The Impossibility And Importance Of CSR - Case Study Example

The Impossibility And Importance Of CSR CSR is also known as Corporate Social Responsibility. Basically, it is when the business “gives” back to the society. There are many problems associated with CSR, mostly pointed out by critics, but the most important accusation is that the CSR is impossible, a conflict of interest. Many critics point that out but the most famous one is Milton Friedman. Corporate Social Responsibility is a voluntary initiative by the corporation. It is when the business sector makes and engages community programs that will eventually benefit the community. CSR is like the “human” part of the business, and it is supposed to lead the company into having a better company image, better company productivity, better employee satisfaction and better community relationship. CSR also happens when a corporation’s business operations (as in the company’s policies and actions) are integrated with social values, specifically the stakeholders’ interests. Usually it focuses on three things: the social, the financial and the environmental facets of the corporation’s interactions. It actually has a triple bottomline: people, planet and profit. CSR involves two main concepts: transparency and accountability. To be accountable is not only to become accountable in terms of the corporation. It also means to be accountable in terms of to its personnel. They have to have the right wages, incentives and working conditions. Of course, they should also be accountable in terms of protecting the culture, environment and the economy of the community. Thus, the corporations of today are expected to perform well not only in financial and management areas but also on areas like business ethics, corporate contributions, community development, diversity, human rights and other workplace issues. With CSR, every company’s environmental and social performances are proportional with their financial performance. As mentioned earlier, transparency is important. Now, corporations are expected to communicate their thrusts, projects and policies that affect their employees, as well as the community and the environment. Current global companies that show transparency are proven to be more financially successful as these factors contribute immensely for a sustainable financial growth. Currently, the investors are now making significant efforts to curb their carbon footprints to enhance their positive impact to the community. These companies are more sensitive to the fact that their company can actually have an impact to the society, and that they are/can be actually socially accountable, as well as environmentally accountable. As an incentive, the stakeholders are rewarding the companies who are indeed making efforts to contribute to the society’s well-being. However, the biggest criticism comes from Milton Friedman, saying that CSR is a paradox and a complete irony, not to mention impossible. Milton Friedman is an American economist who was a recipient of the Nobel Memorial Prize for Economics for “his achievements in the field of consumption analysis, monetary history, and theory”. He thinks that corporations cannot have responsibilities as CSR entails that businesses have “social responsibilities”. As corporations are only artificial entities, logically, they also have artificial responsibilities but of course, even a business cannot have a responsibility. Sure, businesses are owned by responsible people, and corporations have business executives who have values. These business executives may take part in a social movement, perhaps join a medical mission to help those in need. They may have other responsibilities that they took on their own, like their family, their church or even their country. With these responsibilities that they have taken in, they also put in their own money (which they earned from working in the corporation). Because in these respects he is not working as an agent for the company, he is acting on his own social responsibility, not that of the business. These business executives are just employees of the business owners. These employees are only following the rules, the objectives and the goals of the corporation. Their major responsibility is to earn as much money for the company as much as possible because it’s a business, but with the CSR, make money as much as possible while conforming to the basic norms and rules of the society. Some corporations even make schools and hospitals to show their concern for the society, to show their values. Either way, their main loyalty is for the corporation, and to produce money for the corporation. What does it mean if the corporation has a social responsibility as a businessman? In some way or another, it is conflicting of the purposes of the business he represents. See, businesses main goal is to increase profit, right? So if a business is really for social responsibility, they might have to lower the prices of their commodities to prevent inflation, even if their main goal is to increase their wealth. Another point: when trying to be environmentally friendly, the corporation has to spend copious amounts of money just to be environmentally friendly. Lastly, if they are indeed trying to help the society by providing employment, why do not they hire everyone instead of those people who are qualified? This way, they provide solutions for unemployment. Looking at it closely, we can see that the business executive is spending the money of the stakeholders. Then the stakeholders are getting these loads of money from their customers. In short, the money that the corporations use for their own “social responsibility” efforts are from the people, the customers, not the business itself. So can a business have its own social responsibilities? Could they spend their stockholders’ and employees’ money for these social responsibilities? If he would indeed help the society by not contributing to the inflation rates, he would have to sabotage their company’s major goal because he would have to decrease their income. But then would that act, preventing the increase of commodity prices, have a positive effect on the society? Would not the economy collapse? Can the business sustain the demand for their products even if their prices remained low? Will the stockholder’s fire him because he directly disobeyed their own goal? Of course, it is understandable that the corporations uphold these social responsibilities. Not only that it enhances their image, it also sustains their business. But let us all realize that the business sector is not anchored on the business of doing good per se. Always think that business is business, and it’s main goal is to increase income and profit. The principle that unites the business sector is unanimity. If everyone holds a unanimous decision, whether it is moral or not, it works. There are no values that matter, there are no social responsibilities. All that matters is the shared values of the individuals behind the business itself. These values of the individuals will shape them into humans that know which responsibilities that they should undertake. They will make up a society with morally sound people, a society with a collection of socially responsible individuals. The bottom line is that the businesses have only one responsibility, and it may be social or not. Its major responsibility is to use their resources to increase their profits, with special tools designed to do just that. They just have to make sure that they are playing legally, which is to engage in open and free competition without fraud. Reference: Rowe, James. Corporate Social Responsibility as Business Strategy. Center for Global, International, and Regional Studies, University of California Sta. Cruz. (2005).Web. September 15, 2011. Read More