Corporate Social Responsibility as a matter of necessity or choice.
Corporate Social Responsibility is a long standing practice in the world of business and economics. Its inception can be traced back to the year 1953 when Howard Cowen, an American economist loosely referred to as the father of CSR, introduced this concept in his publication titled Social Responsibilities of the Businessman. Since then, the term has been further researched and different theories have been coined to further explain this concept with the vivid examples brought out by the varying opinions expressed by Milton Friedman and Lynn .A. Stout. Corporate Social Responsibility not just as a legal requirement but also as a fundamental ethical tool that embraces the ideals and principles of beneficence (do good), nonmaleficence (do not harm), autonomy (control by the individual), and justice (fairness) stated by Beauchamp and Childress(Jan 1, 2013)
Milton Friedman, in his paper “The Social Responsibility of Business is to Increase its Profits” (1970) describes CSR using the Utilitarian theory where the core purpose is profit maximization.In this case,any project that is undertaken by the corporation, whether to serve the well being of the society or to participate in the frantic efforts to lower carbon emissions and reduce pollution without any form of wealth creation or increment in profit making is thought to be absurd.
Lynn .A. Stout on the other hand proposes an alternative approach referred to a Satisficing, introduced by the economist Herman Simon where corporations are advised to pursue different objectives simultaneously without having to focus only on wealth creation. As such the corporation is still able to make profits while at the same time focus on sustenance.
Corporate Social Responsibility should not only encompass profitability as emphasized by Milton Friedman but also legal and ethical requirements to both the environment and the society that is directly or indirectly affected by its operations. As such, two fundamental principles that are in play would encompass both the profitability and ethical responsibilities of a corporation include;
Deontology where decisions are made based on ethical considerations as a mark of social duty. The second principle is the Triple Bottom Line theory where corporate leaders are expected to tabulate bottom-line results not only in economic terms (costs versus revenue) but also in terms of company effects in the social realm, and with respect to the environment.
A major focus should be taken on sustainability. This ranges from; Economic sustainability where the corporation makes plans for future growth unlike maintaining stock prices as proposed by Milton that is highly volatile and majorly short lived.
Social sustainability in which the corporation empowers its employees and other stakeholders including shareholders or the sole proprietor, workers, suppliers and its customers or any potential customers. This may involve setting up schools, housing units for employees or a functioning clinic for health needs thereby lowering health allowance that further profits the company. Environmental sustainability where both the exploitation of resources is not only under the legal requirements but should make further effort to decrease waste production as well as take part in tree planting initiatives and communal clean up initiatives.
In the short term, such initiatives may require capital injection especially with the social and environmental sustenance. Building schools and equipping hospitals, setting aside company land for tree planting exercises, team building and family fun days for the workers. All these activities may provide a challenge to execute especially during such hard financial times globally with the COVID-19 pandemic.
However, studies that have conducted show that there is an increase in both productivity amongst the employees and in profitability in the long term since such initiatives also tend to attract a more qualified pool of potential employees that may enhance further efficiency for the firm. It also fosters loyalty not only amongst employees but also the surrounding community as well as creditors and suppliers at large while also endearing the business to its loyal customers and serving as an advertising tool for future customers.
Since its inception, CSR has faced a lot of challenges and skepticism from the business community however, with proper legislation and adoption of legal standards, the benefits of a well-managed and executed CSR plan are a treasure to behold within the society that a business operates in without necessarily having to sacrifice profits. This way asocial practices have been put in check with the introduction of laws that seek to protect both the environment and the wellbeing of the people at large.
Works Cited
Chonko, Larry. Ethical Theories. The University of Texas at Arlington.
“Three Theories of Corporate Social Responsibility”. Business Ethics, February 17, 2012, https://2012books.lardbucket.org/books/business-ethics/s17-02-three-theories-of-corporate-so.html. Accessed April 9 2020.
CORPORATE SOCIAL RESPONSIBILITY AND ITS ROLE IN COMMUNITY
Ismail, Maimunah. Development: An International Perspective.
https://www.thomasnet.com/insights/history-of-corporate-social-responsibility/
4-19-2013. Accessed April 9 2020.
Stout, Lynn A. The Shareholder Value Myth. Cornell Law School.
Friedman, Milton. The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine, September 13, 1970. Accessed April 9 2020.
Beauchamp, T.L. & Childress, J. F. (2013). Principles of Biomedical Ethics. Oxford University Press.