist and Nobel laureate, argues that a manager’s primary responsibility is to operate the business in the best interests of the stockholders. Stockholders are interested in a single concern-financial return on investment. He also argues that whenever managers spend organization resources on “social good” they are adding to the cost of doing business. These costs must be passed on to customers through higher prices or absorbed by the stockholders through lower profits. Friedman is not saying that organizations should not be socially responsible; he thinks they should, but only to the extent to maximize profits” (Robbins/Coulter 100).

“The Moral Minimum argues that a corporation’s duty is to make profits while avoiding harm to others. They believe that as long as a business avoids or corrects the social injury it causes, it has met its duty of social responsibility. For instance, a corporation that pollutes the waters and then compensates those who it injures has met its moral minimum duty of social responsibility. The legislative and judicial branches of government have established laws that enforce the moral minimum. For example, occupational safety laws establish minimum safety standards to protect employees from injuries in the workplace”, (Cheeseman 158).

“The stakeholder interest theory of social responsibility holds that corporations must consider the effects, its actions, has on other stakeholders (employees, suppliers, customers, and the local community”. For example, in the decision to close a plant, certain stakeholders may benefit (stockholders and creditors) while others would not (current employees and local community). This theory is criticized because it is difficult to please so many varying interests and concerns” (Cheeseman 158-59).

“Businesses are owned by their...

Cited: Cheeseman, Henry R., Business Law, Legal, E-Commerce, Ethical, and International Environments, Upper Saddle River, New Jersey; Pearson 2006, 155-160.
Robbins, Stephen P, and Mary Coulter, Management, Upper Saddle River, New Jersey; Pearson 2005, 100-106.
Baker, Mallen, “Arguments against Corporate Social Responsibility” Mallen Baker .net 22 April 2006
Nieuwlands, Hans, “Heeding the call: more and more, stakeholders are demanding that corporations live up to their social responsibilities and institute practices that value people, communities, and the environment.”, Internal Auditor, August 2003 Issue,
Ostas, Daniel T., “Cooperate, comply, or evade? A corporate executive 's social responsibilities with regard to law”, American Business Law Journal, Summer 2004 Issue,
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