Management 103

8/13/2019 Management 103

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Milton Friedman wrote in his famous 1970s article inThe New York Times Magazine, that the one and onlysocial responsibility of business, is to increase profitsfor shareholders. Managements fundamental goal is

to increase value for its shareholders and not any

single stakeholder such as solely the sociallyresponsible

Some of the criticisms thrown at corporate socialresponsibility CSR include:

the lack of regulation

misuse as a marketing ploy andabuse of power by decision making companies in thesocial domain.


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Case in point: British American Tobacco, whichwas attacked after it won a United NationsEnvironment Program / Sustainability reporting

award for its annual social report.Critics were quick to point out that winning a CSR

award may well be a tool to deflect some criticismsagainst a socially irresponsible outlook of selling

products that cause so much known damage tohealth.


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Due to the voluntary nature and the lack of formalregulation of corporate social responsibility, CSRinadvertently places even more power in the hands

of decision-making companies. This is becausecompanies are given liberty to shape and definecorporate social responsibility as they deem fit andhow to practically apply CSR, increasing the risk of

further opportunity for abuse of power.


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4. (Mis) spending shareholders money

5. A distraction from the primary purpose of

business6. Undermines the social justification for capitalism

7. CSR reduces public pressure for regulation

8.Not a realistic assessment of power relationships.

seeks to replace force with moral duty.

9.Sets up too vague guideline.

Who is a stakeholder? What do we owe them?

How do we balance competing demands? No single, clear, objective measure of

ethical/economic performance


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Laws and regulationMotives

Nature of business

Ethics and consumerismEthics training

Globalization and market force

Social awareness and education

crises and their consequenceStakeholder priorities

Efforts to implement CSR


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Another driver of CSR is the role of independentmediators, particularly the government, inensuring that corporations are prevented from

harming the broader social good, including peopleand the environment.

CSR critics such as Robert Reichargue thatgovernments should set the agenda for social

responsibility by the way of laws and regulationthat will allow a business to conduct themselvesresponsibly.
http://en.wikipedia.org/wiki/Robert_Reichhttp://en.wikipedia.org/wiki/Robert_Reich


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Another concern is that sometimes companiesclaim to promote CSR and be committed tosustainable developmentbut simultaneously

engaging in harmful business practices
http://en.wikipedia.org/wiki/Sustainable_developmenthttp://en.wikipedia.org/wiki/Sustainable_development


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]

Critics of this argument perceive neoliberalism as opposed

to the well-being of society and a hindrance to humanfreedom. They claim that the type of capitalism practiced

in many developing countries is a form of economic andcultural imperialism, noting that these countries usuallyhave fewer labour protections, and thus their citizens are ata higher risk of exploitation by multinational corporations.
http://en.wikipedia.org/wiki/Corporate_social_responsibilityhttp://en.wikipedia.org/wiki/Cultural_imperialismhttp://en.wikipedia.org/wiki/Cultural_imperialismhttp://en.wikipedia.org/wiki/Corporate_social_responsibility


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The rise in popularity of ethical consumerismover the last twodecades can be linked to the rise of CSR. As global populationincreases, so does the pressure on limited natural resourcesrequired to meet rising consumer demand (Grace and Cohen 2005,147). Industrialization, in many developing countries, is booming asa result of both technology and globalization. Consumers arebecoming more aware of the environmental and social implicationsof their day-to-day consumer decisions and are therefore beginningto make purchasing decisions related to their environmental andethical concerns. However, this practice is far from consistent oruniversal.
http://en.wikipedia.org/wiki/Ethical_consumerismhttp://en.wikipedia.org/wiki/Ethical_consumerism


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The rise of ethics training inside corporations, some of it required bygovernment regulation, is another driver credited with changing thebehavior and culture of corporations. The aim of such training is tohelp employees make ethical decisions when the answers are unclear

Increasingly, companies are becoming interested in processes that canadd visibility to their CSR policies and activities. One method that isgaining increasing popularity is the use of well-grounded trainingprograms, where CSR is a major issue, and business simulationscanplay a part in this.
http://en.wikipedia.org/wiki/Business_simulationhttp://en.wikipedia.org/wiki/Business_simulation


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As corporations pursue growth through globalization, theyhave encountered new challenges that impose limits totheir growth and potential profits. Governmentregulations, tariffs, environmental restrictions and varying

standards of what constitutes "labor exploitation" areproblems that can cost organizations millions of dollars.

Some view ethical issues as simply a costly hindrance,while some companies use CSR methodologies as a

strategic tactic to gain public support for their presence inglobal markets, helping them sustain a competitiveadvantage by using their social contributions to provide asubconscious level of advertising.
http://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Globalization


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Non-governmental organizationsare also taking anincreasing role, leveraging the power of the media and theInternet to increase their scrutiny and collective activismaround corporate behavior. Through education and

dialogue, the development of community in holdingbusinesses responsible for their actions is growing.
http://en.wikipedia.org/wiki/Non-governmental_organizationhttp://en.wikipedia.org/wiki/Non-governmental_organizationhttp://en.wikipedia.org/wiki/Non-governmental_organizationhttp://en.wikipedia.org/wiki/Non-governmental_organization


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Often it takes a crisis to precipitate attention to CSR. Oneof the most active stands against environmentalmanagement is the CERESPrinciples that resulted after theExxon Valdezincident in Alaska in 1989 (Grace and Cohen

2006).
http://en.wikipedia.org/wiki/Coalition_for_Environmentally_Responsible_Economieshttp://en.wikipedia.org/wiki/Exxon_Valdezhttp://en.wikipedia.org/wiki/Exxon_Valdezhttp://en.wikipedia.org/wiki/Coalition_for_Environmentally_Responsible_Economies


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Increasingly, corporations are motivated to become moresocially responsible because their most importantstakeholders expect them to understand and address thesocial and community issues that are relevant to them.

Understanding what causes are important to employees isusually the first priority because of the many interrelatedbusiness benefits that can be derived from increasedemployee engagement (i.e. more loyalty, improved

recruitment, increased retention, higher productivity, andso on).


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A very large number of social and voluntary organizationsare contributing to the field of Corporate socialresponsibility by making it an important agenda wherethey clearly harp for all the corporate bodies to adhere to

the morns of CSR at all costs. In fact, these voluntaryorganizations always go on devising newer and morepragmatic/stringent norms of application of therequirements of Corporate social responsibility.

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Management 103