The Social Responsibility of Business Is to Increase its Profits - Annotated Bibliography Example

Corporate Social Responsibility Name of student Tutor 22 Aug, 2011 Corporate Social Responsibility Mintzberg, H. (1986) "The Case for Corporate Social Responsibility", Journal of Business Strategy, 4 (2): 3 – 15 Abstract This article brings out the need for companies to practice CSR as an important undertaking towards the flourishing of both the economy and the society. Introduction CSR is an undertaking that every business should venture into both for their benefit and for that of the society. There are two forms of CSR: the purest form and the enlightened self-interest. The main questions are what should the driving force be towards companies being socially responsible and if social responsibility is really necessary. To answer this questions this paper explores on points for and against CSR using reviews and researches done. The evidence brought out in support of CSR depicts CSR’s important role in ensuring economic and societal success and the need for companies to engage in it. Literature review The relevant works to that of Mintzberg and that point out to his ideas include that of Friedman (1970), Elbing (1970), Sethi (1975), Levitt (1968) and Bowman (1978). The Sound Investment Theory argues that CSR is a good form of investment (Bowman, 1978). According to the theory, social behavior affects market prices of businesses’ stocks. This theory supports the need for businesses to engage in CSR for economic and social growth. This argument is in support of the performance of the self interest enlightened form of CSR. The major problem as identified by other authors is that though many of the arguments on self interest support CSR, they create a stronger case for other controls. This depicts CSR as a concept involving many contradicting and complex needs. The main questions evident in solving the identified problem are what should be the drive towards taking part in CSR? What effect does CSR has on specific corporations? And what determines necessary social responsibility? From the pure form of CSR as shown by Mintzberg, Sethi (1975) raises the concept of social responsiveness relating to the prevention of social problems. It is with the view that arguments for CSR in relation to self enlightened interest actions, that Mintzberg regards the purest form of CSR (driven by ethics) as being the sole key to sustainable CSR. Support for the arguments brought out has been through the use of previous works. The materials used are however not very convincing as many gaps and questions are evident. Contribution This paper illustrated the need for every company to adopt CSR as a key to promoting economic and social growth through supporting evidence and arguments for the same. By exploring on the pure and on the self enlightened interest forms of CSR, the paper has given supporting evidence for the view that the purest form of CSR is the only sure way of attaining social and economic success. The article has clearly explored the issues surrounding CSR and in turn created a base for assessing if CSR is a worth undertaking and what the key drive towards it should be. Conclusion The findings obtained have helped in deeply analyzing the CSR concept and through the evidence and arguments for and against CSR as brought out in the article, a basis has been created through which a decision can be made on what should be the real motive behind taking part in CSR: whether for the benefit of the company or for ethical reasons. Mintzberg in this article concludes that despite the many debates in opposition towards corporation’s involvement in CSR, it is an important move which all companies should b e seeking to get involved in if the economy and society were to flourish. In terms of what should be the drive towards companies’ involvement in CSR, the article maintains that the purest form of CSR is the only sure way through which sustainable social responsibility will be attained. Future research is necessary to evidently support the view by Mintzberg calling for companies to adopt the pure form of CSR. Critique The greatest argument against the views brought out by Mintzberg in relation to CSR, is that from Friedman who is of the opinion that the only social responsibility by companies is for increased profit gain for the company and not merely for the benefit of the society (Friedman, 1970). According to Friedman, businesses should ensure that their actions aim at increasing profits but be in accordance with set out rules. In support of Mintzberg and in opposition to Friedman, Simon et al. (1983) points out Friedman’s failure to consider the moral or ethical minimum that acting for economic gain is likely to cause harmful effects on the society. Heilborner (1980) further support this by saying that pure maximization of profits is highly likely to cause social irresponsibility. The evidence brought out by the various authors can be said to stand up mainly as a result of the deep and thorough analysis that has been done in support of their presented claims making their concepts easy to point out and understand. In my own opinion, Mintzberg’s view on social responsibility is highly questionable and though some businesses may practice CSR on the basis of ethics, it does not necessarily mean that ethics is the main reason behind their actions. The author only assumes that a business will plan for any of their social undertakings without putting into consideration the expected outcome or benefit on their part and that they will act as a noble gesture and nothing else. This is in the real sense an unlikely move for any business. The testimonials given by companies awarded for being the most ethical are perfect examples of just how companies will practice CSR with the claim of ethics but have a business motive in mind. A good example is the testimonial given by the CEO at FPL group, Lew Hay. He said, “As the No. 1 renewable energy company from wind and solar power in North America, we take our commitment to corporate responsibility with the utmost seriousness. We believe good corporate behavior will lead to good business results, and our track record proves it.” (Lew Hay, CEO, FPL Group). Another testimonial from ECOLAB stated that, “In view of today’s business climate, our inclusion in this outstanding group is particularly meaningful and underscores the importance of developing a strong ethical culture. We believe that strong ethics and social responsibility are critical to delivering profitable, sustainable growth, and the work we undertake to ensure all our associates understand and maintain our high ethical standard is a critical part of running our successful global business.” (Douglas Baker, CEO and President, Ecolab). The views from other authors have been effectively brought out to create an understanding of what would be wrong with Mintzberg’s view that CSR should be done solely for ethical reasons and for this being the only way of ensuring a sustainable and successful economic and societal growth. There is however need for more evidence to be established to back up their claims and arguments. Friedman, M. (1970) “The Social Responsibility of Business is to Increase its Profits.” The New York Times Magazine. 13 Sept. 1970. 26. Abstract This article brings out the view that businesses should only engage in social responsibility and use their resources with an aim of gaining more profits. Introduction Businesses are created to gain profits and benefit from the goods and services they render. With this view then social responsibility as a business undertaking should have the same aim. The main questions here are whether CSR should be exercised for the sole reason of benefiting the society or the business and whether it is an undertaking that every company should adopt. This paper answers this question by presenting a case against CSR and against it being done for ethical reasons. The paper presents knowledge on the likely demerits of CSR for businesses and its need as a business strategy. Literature Review In his arguments opposing CSR and in his view of it being a strategy through which businesses gain profits, Friedman refers to other literature and views that include his previous works and that by others such as Adam Smith and the GM crusade. On the government’s imposition of taxes on businesses for social purposes, Adam Smith expresses doubt on the expected benefits from those trading for the good of the public. Friedman and Smith agree that the argument is a way for the government to gain through undemocratic techniques what they cannot democratically acquire. This is similar to the GM crusade’s requirement that stockholders have corporations engage in CSR. The problem as identified is that the imposed requirements for companies to engage in social responsibility are mainly not in the interest of the organizations and in for example cases of tax and expenditure imposed, the collected amount is not used for the benefit of the society is instead spent by those in charge of collecting it. The question raised is what the effect of forceful involvement of corporations into contributing towards social responsibility would be. This can be addressed through the concept of the ideal system of free market where by no party can be coerced by the other and where cooperation is completely voluntary but in a capitalistic society. The arguments brought out have been deeply explored on and explained to bring out the main concept. More supporting material is however necessary for their views to be more convincing. Contribution This paper has helped in assessing CSR in terms of business and with a business mind. Through it its relevance as a business strategy has been brought out. Through the views given by Friedman, there is an increased understanding of CSR within the current world of business and within the free system of business. Friedman’s argument is an effective way of understanding social responsibility as a way to progress businesses and has expanded our mind from viewing it as a basic noble gesture aimed at benefiting just the society. Conclusion From the discussion brought out by Friedman has identified a fair and just way through which companies can engage in social responsibility in accordance with the law but not entirely out of coercion. Friedman concludes that social responsibility in a capitalist society should be in such a way that businesses are able to utilize its resources as well as take part in activities aimed at gaining more profits as long as the actions are in line with the set down regulations and rules. Future research should seek to focus and deeply explore on the effect such form of social responsibility has on the benefits obtained by the society as compared to that done for ethical and other reasons. The research should seek to identify if there is any difference in the degree of value obtained by the society. Critique Various have risen up to oppose Friedman’s view that CSR by businesses aims at increasing profit. According to Mulligan (1986), Friedman does not prove that the engagement in CSR by businesses is naturally a socialist and an unfair undertaking. Mulligan regards Friedman’s views as being questionable and that lack logical clarity. He says that it is possible for businesses to attain key elements in their operational and strategic management without causing the effects described by Friedman. Sommerville (2006) terms Friedman’s argument as being flawed and regards the author’s views on the difference existing between the need to act in a good way (which he refers as acting beyond the business duty) and avoiding causing harm (which he calls for) are not clear. The stakeholder theory in the modern world of business has been the basis through which organizations and theorists have rejected Friedman’s views. According to this theory, stakeholders are all parties interested or that are part of an organization. Shareholders are just part of stakeholders and whose interests have to be dealt with by corporate managers (Somerville, 2006). Gaining more profits makes a part of many other considerations that need to be made (Tench, 2006). The evidence brought out by the authors in opposition of Friedman’s views fails to stand up as they are not convincing enough. I am in agreement with Friedman’s view. His view is one that is oriented to what is likely to be the greatest motive of businesses taking part in CSR, with an aim of seeking to gain from their actions. The author analyses CSR with a business strategic mind and takes into consideration that in whatever action is to be done, none of the parties involved stands to lose. Hewlet Packard which is an active player in CSR for example believes that environmental and social initiatives will eventually improve the financial performance of the company and enhance its corporate image. This case is similar to other companies such as Wal Mart, MacDonald, J&J Co. among others. Whatever the motive, corporations are well aware that their acts will to the greatest extent positively impact the company. Businesses as brought out by Friedman are therefore putting a face in their acts towards the society, referring to them as noble gestures, while in the real sense they clearly understand the end result for them. It is difficult to establish with what motive a business is being socially responsible hence, it would be only right to say that organizations should be allowed to freely take part in social responsibility regardless of what the motive is. Authors disagreeing with Friedman need to clearly bring out their argument using up to date supporting evidence to their views. The re is need for more supporting literature and evidence researches to be done to support the views brought out by Friedman. Such literature should support his views and show proven evidence that the views shared are similar to those shared by businesses or corporations. References Bowman, H. (1978). Corporate Social responsibility and the Investor. Journal of Contemporary Business, Winter: 21-43. Elbing, E. (1970). The Value of Business: the Responsibility of the Businessman. Academy of Management Journal, 3: 312-322. Friedman, M. (1970) “The Social Responsibility of Business is to Increase its Profits.” The New York Times Magazine. 13 Sept. 1970. 26. Heilborner, R. (1980). Marxism: For and Against. NY: Norton & Co. Levitt, T. (1968). Why Businesses Always Loses. Harvard Business Review, 3(2): 81-89. Mintzberg, H. (1986) "The Case for Corporate Social Responsibility", Journal of Business Strategy, 4 (2): 3 – 15 Mulligan, T. (1986). A Critique of Milton Friedman’s Essay ‘The Social Responsibility of Business is to Increase its Profits’. Journal of Business Ethics, 5(4): 265- 269. Sethi, P. (1975). Dimensions of Corporate Social performance: An analytical Framework. California Management Review, Spring: 58-64. Simon, J., Powers, C. and Gunnemann, J. (1983). The responsibilities of corporations and their Owners. Englewood Cliffs, NJ: Prentice-Hall, Inc. Somerville, I. (2006). Business ethics, public relations and corporate social responsibility. Oxon: Routledge Publishers. Tench, R. (2006). Community and society: corporate social responsibility (CSR). London: Pearson Education. Read More