Key Aspects of Corporate Social Responsibility - Assignment Example

Evaluate the idea that “a companys resources devoted to some cause other than making a profit is outrageous Introduction and purpose: A corporationcomprises employees, stake holders and other entities that hold legal reputation in the society. It works to safeguard the interests of these shareholders through the revenues generated as a result of its functionality. Corporate social responsibility can be referred to as, “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction, with their stakeholders on a voluntary basis”. (Prieto-Carron, Lund-Thomesn, Chan, Muro & Bhushan, 2001). The theory of business ethics has gained much coverage in the media these days and various supporting and contradicting views about the implementation of this theory in the business are arising. Economists do not deny the existence of corporate social responsibility, but different economists define the responsibility differently. Some economists like Miltion Frideman criticize the idea saying that business is most responsible when it makes profit efficiently not when it misapplies its energy on social projects. (Frideman, 1970). On the other hand, Ralph Nader, defined responsibilities as inclusive of measures necessary to safeguard the interests of society. “It is hard to imagine the rise of the modern consumer movement without the leadership, resourcefulness, and sheer persistence of Ralph Nader”. (Bollier, 2010). Purpose: In this paper, I am going to write about the impact of incorporating the concept of Corporate Social Responsibility (CSR) into a corporation’s business and working system. The potential benefits of achieving the CSR through business ethics will be weighed against the financial losses incurred by the corporation and its share holders in way of fulfilling the CSR to evaluate the eligibility of CSR to be adopted in a corporation’s business. Is it unethical for businesses to not invest in CSR? The business ethic theory requires corporations to consider it their ethical responsibility to greatly look after the wellbeing of their employees, stakeholders and the society besides focusing on making profits. According to (Agalgatti and Krishna, 2007), there are basically two theories namely the Teleological theory which analyses the results to judge if an action was right or wrong, and the Deontological theory, which classifies duty as a moral category that is not influenced by results. They also noted that the discussion on business ethics is conducted on either or both of them. Basically the business ethic theory necessitates the consideration of social benefits beside making money. On the other hand, (Leave this line as it is please)----------------------------------------------------------- It is quite understood that no business is run to lose or even maintain money at the investment sum. Corporations assume a great responsibility of conducting business in such a manner that would generate revenue for those who invested in it, and the corporate resources should be utilized to ensure the same. Therefore, utilization of resources to achieve purposes other than what are of interest to the investors is a misuse of the corporate resources. All measures in favor of corporate social responsibility are taken on the cost of the investors’ profit, who expect the leaders to go as far as they can remaining within the legal boundaries and earn them profit. Accordingly, investing in additional measures in conformance to the corporate social responsibility is unethical in a sense that it would breach the investors’ trust and confidence in the corporation. Do businesses owe anything to society? Society and business are mutually beneficial, and require each other to safeguard their interests. Corporations provide us with facilities and products, not because of any other reason but because this earns them money. Besides, in the way of achieving their goals, businesses offer employment opportunities to the society. However, providing the society with employment opportunities is never the sole purpose of any company. Rather it is only a prerequisite for the attainment of their goals. Some critiques are of the view that layoffs and outsourcing is wrong and unethical for it does not favor the interests of individuals in the society. But they should realize that earning investors the profit is the fundamental goal of any corporation, and therefore, getting a company bankrupt with a no layoff policy is injustice to the investors and is accordingly unethical. Similarly, use of costly domestic sources to achieve the production would cost the investors more which is again unethical. This is neither good for the business nor the society because both are mutually linked. Does investing in Corporate Social Responsibility make a good sense for a business? Argument For CSR: Those who favor CSR claim that it boosts a company’s reputation and earns it good revenue. One way that CSR can help a company is by earning it good public relations which stand as an asset for the company. “The contemporary consumer is more aware of social, ethical and environmental issues. These issues are increasingly becoming a deciding factor on which products to buy”. (Massin, 2008). Good workers consider a company’s CSR record and analyse its public relations before choosing a certain company. Considering the vast spread emphasis from the government on the inculcation of CSR in the goals of a company, ambitious workers foresee a company fulfilling CSR as the one with a bright future, and therefore opt for the same in view of securing a safe future. A company with a good CSR record is likely to gain top level workers. Moreover, a company may find favorable alternatives for certain aspects in the way of considering CSR in its working. The company may explore new business opportunities to increase its sales and ultimately the profits. Besides, CSR can sometimes enhance a company’s efficiency and accordingly its production when the company struggles to modify its system in a way that would reduce the potential hazards and harms to the employees and the society. The resulting system may enchase the utilization of the corporation’s resources. For instance, a certain company may search for ways to recycle its products in view of reducing the environmental pollution. In this way, the company would not only work in favor of the society but also increase its own efficiency by utilization of the recycled products, and a reduction in the production and marketing cost. Last but not the least, corporations working in accordance with the CSR are rewarded by the government in the form of a tax-cutoff. Also, such companies gain political support that would gain the company more customers and is beneficial for the company in the long run. These points support the idea that investing in CSR would enhance the productivity and profits of a company. Arguments Against CSR: There are many arguments against the concept of CSR that think that profitability can only be judged on the basis of a company’s economic criteria. Friedman argued, “There is one and only social responsibility of business- to use its recourses and engage in activities designed to increase its profits”. (Friedman, 1970). As a result of this, the business will generate more profits that would enhance the business and bring more employment opportunities for the society to avail. Therefore, the profitability of the corporations would tend to serve the society by generating wealth and boosting the country’s economy. For instance, according to (Hodak, 2008), multinationals companies in China that had poor CSR record have actually helped China in poverty reduction through job creation more than the UN has done through various initiatives. Besides, this concept requires the company to work solely to safeguard the interests of the investors. As (Steve Milloy, 2008) claimed, “shareholders do not hire CEOs to be the UN, they were hired to make money for shareholders”. Thus, investing shareholders money in social causes deviates from the company’s primary purpose and is deceptive and irresponsible (Atkins, 2008). It is seldom criticized that CSR does not generate profits for the company. There is no doubt that a company’s performance is enhanced by investing in CSR, but (Vogel, 2008) argued that this is not the case. Consumers will make their decisions on price, quality and convenience not CSR. (Vogel, 2008) related it to the case of Exxon Mobile that had a bad environmental reputation, yet it made more profits than BP that had earned good public relations in the environment. Such practical examples cause the owners to rethink about the consequences and results of fulfilling CSR when they are starting a business. Conclusion: Concluding all what is said above, CSR is undoubtedly a very good approach toward serving the society but there are various important aspects that compliment the implementation of CSR in a business. Corporations should realize that investing in CSR is ultimately beneficial both for them and the society, but CSR should not be enforced as a legitimate requirement on the corporations. I personally am of the view that such a large emphasis on business ethics is a mere waste of time and money. Probably, this is happening in response to the criticism raised by well-known journals. However, business can influence the matter. If they consider it necessary to earn good public relations by working according to the CSR standards, the increased emphasis on business ethics will become permanent. Businesses can beat this theory by sticking to the sole purpose of making money, which is their true ethical responsibility towards themselves, their stakeholders and the society. References: Agalgatti, B. H. and Krishna, S., 2007. “Business ethics-concepts and practices”. Available at: http://books.google.com/books?id=WIkcJq5Y3t8C&pg=PA47&dq=business+ethics+theory&cd=4#v=onepage&q=business%20ethics%20theory&f=false. [Accessed 15 April, 2010]. Atkins, B., 2006, November 28. “Is Corporate Social Responsibility Responsible?” Forbes. Available at: http://www.forbes.com/2006/11/16/leadership-philanthropy-charity-lead-citizen-cx_ba_1128directorship.html. [Accessed 15 April, 2010]. Bollier, D., 2010. “Ralph Nader: Biographical Information.” Available at: http://www.nader.org/ecm.html. [Accessed 15 April, 2010]. Friedman, M., 1970, September 13. “The Social Responsibility of Business is to Increase its Profits.” The New York Times Magazine. Available at: http://www.ethicsinbusiness.net/case-studies/the-social-responsibility-of-business-is-to-increase-its-profits/. [Accessed 15 April, 2010]. Hodak, M., 2008, October 16. “The Best Planet Profits Can Provide.” Forbes. Available at: http://www.forbes.com/2008/10/16/capitalist-social-responsibility-lead-corprespons08-cx_mh_1016hodak.html. [Accessed 15 April, 2010]. Massin, 2008. “Csr: The Proverbial White Elephant?” Available at: http://www.oppapers.com/essays/Csr-Proverbial-White-Elephant/184332?topic. [Accessed 15 April, 2010]. Milloy, S., 2008. “CEOs on CSR”. Forbes. Available at: http://www.forbes.com/2008/10/16/ceos-csr-critics-lead-corprespons08-cx_tw_mk_kk_1016ceos.html. [Accessed 15 April, 2010]. Prieto-Carron, M., Lund-Thomsen, P., Chan, M., Muro, A., & Bhushan, C. 2006. “Critical Perspectives on CSR and development: what we know, what we don’t know, and what we need to know.” International Affairs, 82(5), 977-987. Vogel, D., 2008, October 16. “CSR Doesn’t Pay”. Forbes. Available at: http://www.forbes.com/leadership/2008/10/16/csr-doesnt-pay-lead-corprespons08-cx_dv_1016vogel.html. [Accessed 15 April, 2010]. Read More