ASSESSMENT OF PRACTICE OF CORPORATE SOCIAL RESPONSIBILITY

 Arguments in Support of Corporate Social Responsibility

Long-run self-interest - In the long run, business enterprises will benefit from their own
investment by using their resources in reducing or eliminating social problems. A good social
and economic condition will offer an encouraging environment for businesses. Firms that assume
social responsibilities may suffer losses in the short-run but fulfilling social obligations is
beneficial for long-run survival of the firms. The short-term costs are, therefore, investments for
long-run profitability. Business organizations are powerful institutions of the society. Their
acceptance by the society will be denied if they ignore social problems. To avoid self-destruction
in the long-run, business enterprises assume social responsibility.
Business resources - Businesses could use the huge resources in the improvement of societal
and environmental conditions and can be partly used for solving social problems. Some of these
business resources are manpower, funds, materials, management skills and technology
Viability of Business - As embodied in the deed of a corporation, businesses are granted powers
and privileges by the government due to their contribution to the economy and valuable service
to society. The government can also revoke the charter of a business once it fails to meet social
expectations. For this reason, businesses have to perform their social responsibilities. Non-
conformance to social norms may attract legislative restrictions. Government directly influences
the organizations through regulations that dictate what they should do and what not. Various
agencies monitor business activities. Organizations that violate regulations are levied fines and
penalties. To avoid such interventions, organizations have risen to the cause of social concerns.
Public Image - Charitable, civic and socio economic projects are some of the activities where
businesses take part. As they become active with such projects, their public image is also
enhanced. They leave to the society a very good impression of their corporate image that attracts
more competent recruits and a greater number of customers.
Profit from Social Problems - Businesses can turn problems into profits by being creative and
resourceful. An example is recycling of waste materials into other valuable goods.
 Assessment Against the Practice of Corporate Socia1 Responsibility
Profit Maximization – Corporate executives and managers are primarily responsible o investors
and stockholders. It is their duty to maximize the profit of their business, not the concerns of the
society.
Lack of Social Skills - Businessmen lack the appropriate skills in solving social concerns. Social
problems should be the concern of the government not the businessmen’s who are honed with
the disciplines involved in business. It is argued by the opponents of social responsibility that
basic function of a business enterprise is to look into economic viability of its operations. It is for
the Government to look after interests of the society.
Lack of Social Accountability - The social needs and problems should not depend on
businessmen. Businesses cannot be expected to solve social problems. This must be left to the
government.
Higher Product Cost - Businesses' active participation in social, charitable or civic projects
leads to additional expenses and wastes man hours of the company. In order to recover from such
losses, businesses increase the cost of their products that may also cause them a disadvantage
from the costs of the products of their competitors. Any social-benefit program where initial
costs exceed the benefits may not be taken up by enterprises even in the short run. Costs related
to social programs are adjusted or transfer the social costs by the business concerns in the
following ways:
(a) High prices:
The costs are passed to consumers by increasing prices of goods and services.
(b) Low wages:
If managers maintain the level of prices, the social costs may be reflected in reduction of wages.
(c) Low profits:
If wages are stabilized, profits would be reduced, which will lower dividends to the shareholders.
Low profits will reduce managers’ desire to further engage in corporate social responsibility

SOURCES
[F. Fajardo. (2000). Management, pp. 103-109]
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