Corporate Social Responsibility - Essay Example

o work towards the fulfilment of its own interests in total disregard of the individuals whom it is representing, and in such a situation it is possible that the principal is the one most likely to suffer (Crane & Matten, 2003, p.42). In this way, it is possible for the principal–agent problem to take place, leading to the ruining of relationships which were meant to be mutually beneficial. The fact that the agent works towards the achievement of its own goals to the total detriment of the entity represented by it creates a situation where it is impossible for such entities to trust agents to handle their affairs.

In this way, the agent is given the power to represent the interests of the principal, and instead of doing so, it chooses to undertake activities which not only ensure that it gains a lot from the activities, but that the interests of the principal suffer as a result. Corporate social responsibility comes about mainly because of the instances of conflict that are a part of the inconsistencies that occur between the profitability and social goals. The result is that many companies have to work towards the attainment of profits while at the same time ensuring that they act responsibly towards their employees as well as the societies that are affected by their activities.

A case study conducted on Levi Strauss shows that this company makes sure that the working conditions and wages among the workers throughout its supply chain is reasonable (McWilliams & Siegel, 2001). In this way, the company is able not only to achieve the legal requirements of the countries within which it works, but it also ensures that it takes ethical responsibility over its actions as well as its employees. While this may be the case, there have been instances where because of the massive profit margins within these companies, many of their chief executives have gone out of their way to ensure that they gain huge salary increments.

In such cases, these executive officers are often