Freeman's Stakeholder Theory Of Corporate Social Responsibility

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Corporate social responsibility has changed over the years, which causes organisations to adapt to ensure that the company is able to prosper. Corporate social responsibility refers to the company’s long-term view; proactivity and attaining more informed knowledge. Altruism is the unselfish concern for the welfare of others, the stakeholders in the company. Corporate social responsibility is an important concept understood by many businesses, be it small and medium enterprises or large and multinational organisations. Therefore, majority of organisations do not undertake corporate social responsibility initiatives primarily for altruistic reasons. This will be explained with reference to Friedman’s shareholder theory, Freeman’s stakeholder…show more content…
Many organisations have come to understand both theories and over time have adapted to using Freeman’s stakeholder theory. However, according to Sen and Cowley (2012), it is known that stakeholder theorists neither oppose Friedman’s idea of profit maximisation, nor defend the opinion that managers only have ethical obligations towards shareholders. These two theories are adopted differently according to the organisation. This is to ensure that whichever theory the organisation obeys, it will allow for the company to benefit instead of lose out to other…show more content…
These companies would follow Freeman’s stakeholder theory. Njite, Hancer, and Slevitch (2011) believed that leaders have the power to influence the workers’ attitudes and the ability to create a work and social climate to increase morale (cited by Rodríguez Bolívar, Garde Sánchez & López Hernández, 2014). Being altruistic is being able to be concerned about the welfare of everyone in the organisation and ensuring that they will be able to give back to the community. Freeman’s theory emphasizes on surpassing profit maximisation and focusing on what benefits stakeholders, not only shareholders (Lindorff and Peck, 2010). The Economist Intelligence Unit (2005) states that companies which emphasise on corporate social responsibility are known to have healthier long-term financial
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