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Why corporate social responsibility important
Ethical issues in business
Business ethics chapter 7
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Corporate social responsibility involves business practices with initiatives that benefit society.
The company has an economic and legal responsibilities, which are required, ethical responsibility, which is expected, and a philanthropic responsibility, which is desired.
The arguments for it are that corporations increase long-term profits by operating with a CSR perspective. Also, pro action is sometimes better than reaction. This means that if businesses proactively participate in CSR and have it as a part of their core values, there would be less negative reaction from the public, and therefore better reputation and goodwill. The public supports CSR greatly. There are principles that are beyond the maximization of profits for shareholders.
The economic model states that the only goal of businesses is to maximize profits for the shareholders. The business is not equipped to work with social activities, and they limit its ability to be competitive in a global marketplace. The argument against CSR is that it questions the profit maximization for businesses. Critics argue that CSR distracts businesses from their economic role. Milton Friedman argued that markets should work on their own, and CSR makes markets not sufficient enough and as a result good competition suffers. One of the examples is Walmart and their low prices strategies. The company is aggressive with its suppliers, competitors, and even local municipalities when negotiating tax and financial incentives. These strategies help company maintain their low prices, and therefore satisfy customers. The company has been committed to obeying the law in all of its strategies, and they have been maximizing the shareholders profits within the law. According to Friedman, this company would be socially responsible corporation. Its corporate strategy has achieved several ethical objectives. Society benefits when the company offers a range of products with low prices, the company outsources its services to the most efficient supplier, and attracts more investors. Overall, society benefits from the company’s profit
There are three main responsibilities for a company to cover under social responsibility environmental, social and economical. When social and economical responsibilities overlap it helps create an equitable company. When environmental and economical responsibilities overlap it creates a viable company. When social and environmental overlap it creates a bearable company. But when all three are combined it creates a sustainable company that incorporates all three outcomes of overlapping
Governmental CSR policies are beneficial for consumers and organizations. Consumers are protected from abuse when organizations adhere to policies set forth by the government. The government has passed laws and created regulations as a guide for organizations to follow for the protection of the environment.
Corporate Social Responsibility is the obligation from corporations to utilize their resources to aid and benefit the larger society. The four components of CSR are economic, legal, ethical, and philanthropic. Social Responsibility is a fundamental force in the wealth creation process. If correctly demonstrated, CSR should heighten competitiveness and boost the value of wealth creation to society. A company's CSR Initiatives directly represent who the company is and what it believes it. The m...
Today’s 21st century has brought forth many changes, both positive and negative, as well as, an extremely diverse society whose different needs and wants must be met. Therefore, in an attempt to sustain a balance and comprehend today’s challenges, society as well as, businesses tend to adopt and incorporate certain methods, systems, and theories. As a matter of fact, in the past, the Milton Friedman’s theory of corporate social responsibility was adopted and very influential (Friedman, 1962). The Milton Friedman’s theory stated that the obligation of a business was to maximize its profits, and that business executives had a responsibility to their shareholders rather than to the greater good of society (Friedman, 1962). However, since things and people have evolved throughout the years, the perception of Milton Friedman’s theory has been impacted. Therefore, in this paper, one will further discuss the Milton Friedman Goal of the Firm, its relevancy as it applies to apprehending the purpose of a business in society, and whether or not the government or society portrays a role in expanding the Friedman discussion.
...a way “ ‘you can do well and do good’ ” (Harbin and Humphrey 3), make money with an intent to do something good with it for yourself and others. The CSR strategy allows companies to brand themselves around an issue people truly care about and are willing to pay the extra money to support a corporation that supports the same message. The environment and sustainable living are important issues for the people of today’s future. Companies have an opportunity to take the stance and popularize the cause, to make it a trend among consumers. For example, Breast Cancer was a cause highly commercialized by several companies through Susan G. Komen and the movement has made great gains since then. Recently a Walgreens built a store powered entirely by renewable resources, like solar power and wind energy. The store is providing many opportunities for the community to go green.
Milton Friedman’s view is that in a capitalist economy, there is one and only one responsibility of business: to use its resources and engage in activities designed to increase its profits. Business does not have a social responsibility to promote desirable social ends. A corporation is an artificial person. The corporate executive is the agent of the individuals who own the business and their main responsibility is to them. The directors of companies have a fiduciary responsibility to act in the best interest of the shareholders. The managers are agents of the shareholders and therefore have a moral obligation to manage the firm in the interest of the shareholders, which obviously is to make as much money as possible and maximize shareholder wealth. The shareholders are the owners of the organization and therefore the profits belong to them. In conclusion, Friedman believes that business is to maximize profits. He suggested a healthy corporation has to be not only ethically good, but also being economically good. Overall, as he stated in the article, business must gain profit without break the rules of game (D. Murphy, Class Lecture, January 17, 2014)
To supply the wants and needs of a consumer, society entrusts wealth-producing resources to the business enterprise.” (Santayana, George. Is The Tyranny Of Shareholder Value Finally Ending? So before we go into greater detail on the different perspectives related to social responsibility, one might question the meaning of social responsibility. It is generally agreed that social responsibility is defined as the business obligation to make decisions that benefit society.... ...
An organization’s Corporate Social Responsibility (CSR) drives them to look out for the different interests of society. Most business corporations undertake responsibility for the impact of their organizational pursuits and various activities on their customers, employees, shareholders, communities and the environment. With the high volume of general competition between different companies and organizations in varied fields, CSR has become a morally imperative commitment, more than one enforced by the law. Most organizations in the modern world willingly try to improve the general well-being of not only their employees, but also their families and the society as a whole.
According to Mike Peng, Corporate Social Responsibility (CSR) is the consideration and response to issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social benefits along with traditional economic gains the firm seeks. CSR is a way in which a company seeks to achieve a balance between profit, environmental concerns and social imperatives. This is known as the ‘Triple-Botto...
In recent years, companies are becoming socially responsible and now stakeholders almost expect a company to have CSR policies. Therefore, in twentieth century, corporate social responsibility (CSR) became an important development in public life (Barnett, ND).Corporate social responsibility is defined as “the ways in which an organisation exceeds the minimum obligations to stakeholders specified through regulation and corporate governance” (Johnson, Schools and Whittington, N.D cited in March, 2012). Stakeholders can be defined as “those individuals or groups who depend on the organisation to fulfil their own goals and on whom, in turn, the organisation depends” (Johnson, Schools and Whittington, N.D cited in March, 2012). There are many purposes for this essay, the first purpose is to descried the key principles of corporate social responsibility and explain their importance for stakeholders. Secondly, is to show how far this company follows those principles in order to be accountable to at least three of its stakeholders. In this essay, three stakeholders, environment, customers and employees will be evaluated respectively and the key principles of the stakeholders will be examined.
Although there are some arguments against social responsibility, more of organizations take action on social responsibility. The best interest of business organizations is social responsibilities, that would be benefit in the long run of company, can bring more profit, and benefit to the human and the environment.
CSR is the obligation of business to promote and to protect the interest of shareholders.
While the concept of an individual having responsibility is commonly recognized, modern views have lead to the emerging issue of corporate responsibility. Business Directory.com defines corporate social responsibility as, “A company’s sense of responsibility towards the community and environment (both ecological and social) in which it operates. Companies express this citizenship (1) through their waste and pollution reduction processes, (2) by contributing educational and social programs, and (3) by earning adequate returns on the employed resources.” But such a concept has been much disputed since at least the 1970’s.
A company has an economic obligation. It must earn a favorable return for its stockholders in the restrictions of the law. But, corporate social responsibility means that organizations have also ethical and societal responsibilities that go past their economic responsibilities. CSR needs organizations to develop their documentations of their responsibilities to include other stakeholders such as workers, customers, suppliers, local societies, state governments, international organizations, etc. Ethics could be seen as a fundamental component of individual and group activities at the heart of organizations’ errands.
CSR and Corporate governance initiatives are good for communities, because they help elevate the community and they bring growth to the communities. CSR does reach their aims and their need. Like the Kids in Parks initiatives by Pick n Pay, they help the young generation to break out of the cycle of poverty. And CSR is good because it helps promote the image and goodwill of the business: Pick n pay is a perfect example.