There were arguments that obligation of business is to maximize long term profit for shareholders in a sustainable way, while others call them to involve more to social responses. Each judgment has its own reasons which this research sought to analyze. Based on that, certain social obligations of business will be addressed with evidences, showing their necessary of being more responsible to social outcomes.
Key words: corporate social obligation, shareholders, corporate profit, social responsibility
There has been a long debate on the role of business in society. Some people agreed with argument of: “The social obligation of business is to sustainably maximize long-term profits for shareholders. Nothing more. Nothing less” . However, others judge: “Business has a key role to play in combating issue like climate change, since the traditional response of many environmentalists and governments (namely, to encourage behavioral and attitudinal change amongst the general population) is not enough in itself to ultimately produce desired environmental outcomes” . Different judgments have their own reasons based on appropriate grounds. My view is that business should ensure long term profit and stable operation while promote applying CSR practices into their daily operation for better performance. Companies today are confronting intense pressures to address social concerns and it is undeniable that socially irresponsible businesses may lose their competitive advantage .
Corporate Social Responsibility (CSR)
Since 1920s, the concept of Corporate Social Responsibility (CSR) started to be discussed. However, due to the Great Depression economics and World War II, business leaders did not discuss about it seriously until the 1950s. The definition of Corporate Social Responsibility (CSR) varies between businesses and possibly changes at certain time points, depending on their visions and goals. There are so many definition for CSR. However, the most general definition for it is that “CSR is about how companies manage the business processes to produce an overall positive impact on society” .
CSR now a day has been a popular term in different businesses. However, it seems corporations pay more attentions to these activities than those of small and medium size, who usually blame that they do not have time and money to follow these “luxury” practices. In all effort, the UN Global Compact guideline on ISO 260000 had been developed to help enterprises of all sizes to globally approach and practice CSR strategies. CSR application is not required by law, while business profits and social obligations are always difficult choices for management, CSR strategies are most of time considered for implementation, as the business trend is to contribute good thing and more responsible to society. We will analyze each situation in the next paragraphs, to understand better on why sometimes it is hard making decision.
Corporate Social Responsible OR corporate profit?
It is argued that social obligation or social responsibility was defined as the obligation of business to meet its economic and legal responsibilities and no more . This viewpoint is based on the notion that business organizations were set up with aims to provide goods and services to society, and enterprise were operated primary on profit motive. Many scholars agreed upon this point of view, including Milton Friedman (1970), as mentioned in his article in the New York Times Magazine . This belief has been maintained for many years not only by Friedman but also other business executives and scholars. It is true that the primary social obligation/social responsibility of a business is to bring benefits to its owners and shareholders who invest a significant amount of money there. Consequently, fulfilling the economic responsibility is the initial obligation of a business, it should also obey the laws and...
Please join StudyMode to read the full document