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to make decisions and take actions that will enhance the welfare and interests of society as well as the organization” (p.146). Do managers have a responsibility to their stakeholders? Certainly, for the owners of the business have invested their capital in the firm. Do managers have a responsibility, a social responsibility, to their employees and the community? Many oppose corporate social responsibility? They believe that business should stick strictly to making profit and leave social matters to other groups in society. Some economists fear that the pursuit of social goals by business will lower firms’ economic efficiency, thereby depriving society of important goods and services. Others are skeptical about trusting business with social improvements; they prefer governmental initiative and programs. The Nobel Prize economist Milton Friedman declared that: There is 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 he game, which is to say, engages in open and free competition without deception or fraud”. Nevertheless, the author opposes this view, as he believes that this issue can no longer be ignored in the context of an ethical approach to doing business and will construct and argument that will support business ethics and corporate social responsibility. The Hand of Management Bartol and Martin (1991) in discussing corporate social responsibility states that: “The hand of management perspective states that corporations and their managers are expected to act in ways that improve the welfare of society as a whole as well as advance corporate economic interest” (p.104). Three major arguments are typically advanced in favour of social corporate responsibility. The Anti-freeloader argument holds that since businesses benefit from a better society, they should bear part of the costs of improving it by actively working to bring some solutions to the problems. The Capacity argument states that the
such as The Coorporative and The Body Shop are built on ethical values. must make up for recent government cutback in social programmes. Discourages Government Regulation One of the most appealing arguments for business supports is that voluntary social acts may bead off an increased amount of government regulation and taxation. So much of a company’s reputation results from ‘trust’ by shareholders. This argument is related to the iron law of responsibility. A strong reputation in environmental and social responsibility can help a company build this trust. Those operating 2 . it needs to result from real practices and policies and integrity towards the company’s responsibilities. Corporate social responsibility can play a role in building customer loyalty based on distinctive ethical values. they are likely to eventually suffer financially and go out of business. The Enlightened SelfInterest argument hold that businesses exist as society’s pleasure and that. Enhanced brand image and reputation A good reputation is often very hard to build. diversity or the environment seriously and so avoid intervention. Business service organisations can benefit too from building a reputation for integrity and best practice. In crowded marketplaces companies strive for a unique selling proposition which can separate them from the competition in the minds of consumers. society’s expectations appear to be expanding regarding the social responsibility of business firms. which states that in the long run. because of its considerable economic resources. he who do not use power in a manner society considers responsibly will tend to lose it. generally. yet can be destroyed in a day. However. Otherwise. Several major brands.private sector. for their own legitimacy and survival businesses should meet the expectation of the public regard social responsibility. Shareholders are not stupid and can see through non-sense. By taking substantive voluntary steps they can persuade governments and the wider public that they are taking current issues like health and safety.
It did include a 3 . Johnson & Johnson took this radical action to ensure the safety of its consumers after the product was linked to several consumers’ deaths from cyanide poisoning even though the company production processes were never found defective. thus an allowable business expense. A 1997 DePaul University study found that companies with a defined corporate commitment to ethical principles do better financially (based on annual sales/revenues) than companies that don't. The rational was that a corporate gift to a school. Promotes Long-Term Profits for Business. corporate social responsibility by business produces long-run business profits. The Enron last social and environmental report is rather light on the kind of measures that are increasingly being demanded. Customers rewarded Johnson & Johnson’s responsible actions by continuing to buy its products. The company was gearing up to address human rights and other issues. thought costly in the present might in time provide a flow of talented graduates to work for the company. There is a lot of narrative. v A.away from their home country can make sure they stay welcomed by being good corporate citizens with respect to labour standards and its impact on the environment. A similar example was seen in the classic Johnson & Johnson Tylenol incident. A look at the Enron collapse issue surely justifies this University’s findings when contrasted with the Johnson and Johnson issue above. Smith Manufacturing that a corporate donation to Princeton University was an investment by the firm. the firm absorbed millions of dollars in short-term costs by recalling all of its extra strength capsules. and a whole range of things that are at the early stages. A New Jersey judge ruled in Barlow et al. In the 1980’s. At times.P. The court ruled that top executives must take a long-range view of the matter and exercise enlightened leadership and direction when it comes to using company funds for socially responsible programmes. The company was to take a comprehensive review of its stakeholders. and in the long run the company once again became profitable.
If a business works to provide a less stressful 4 . Moreover.number of figures on environmental performance. over half would recommend a company to friends or family based on its social and ethical reputation. Addressing economic performance is no longer enough since many investors link economic performance to social issues. Those who were critics suggested that the company has always been a poor corporate citizen. and that those who have been seduced by its community and environmental programs have been duped. The public. fairness in the workplace. In addition. demands for a cleaner environment. Response to Changing Stakeholders’ Demands. a high percentage of customers consider a company's commitment to social responsibility important when deciding on purchasing its products or services. privacy protection. and on health and safety records. funded. Social responsibility is considered important to seven in ten consumers across Europe. groups representing society’s point of view are better organized. and able to state their case in the media and in the legislature. This is the highest translation of opinion into purchasing decisions of any country measured in Europe. socially responsible activities are the most important factors the public take into account when judging a company. now more than ever. Social expectations have increased dramatically over the past decade. Businesses clearly are challenged to more quickly and accurately respond to these changes demand made by their stakeholders. Furthermore. safe products. attention to social concerns does benefit the business on the bottom line. expects higher levels of social performance from business. Some people argue that in the long run. and similar social issues and concerns have placed business in social spotlight. After product quality and customer service.
g. (Justin Martin 1994). to include concern for individual and community welfare in their day-to-day decisions. Some companies resist these movements. If a business addresses important social issues customers may view it more favourably. budging only when forced by legislation or consumers outcries. The key here is that business does derive benefits by addressing social issues.. 5 . Conclusion The social responsibility and environmental movements will place even stricter demands on companies in the future. They view social responsible actions as an opportunity to do well by doing good to profit by serving the best long run interest of their customers and communities. E. If a business focuses on community issues. from top management to ice cream scoopers in each store. They are building social responsibility and action into their company by value and mission statements. readily accept their responsibilities to the world around them. In fact. More forwardlooking companies. The Body Shop. however. Saturn. Some companies such as Ben and Jerry’s. and others are practicing caring capitalisation and distinguishing themselves by being more civic minded and caring. Ben and Jerry’s mission statement challenges all employees. it may be able to attract skilled workers to move to the community.work environment for its employees. they may demonstrate less absenteeism and more overall motivation toward the job. The arguments here can be compelling. one service found that over three quarter of its respondents preferred to buy form business that support worthy causes.
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