Approaches to Corporate Social Responsibility - Coursework Example

Approaches to Corporate Social Responsibility Name Instructor’s name Course Date Table of Contents Table of Contents 2 Thesis statement 3 Introduction 3 Approaches to corporate social responsibility 4 The classical economic approach 4 The socioeconomic approach 5 Broad social approach 7 Conclusion 8 References 9 Approaches to Corporate Social Responsibility Thesis statement This paper examines the increased need for CSR. It will also focus on the different managerial approaches applied in CSR. The relation between these viewpoints and other social governing principles of ethics will also be established to ascertain the relevance of CSR to the particular ethical issues. This paper will use a case study to illustrate the application or lack thereof of the implementation of CSR. The case study used is of tobacco companies whose products have detrimental effect on the society. The management of the companies conspired to suppress information on their products so as to maximize profits. The dilemma therefore exists in the importance of staying economically relevant and implementing a responsible advertising strategy (Driver, 2006). Introduction Corporate social responsibility has become a mandatory aspect of many public institutions. In all sectors of business it has become important to boost the company’s image by portraying some sense of responsibly for the business activity on the society. McWillians & Siegel (2001) say that companies have turned from mere compliance with laws to following the dedication to codes of conduct and social sponsoring. Corporate responsibility has paradoxical support from the public authorities. This support is paradoxical in its dimension to challenge the regulation and arbitral role of the state (Kotler & Lee 2004). Alvesson & Berg (1992), note that Companies that implement CSR whether for business or normative cases face many challenges in formulation and implementation. These are particularly concentrated in determining the company’s social obligation. Carroll (1991), notes that the main characteristic of CSR is the obligation the corporation has to the stakeholders who are affected by it policies and practices. Studies by Trevino & Weaver (1994) have indicated a positive relationship between corporations CSR the overall performance. Socially sensitive companies have a positive image and therefore improve share value (Alvesson & Berg, 1992). The three dimensions of managerial strategies towards CSR are the classical or traditional approach, the socioeconomic approach and the broad social approach. The classical view stipulates that the company has no moral obligation to the stakeholders. The main objective of businesses is to make profit oblivious of the effect of their action on the society. This is a relatively utilitarian perspective as it maximizes on the achievement of a goal and nothing else. The two social viewpoints are the inverse of the classical. In this dimension, the business has obligation and responsibility to the society. These approaches stipulate that the management social responsibility is economic, legal, ethical and philanthropic (Hartman, 2004). Approaches to corporate social responsibility The classical economic approach Friedman (1970) indicated in his article that businesses have no moral obligation to its staff or the society. All responsibility for the two groups lies with the state. According to Hetzel (2007), the implementation of CSR is viewed to be subversive and incompatible with the doctrines of a liberal society. According to the classical view the tobacco companies are only responsible to their shareholders. The classic view is indicative of the managers stand point for the tobacco companies. The managers were motivated by increase in profitability of their companies and did not care what that implied for the customers (Reinartz, & Kumar 2002). Worse still, they use manipulative strategies by employing stakeholders of the health sector to promote their businesses. According to the economic theory, if demand of a commodity is high then the supply should also be high to meet the demand. This is never naturally the case and therefore businesses have to apply good marketing strategies (Santos, & Boote 2003). By marketing the use of tobacco, these companies were merely creating the demand for their products. Increasing the demand these companies created immense wealth for the agents who are part of the companies. For classical enthusiast, social responsibility is only justified if the action performed has some beneficial effect to the company. This implies that if by taking part in the social responsible endeavor the company could enjoy reduced taxation, more profitability or better access to resources then the CSR will be justified for that instance (Moore, 2001). The classic point of view is not only unethical for the society, Friedman’s view is outdated and cannot be applied not only for its ethical deficiencies but for its negative impact on competition too (Laidler, 2005). It is almost impossible to apply in a world where businesses are networked and have interrelated activities. According to Porter, & Kramer (2002), the twentieth century business scenario has a greater level of interdependence. This therefore means that independent drive towards shareholder gratification is a failing strategy as businesses have to consider the interest of all stakeholders (Lawrence & Weber, 2008). According to Simpson, & Kohers, (2002), ethics advocate can easily demean the reputation for businesses that do not apply the proper CSR procedures and lead to the downfall of a company. The dilemma for managers lies in the application of the egoistic or the altruistic principles of ethics. The socioeconomic approach The socioeconomic view is that businesses responsibility goes beyond the profit making endeavors. Businesses therefore have a wider perspective of responsibility which encompasses the social welfare. Socioeconomic responsibility is further enhanced by the relational responsibility as postulated by Wilson (2005). This is when a company adopts the socioeconomic view with the purpose of promoting the welfare of the society which is affected by its operations. The tobacco companies failed to meet or were in complete disregard of the necessary social responsibility. They did not protect the welfare of the society and to make matters worse, even used media advertisements to increase the sale of a product that is dangerous to the society. The companies failed to correct harm that is caused by their activities and therefore failed not only in the philanthropic CSR but also in ethical CSR. This falls under the boundaries of causal responsibility which dictates that if someone causes something to happen they are responsible for the consequences. Causal responsibility however does not lie solely on the companies; the responsibility to protect from harm is shared between the company and the society (Solomon 1994). In an investigation of the civic or general duties of the managers to determine the extent of social responsibility implied in their action, it is found that the managers have failed the societal expectation (Barnett & Salomon 2003). The general duties are cemented to the social contract that people have with each other. They include the undocumented expectation that managers are not to harm, and if possible, to do good to the society. According to professional ethics, the managers have ethical obligations because the society has granted them the privileges of high income and high social status. The managers of the tobacco companies abused these privileges by meeting in seclusion from the society and devising mischievous plans to increase their profitability while knowingly causing harm to the society. The professional reciprocity of societal ethics dictates that the managers should bear the burden of accountability for their action. Broad social approach Here the company seeks to benefit groups that are out of their particular area of interest. The businesses get involved in social activism despite the fact that they have no negative effects on the society; they are still involved in philanthropic activities (Prahalad, 2004). The tobacco companies failed to meet either of the two alternatives of social responsibility. They were only motivated by the economic demand by the shareholders for more financial benefits. Social activism is also aimed at increasing company’s responsibility for alleviation of unethical issues in the society even if they have not directly caused them. This is suggested by the altruistic dimension of CSR which stipulate there should be a humanitarian organizational sacrifice for the welfare of the society. This implies that the tobacco companies were responsible for elimination of societal welfare deficiencies of drug and alcohol abuse. Unfortunately, in so doing the managers could have minimized the profitability of their own company. However, the passive stance chosen by the managers is excusable as the ultraistic responsibility of the companies is not a mandatory obligation. It is an alleged role for social ethical obligation and therefore does not have to be done. If the companies could have opted to act in a philanthropic manner, they would have increased their share value, demonstrated their corporate competencies and helped in solving social problems (Porter & Kramer, 2002). Examinations by Bowie & Dunfee (2002) on altruistic CSR have concluded that companies have the social obligation to tell the truth in their advertisements. This will involve giving the good and the bad side of the products being marketed. This argument supports the ethical CSR and tries to enhance how companies protect people from social injuries. In consideration of the above fact, this case of the tobacco companies using wrong information in their advertisements is an unethical act. To further complicate the matter, the adverts were manipulative in their use of doctors to reinforce the suitability of smoking habit. Conclusion It is irrefutable that CSR is rewarding for both the society and the business corporations. The responsibility towards ethical uprightness is the minimum level of social responsibility that corporations owe the society. By rejecting to comply with the socioeconomic perspective, the tobacco companies opted for compartmentalization and delineation that comes with the classical approach. A company has to maintain profitability and still meet its social obligation. Profitability here is implied as being instrumental for survival of the companies in the market place and is not an intrinsic goal. However it should be noted that the main purpose of businesses is to maximize profits. Classical enthusiasts hold the opinion that the business should ensure profitability of all its actions with little regard to social welfare. Socioeconomic on the other hand are determined to ensure the protection of the society from the actions of the companies. This involves disclosure of credible information about the ethical implication of products in advertisements. It also involves other company’s measures to ensure that none of their actions cause any harm to the society. In the broad perspective of CSR, the companies have the humanitarian responsibility of ensuring social wellbeing (Fisher & Lovell, 2006). This is a philanthropic opinion of how managers should uphold societal moral uprightness. However, this altruistic view has negative impact on the profitability of companies. Many shareholders say that if the management is interested in spending on philanthropic ethical issues, then the managers should spend their own money. References Alvesson, I.M. and Berg, P.O. (1992) Corporate Culture and Organisational Symbolism: an Overview, De Gruyter, Berlin. Barnett, M. L., and Salomon, R. M. (2003). ‘Throwing a Curve at Socially Responsible Investing Research’. Organization & Environment, 16(3): 381–9. Bowie, N. E., andDunfee, T.W. (2002). ‘Confronting Morality in Markets’. Journal of Business Ethics, 38(4): 381–93. Carroll A.B. 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