Classical Economic And Socio Economic Essay

Classical Economic And Socio Economic Essay

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It can be seen that classical economic and socio-economic have a different focus. The school of thoughts might seem contradictory to each other. However, Friedman principle may also be aligned with socio-economic view to a certain extent due to market for virtue and competitive advantage (Orlitzky, 2015; Sandoval, 2015).

The “Market for virtue” may exist if society as a whole works as the main driver of Corporate Responsibility (CR). Support from society is presumed to encourage business to conduct in CR manner (Carroll and Shabana, 2010). As the public or market supports the CR, Friedman and Smith’s invisible hand may agree in conducting business responsibly by taking market for virtue as reasoning (Orlitzky, 2015). Furthermore, support from society towards CR allows company to explore an alternative business opportunities (Calabrese et al., 2013) and to gain further competitive advantage (Porter and Kramer, 2007). As society becomes more aware of and supportive to corporate CR, the market for virtue view of CR may exists.

Despite of corruption and nepotism in Indonesia (Alatas, 1999; Shauki, 2011), society in Indonesia is generally in favor of CR. The data of society’s response towards CR can be seen by the data collected by Environics International derived from Millennium Poll of community attitudes to CR. It is found that society in Indonesia supports CR. The result shows 35 percent of them mention that CR is important in today’s era society and demand that Indonesian company could set a higher standard of ethics in order to help building a better place to live in terms of society (Reiley, 2001; Aditjondro, 2001). Compared to the western country, number of Indonesia’s society who wanted a better ethics in building a better p...


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... “free” business conducts which set the foundation of critiques against the classical view. Hence, moral minimum of socio-economic view was introduced to minimize the harms. It could be seen in Indonesia, there had been many cases showing damage caused by business which can be potentially minimized by corporate responsibility (CR).

The existence of “market for virtue” plays a big role in society in Indonesia. As the society began to favor CR, classical view began to agree with socio-economic view. This is due to benefit given by complying with CR in Indonesia. However, there had been many misconceptions due to corruption and nepotism mingling in Indonesia’s business. As CR had been underrated, the drive of complying CR is not maximized by a mere drive from “market for virtue”. Hence, the government of Indonesia worked as interferer by erecting laws and regulations. 

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