Corporate Social Responsibility (CSR) is a business practice that entails giving back to society. Many economies require businesses to play a part in developing standards of living in a given community. Some scholars believe that CSR is based on profit-making in an organization. Businesses comply with CSR regulations by setting up social programs that extend goodwill by giving back to society. Social responsibility is beyond making a profit and entails improving social and living standards of a firm.
Social progress is an important goal for any CSR initiative among businesses. The living standards of people are likely to improve if businesses promote social lifestyles of the disadvantaged community. Freidman, Mackey, and Rodgers (2005) provide different views that describe the objective of social responsibility among profit-making entities. These scholars are persuaded to believe that CSR programs should be based, entirely, on profit realization.
…The Social Responsibility of Business Is to Increase Its Profits.” The future Nobel laureate in economics had no patience for capitalists who claimed that “business is not concerned ‘merely’ with profit but also with promoting desirable ‘social’ ends; that business has a ‘social conscience’ and takes its responsibilities seriously for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers (Friedman, Mackey,& Rodgers, 2005).
Using resources to increase profit margins is a primary objective of any business. Freidman, Mackey, and Rodgers (2005) are convinced that CSR programs should not involve activities that have no direct impact on profit margins.
…there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” That’s the orthodox view among free-market economists: that the only social responsibility a law-abiding business has is to maximize profits for the shareholders (Friedman, Mackey,& Rodgers, 2005).
Stakeholder relationship and management play a fundamental role in promoting a business. Employees, customers, investors, and the management team should have a strong relationship bound by common business objectives. CSR programs should foster strong stakeholder relationship as a means of increasing profit margins in an organization. Stakeholders who frequently communicate with minimal conflict can invest in profitable business opportunities. Stakeholder management should also be facilitated by objective CSR initiatives in firms.
…but I believe that the enlightened corporation should try to create value for all of its constituencies. From an investor’s perspective, the purpose of the business is to maximize profits. But that’s not the purpose for other stakeholders — for customers, employees, suppliers, and the community. Each of those groups will define the purpose of the business in terms of its needs and desires, and each perspective is valid and legitimate (Friedman, Mackey,& Rodgers, 2005).
My current employer believes in Freidman, Mackey, and Rodgers’ ideas on social responsibility in business. Profit-making is the ultimate goal of CSR initiatives in this organization. I disagree with my current employer when it comes to developing CSR programs. The social responsibilities of a business should have progressive impacts on the living standards of the identified target audience. For instance, scholarship programs for bright but needy students could improve Customer Relationship Management (CRM)in markets where consumers are loyal to a firm’s products.
CSR is an important regulation for businesses. Businesses benefit in many ways if a firm’s CSR program has positive impacts. Aside from high profit-margins, other benefits include a conducive business environment, positive organizational image, and progressive organizational culture. These benefits result in high profit-margins, indirectly, when CSR programs are implemented with respect to a certain set of business goals. Similarly, paying for the treatment for cancer patients is an important CSR program that would increase profit margins indirectly. For instance, the organizational image of a health institution is improved when it wins humanitarian awards for improving medical standards among the less privileged. In essence, the benefiting hospital attracts patients from across the globe.
Friedman, M., Mackey, J., & Rodgers, T. J. (2005). Rethinking the social responsibility of business. Reason, 37(5), 28-37.