Premium Essay

Csr or Profit

In: Business and Management

Submitted By srijon90
Words 3014
Pages 13
The Social Responsibility of Business is to Increase its Profits by Milton Friedman
The New York Times Magazine, September 13, 1970. Copyright @ 1970 by The New York Times Company.
When I hear businessmen speak eloquently about the "social responsibilities of business in a free-enterprise system," I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned "merely" with profit but also with promoting desirable "social" ends; that business has a "social conscience" and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are–or would be if they or anyone else took them seriously– preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.
The discussions of the "social responsibilities of business" are notable for their analytical looseness and lack of rigor. What does it mean to say that "business" has responsibilities? Only people can have responsibilities.
A corporation is an artificial person and in this sense may have artificial responsibilities, but "business" as a whole cannot be said to have responsibilities, even in this vague sense. The first step toward clarity in examining the doctrine of the social responsibility of business is to ask precisely what it implies for whom.
Presumably, the individuals who are to be responsible are businessmen, which means individual proprietors or corporate executives. Most of the discussion of social responsibility is directed at corporations,...

Similar Documents

Premium Essay

Profits vs Csr

...Should Businesses Operating Today in New Zealand Go “Beyond Profits”? In 1970, it was argued by Nobel Prize-winning economist, Milton Friedman, that the only social responsibility of business is to increase its profits (Friedman, 1970). Since Friedman expounded his widely acclaimed philosophy on the social responsibility of business, many experts in the area of business and social responsibility have retaliated with their own views on corporate social responsibility (CSR). One of these views is the idea that businesses should go beyond the classic economic paradigm, a-la Friedman, to carry out certain responsibilities to society such as ethical and philanthropic responsibilities (Carroll, 1991). In order to have a better understanding of one’s position on the CSR debate, this essay will specifically target the corporate social responsibilities of businesses within a general New Zealand context so that one might precisely answer the question “Should Businesses Today Operate beyond Profits”? “Responsible governance” in New Zealand (NZ) management is equivalent to the organization’s “environmental, social and risk management practices and the interests of its shareholders and increasingly wide stakeholders (Birchfield, 2011). The definition of responsible governance seems to be in favor of the CSR position as businesses in NZ are clearly obliged to more responsibilities other than Friedman’s ultimate profit-maximizing goal. However, a resent consensus in the business......

Words: 2103 - Pages: 9

Premium Essay

Corporate Responsibility

...NAIR# Abstract We provide a framework for analyzing corporate social responsibility (CSR). Our model of CSR in this paper has two important ingredients – CSR is at least in part a profit motivated decision; and different CSR activities are aimed at different audiences. We examine the implications of our framework using a ‘visible’ CSR index that captures consumeroriented CSR. We find that CSR is more prevalent in advertisingintensive (consumer-oriented) industries, and CSR is more positively related to profitability in these industries. Further, the effect of CSR on profits is stronger in competitive industries, especially when few other firms undertake such actions, suggesting that CSR may be used as a means of differentiation in otherwise competitive environments. We also find tentative evidence that the profit effects of CSR are more positive when large external shareholders are on the board. Finally, we document that different types of CSR activities targeted toward different audiences appear to be unrelated. The authors thank Franklin Allen, Randall Morck, Michael Roberts and Jeremy Stein for discussions. # Fisman and Heal are at the Graduate School of Business, Columbia University and Nair is at The Wharton School, University of Pennsylvania. 1 * In the business community, Corporate Social Responsibility (CSR) has emerged as a significant theme.1 While the growing emphasis on CSR is affecting the relationship between companies and their various stakeholders -......

Words: 7214 - Pages: 29

Free Essay

Corporate Social Responsibility

...Introduction Corporate social responsibility has taken on an increasingly prominent role in the business world in recent years. CSR has grown so popular that nearly every major company in the U.S. now integrates a significant commitment to social and/or environmental programs into its business model. CSR can be loosely defined as the adoption of socially beneficial and environmentally sustainable practices by corporate actors. The rise of CSR can be attributed to growing public disenchantment with traditional business practices that degrade the environment and compromise worker wellbeing, and resulting pressure from consumers and nonprofits on the private sector to reform itself. Instead of simply complying with government regulation, a company that is “socially responsible” adopts more stringent self-regulation ensuring that it is acting to minimize negative impact on the environment, its employees, its customers, and the community. The attitude that the corporate world should be responsible for adverse production effects has expanded into a broader conception of its responsibilities. It is now common to expect corporations not only to be accountable for their actions, but to contribute to solving the world’s problems. That is, corporations are now pressured to contribute to the creation of public goods like a healthy environment and poverty reduction as well as to absorb their own production externalities. Combined with the growing demand for “green” products, the......

Words: 5553 - Pages: 23

Free Essay

Corporate Social Responsibility

...Corporate Social Responsibility and Nonprofit Organizations Darin Leedy December 2009 Senior thesis submitted in partial fulfillment of the requirements for a Bachelor of Arts degree in Economics at the University of Puget Sound Introduction Corporate social responsibility has taken on an increasingly prominent role in the business world in recent years. CSR has grown so popular that nearly every major company in the U.S. now integrates a significant commitment to social and/or environmental programs into its business model. CSR can be loosely defined as the adoption of socially beneficial and environmentally sustainable practices by corporate actors. The rise of CSR can be attributed to growing public disenchantment with traditional business practices that degrade the environment and compromise worker wellbeing, and resulting pressure from consumers and nonprofits on the private sector to reform itself. Instead of simply complying with government regulation, a company that is “socially responsible” adopts more stringent self-regulation ensuring that it is acting to minimize negative impact on the environment, its employees, its customers, and the community. The attitude that the corporate world should be responsible for adverse production effects has expanded into a broader conception of its responsibilities. It is now common to expect corporations not only to be accountable for their actions, but to contribute to solving the world’s......

Words: 5586 - Pages: 23

Premium Essay

Corporate Social Responsibility

...conferred under clause (o) and clause (q) of sub-section 3 of Section 134 read with Section 135 and sub-sections (1) and (2) of section 469 of the Companies Act, 2013 lays down CSR Rules, 2013. CSR rules have not yet been notified. 2. INTRODUCTION Corporate social responsibility has been in existence for a long time and is based on the Gandhian principle of trusteeship concept whereby business houses are looked upon as trustees of the resources they draw from the society and hence they are to return them back manifold. CSR is extremely important for sustainable development of all those people on whom the business has an impact including the society at large. CSR functions as a self-regulating mechanism whereby a business monitors and ensures its compliance with law and ethical standards. CSR is the process by which an organization thinks about and evolves its relationships with stakeholders for the common good, and demonstrates its commitment in this regard by adoption of appropriate business processes and strategies. Thus CSR is not charity or mere donations. CSR is a way of conducting business, by which corporate entities visibly contribute to the social good. Socially responsible companies do not limit themselves to using resources to engage in activities that increase only their profits. They...

Words: 1700 - Pages: 7

Premium Essay

Between Profit-Seeking and Prosociality Corporate Social Responsibility as Derridean Supplement

...J Bus Ethics (2011) 104:77–91 DOI 10.1007/s10551-011-0890-1 Between Profit-Seeking and Prosociality: Corporate Social Responsibility as Derridean Supplement Cameron Sabadoz Received: 3 December 2010 / Accepted: 5 May 2011 / Published online: 24 May 2011 Ó Springer Science+Business Media B.V. 2011 Abstract This article revolves around the debate surrounding the lack of a coherent definition for corporate social responsibility (CSR). I make use of Jacques Derrida’s theorizing on contested meaning to argue that CSR’s ambiguity is actually necessary in light of its functional role as a ‘‘supplement’’ to corporate profit-seeking. As a discourse that refuses to conclusively resolve the tension between profit-seeking and prosociality, CSR expresses an important critical perspective which demands that firms act responsibly, while retaining the overall corporate frame of shareholder supremacy. CSR does this by ambivalently affirming both profit-seeking and prosociality, a necessary contradiction. Attempts to reduce CSR’s ambiguity can thus only succeed by undermining its viability as a normative discourse that captures how certain elements of society understand how firms should act. The analysis suggests that greater scholarly attention is needed with regard to the material discursive environments within which discourses such as CSR are deployed. A discursive approach to research could thus benefit future practitioners, who have to act according to fluid standards......

Words: 13268 - Pages: 54

Premium Essay

Corporate Social Responsibility

...Introduction 2. A Young Company’s CSR Motives 3. The Potential for Backfire 4. CSR Development: The Three Phases 5. A Mature Company’s CSR Motives 6. Vice Industries CRS Initiatives 7. Other Schools of Thought 8. Conclusion 1. Introduction Scholars explain the surprising fact that companies in the United States alone spend $9 billion annually on philanthropic causes by investigating the motives behind such apparent generosity (e.g. Cone et al., 2003). The critical importance of CSR derives from the fact that CSR practices have considerable influence on a company’s reputation and “the reputation of a firm is arguably the most valuable asset” (Peloza, 2006: 69). The term “corporate social responsibility,” or CSR, can be defined broadly as a firm’s charitable contributions and social initiatives, such as “philanthropy, cause-related marketing, environmental responsibility, and humane employee treatment, among others” (Ellen et al., 2006: 148). Researchers have found that over the past 30 years CSR correlated positively with corporate financial performance (CFP) (Orlitzky et al., 2003). “At its simplest, some argue that this ‘trend’ is purely self-serving marketing or philanthropy to offset concern over organizations’ increasing profit or corporate scandals.” (Brock, 2005: 58). By examining the motives behind CSR as purported by a broad spectrum of scholars, this paper will argue that companies initially implement CSR initiatives in an......

Words: 3514 - Pages: 15

Premium Essay

Should Smes Undertake Their Csr

...responsibility(CSR)in 2000, France required companies to include information of CSR in their annual report in 2001, and the Danish government established the Copenhagen Centre in 2008. It seems that CSR has transformed from theory to reality and has become an international trend over the past few years. While CSR has been widespread in large companies, it received less attention on small and medium-size enterprises(SMEs). Considering the significant impact of SEMs on the world economy and the important position of SMEs in the modern market, whether should these companies undertake their corporate social responsibility or not has become a considerable debate. Different from large companies, SMEs may not have the power or ability to handle social activities, so it may make itself less competitive by pursuing CSR (Carroll and Shabana, 2010). Other studies indicate that voluntary initiatives will be less effective than regulation (Williamson et al., 2006). Moreover, profit-maximization is the ultimate goal of SMEs. However, the CSR agenda could provide SMEs with significant scope for competitive advantage (Tilley et al., 2003). At the same time, SMEs account for 99.8% of European enterprises (European Commission, 2003), and have a greater environmental impact per unit than large firms and are the largest contributors to pollution (Environment Agency, 2003). In light of this, it is necessary for SMEs to undertake CSR (ibid.). Nevertheless, the benefits or drawbacks of CSR......

Words: 2724 - Pages: 11

Premium Essay

Should Csr Be Used as a Marketing Tool by Producers in the Cosmetics Industry?

...Should CSR be used as a Marketing Tool by Producers in the Cosmetics Industry? ABSTRACT The purpose of this paper is to prove that CSR can be used as a positive approach in the area of marketing and promotion, particularly in the cosmetic industry. The paper substantiates this hypothesis by drawing on theory from scholarly articles and literature and analysing data from annual reports. A portion of the research is dedicated to the Body Shop, based on analysis of their annual reports, as well as the reaction of different stakeholder groups based on several literatures. The paper finds that there are positives and negatives in using CSR and promoting it using marketing depending on the consumers’ perceptions. It also finds that there exists an information asymmetry between producers and consumers in terms of CSR for their products. The paper supports previous ideas that CSR is useful in benefitting the company brand and value and that it can also be used to influence a consumer’s purchase decision of the cosmetics. INTRODUCTION In conceptual theory, CSR is how a company incorporates “social, environmental and economic issues into their values and business operations in a transparent and accountable manner” (FAITC, 2012). In simple terms, CSR is the actions that a company undertakes or doesn’t undertake during their business functions to benefit society and their stakeholders. There are many arguments for and against CSR and also differing views on whether it actually......

Words: 3361 - Pages: 14

Premium Essay

Corporate Social Responsibility

...Corporate Social Responsibility – How the new companies’ bill-2013 will affect the lives of people in India. JOSHI BABU.PALLI 13SSMA35 Contents 1. Corporate Social Responsibility (CSR)-Definition 2. CSR history in India 3. Role of CSR in society –Indian perspective 4. Indian companies’ achievements as part of CSR so far 5. Companies bill-2013 6. Benefits and challenges to the society 7. Conclusion 1. Corporate Social Responsibility-Definition There are so many definitions are there which defined the Corporate social responsibility(CSR) in their own way but most acceptable definition is given by Lord holme and Richard watts in the book “making good business sense” i.e. “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” with this definition we can understand that CSR that corporate companies’ contribution to the betterment of society by funding and as well as organizing the social works and fighting against the social evils. Many countries have their own terminology for CSR for example: USA uses corporate citizenship and some other countries use sustainable business etc. The concept of CSR originated in the 1950’s in the USA and the concept came into prominence in public debate during the 1960’s and 1970’s. At that time US had lots of pressing social problems......

Words: 2599 - Pages: 11

Premium Essay

Corporate Social Responsibility

...CORPORATE SOCIAL RESPONSIBILITY SUSTAINABILITY- A CRITIQUE Outline What is CSR? What do w e mean by sustainability? Critique OCEANIC Bank’s Story What is CSR Corporate Social Responsibility and Sustainability can be defined as a company's verifiable commitment to operating in an economically, socially and environmentally sustainable manner that is transparent and increasingly satisfying to its stakeholders. Stakeholders include investors, customers, employees, business partners, local communities, the environment and society. The emphasis is on transparent and verifiable stakeholder driven business operation delivering optimised sustainability performance and associated competitive advantage. Sustainable business operation means addressing the needs of present stakeholders while seeking to protect, support and enhance the human and natural resources that will be needed by future stakeholders. CSR describes the principle that companies can and should make a positive contribution to society. CSR is the practice of managing the social, environmental and economic impacts of the company, being responsive to 'stakeholders' (those who are affected by a business operation) and behaving according to a set of values which are not codified in law. In practice the term can refer to a wide range of actions that companies may take, from donating to charity to reducing carbon emissions. By CSR here we refer to the practice of major companies, rather than 'ethical pioneers':......

Words: 2032 - Pages: 9

Free Essay

Corporate Social Responsibility

...Chapter 1: What is CSR Organizations can be classified in 3 categories: 1) For profits: Seek gain for their owners 2) Government: Exists to define rules and structures of society within which all organizations must operate 3) Non-profits: Emerge to do social good when the political will of the profit motive is insufficient to address societies needs Stakeholders: Includes all those who are related in some way to a firm “A stakeholder in an organization is any group or individual who can affect or is affected by the achievement of the organizations objectives” could range from clearly defined customers, employees, suppliers, creditors, and regulating authorities, to other more amorphous constituents such as local communities CSR is both critical and controversial; It is critical because the for-profit sector is the largest and most innovative part of any free societies economy. However CSR remains controversial; In spite of the rising importance of CSR today for corporate leaders, academics, and bureaucrats alike, many still draw on the views of the Nobel Prize- winning economist Milton Friedman, who argues against CSR because it distracted leaders from economic goals. Friedman believed that the only “social responsibility of a business is to increase its profits”- that society benefits most when businesses focus on maximizing their financial success. David Packard, a co-founder of Hewlett-Packard however, believes “a group of people get together and exist......

Words: 2331 - Pages: 10

Premium Essay

Corporate Social Responsibility for Business

...social responsibility for the business. There is more intense scrutiny from public toward business since the past thirty years because business caused many problems that are criticized much by public and society such as unacceptable ethical behaviors, deteriorating environment cased by business activities and so on. As a result, a concern of Corporate Social Responsibility (CSR) had generated during that time. Many people believe CSR is good for business based on the socioeconomic view of social responsibility (Robbins, Bergman, Stagg & Coulter, 2005). This report is in favour of the view that the CSR is good for business by considering the economic, legal, ethic and philanthropic advantages of CSR in business. From the impacts of CSR to business’ economic positions, there are three advantages for business, which are secure long-run profits for companies, improvement of shareholder’s interests in the long run, superiority of avoidance of negative social or environmental impact and Improvement of public image and supports from public expectations respectively. • Secure long-run profits for companies CSR can help companies maintain long-range self-interest. That is to say, many of social problems caused from business activities seriously deteriorate the social condition that may become unhealthy climate for business’ performance, but SCR may remedy these problems to help business survive and prosper in the future because the function of social responsibility is just......

Words: 1632 - Pages: 7

Premium Essay

Corportate Social Responsibility

...3: Does CSR represent a genuine desire by corporations to do well towards society? Introduction The dominant model of business activity in the past merely concentrated on the benefit of the shareholders, which is maximizing profit from the firms’ activities. Any other benefits or harms created in the process of the activity were considered secondary. Issues such as ethics and creating values for customers and stakeholders were thus ignored and rarely paid attention to. Unfortunately with the business world ever-changing, the culture that was embedded in the past is no longer workable in this 21st century as it was resistant to changes, inconsistent with the laws and ignores the ethical side (Freeman 2008). The issue of Corporate Social Responsibility or CSR has been the subject of debate among researchers for the past twenty years (Chen & Winai, 2011). There have been many arguments if businesses should engage CSR initiatives in their operations. CSR or corporate citizenship is defined as the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large (Moir 2001). The essay will discuss on the literature review of the different perspectives of CSR, arguments against it and the analysis if CSR represent corporations’ genuine desire to contribute towards the society. Literature Review Arguments for......

Words: 2985 - Pages: 12

Premium Essay

Corporate Social Responsibility

...Responsibility practices seen as unethical through exploiting CSR initiatives for a profit? In today’s society, corporations that perform better in their respective markets are able to collect assets that are needed to participate in Corporate Social Responsibility practices. Through these voluntary practices corporations are able to improve their social, environmental, and human rights accounts. This essay will begin with an insight of what Corporate Social Responsibility is; furthermore it will elaborate on how corporations that participate in the practice of Corporate Social Responsibility are seen as unethical because it is able to exploit its initiatives in the pursuit of profits. The Corporate Social Responsibility initiative has developed significantly through the past few decades. This is because of many multinational corporations have been influenced by civil societies to adopt numerous voluntary initiatives. Corporations have been influenced into adopting programs that assist in improving their social, environmental, and human rights records (Utting, 2005, pg. 375). These corporations are expected to adopt new codes of conduct, which administrate their environmental management, the health and safely of their employees, partnerships with Non-Governmental Organizations, and increase their support for community development projects (Utting, 2005, pg. 375) Multinational corporations have started engaging themselves in CSR programs, because of the pressure that......

Words: 2036 - Pages: 9