The paper "Corporate Social Responsibility by the US Tobacco Companies" is a good example of a business case study. In the modern age, business corporations operate continually in more open and dynamic systems as consumers become more and more enlightened on their rights. There is pressure from different societal forces to influence businesses actions as a top executive and managerial decisions are being scrutinised for their impact on the greater society. In this essay, I will discuss three Corporate Social Responsibility (CSR) perspectives; the narrow classical view, the social-economic view and broad maximal view.
I will apply the concepts in understanding the United States (US) government institutions and cigarette companies’ management decisions regarding tobacco products safety, social welfare and need for business productivity. I will also apply Kew Garden Principles (KGP) in the evaluation of the social-economic and the broad maximal view of CSR. Corporate social responsibility (CSR) can be defined as the "economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time" (Carroll and Buchholtz 2003, p. 36). This implies that organizations have a vast array of heterogeneous obligations i. e.
pursuing their shareholders’ profits motivations alongside the moral, ethical, and philanthropic responsibilities to the society (Schwartz, 2011; Simon, 1997, Wood, 1991 & Cochran, 1984). CSR upholds a process that integrates business strategies, social welfare, ethical human rights and consumer concerns into business operations. The core objective is to perpetuate positive impacts through goods and services that are beneficial to society and the enterprises leading to overall usability, satisfaction, and happiness (Schofield, 2006). Milton Friedman is the father of the narrow classical economic view. He argued that “ managers” are employees primarily obliged to create optimal wealth for their employers (Friedman, 1970; Simon, 1997: 64).
Classical view disapproves corporations’ obligations to society. Milton argued that business investments are economic institutions with the aim of increasing financial returns and the provision of goods and services. However, he stated that corporations have to act within the law and ethically approved standards (Robbins, Bergman, Stagg and Coulter, 2003: 136). According to the classical view, management’ s only social responsibility is to create optimal returns on their investment. (Robbins, S et al.
2006, p. 161). The U. S cigarette companies adopt classical-economic ideologies to maximize profits for business growth and economic productivity. The companies are optimizing their profit margins with the belief that social issues should be addressed by other institutions (Friedman, 1970; Friedman, 1962; Simon, 1997). However, they engage in lawlessness and unethical business practices which is a violation of the classical view. According to Friedman’ s agent-principal argument, the “ managers” are agents of the owners of the corporations (Friedman, 1970; Friedman, 1962; Simon, 1997). Therefore, they should act in the best interests of their principals’ desires i. e.
increasing revenues. From the case, the management does not use corporate recourses to pursue philanthropic social obligations because it is illegal and could be termed as stealing from their principles. Following Friedman’ s tax argument, the management’ s use of corporations’ profits for CSR obligations would be imposing costs on the shareholders without their consent. This would be engaging in an unjustified form of taxation without fair representation and that is contrary to the principles of democratic governance. From free society argument, tobacco companies’ adoption of other CSR other than profits maximization would impose controls on stakeholders without their consent.
The concept of a free society is based on maximizing unanimity in the market and minimizing conformity. The tobacco companies’ adoption of CSR obligations would inhibit opportunities for market mechanisms to actualize the principles of unanimity. Suppressing the principle of unanimity and adopting conformity would violate the foundations of a free society. As a result, we see the managers pursuing optimal profits for the shareholders and boycotting many social responsibilities.
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