Corporate social responsibility
Should companies be socially responsible?
In this essay, we aim to discuss the role of social responsibility in companies. In the same way, to intend to show arguments for, and against social responsibility in companies. That way, to provide a concise argument we shall provide a brief background on the subject, we shall show the history of social responsibility. How it started and developed. After that, we aim to provide arguments, and counterarguments on the role social responsibility play in companies.
History of Social Responsibility in Companies.Social responsibility refers to the responsibility an organization has for the impacts of its decisions, and activities. For a business to be socially responsible, it has to have a transparent and ethical behavior, consistent with sustainable development and welfare of the society (Hohnen& Potts, 2007). Social responsibility takes into account the expectations of the companies’ stakeholders while complying and applying laws consistent with appropriate and ethical behavior. In the same way, social responsibility intends to integrate those rules and laws inside, and outside of the workplace, in order to have a comprehensive and straight line of behavior that reflects the practices of the company. Social responsibility in the companies is becoming increasingly integrated into companies, and into the modern business practices, as a way to be able to compete responsibly with other companies while keeping an ethical behavior. In more layman-oriented terms, social responsibility refers to the way companies and firms integrate social; economic, and environmental concerns into the company’s values; culture, and decision-making. Likewise, this practices intend to create a transparent and accountable way of conducting business to create wealth and wellbeing for the company.
The introduction of Social Responsibility in Companies. In a period that covers 60 years, and goes from 1945 to 2004, the world has seen many changes in global politics and economy. For instance, we are now witnessing political tension between the United States, a country whose economic stance is of a global capitalism. Versus the more self-reliant and protective economies of the European Union. The rise of the European Union has influenced the behavior of companies, regarding social responsibility. In the same way, the wall of the Soviet threat, has changed the attitude of the U.S. on social responsibility. In the same way, there is an important difference between Europe and America on their relations with the government and corporations. Americans are more trusting to the corporations than to the government. Europe is the exact opposite. (CEBC 6). Where Europeans are more trusting concerning government’s intrusion on corporations, the Americans are far skeptical. In the beginning, Social responsibility has changed from an ideology of laborer’s protectionism to a complete dimension of the business practices. In the 21st century, many business leaders have recognized that Social responsibility is an important component of business success. (Maon & Swaen 4).
Arguments against Social Responsibility in Companies. We shall present the arguments against Social Responsibility in companies, in order to counterargument with the arguments for.
1. Profits. The idea of companies having a responsibility to act in the public interest its fundamentally flawed from the start. Since the implementation of social responsibility in companies, they now claim that there are not in business just for the profits. They say that they are looking at the bigger picture, and serving a social purpose. This might work with large companies where the interests of the stakeholders and the public interests, are aligned. However, in companies where this does not happen, it is highly unlikely that the company will act against their stakeholders’ interests. In that case, for big companies, social responsibility is irrelevant, as companies can use it their favor. On the other hand, for small companies, to act in socially responsible ways, is highly ineffective. If the public keeps looking at the companies to resolve societal issues, they are in for a disappointment. (Karnani 1)
2. Competitive Disadvantage. This argument considers that those companies who take social actions have the money to pay the price it entails and are using that money to get an unjust competitive advantage over their rivals. That is why, those who advocate social responsibility consider that the social actions should not come from the business, but from the public (Cheers 12)
3. Greenwashing. This argument considers that companies only use social responsibility as a way to avert a crisis. In other cases, it is used solely with propaganda purposes, and to report actions. For instance, a company goes and reports a heart-warming story about a socially responsible action they took, but in the reality, that action has little or none effect in the world. (Karnani 5). That is why, although many companies are fierce advocates of social responsibility, in theory, they might not be as much in practice. In business terms. The companies would not increase the stakeholders welfare, by decreasing the shareholders’ wealth. On the contrary, what those companies do is to promote their reputation with the community to mask their flaws.
Arguments for Social Responsibility in Companies. In order to present our arguments in a neater gay, we shall separate them in different points, and then compare them.
1. Customer Engagement. Opposing to greenwashing, we found the concept of customer engagement. In a strict sense, there is no point on doing social responsibility if nobody knows that the company is doing. For instance, Wal-Mart is rebranding and has established itself as the leader in environmental efforts. That way, customers can relate to the company, not only because of the products they sell, but for the good actions the company undertakes (Epstein-Reeves 1)
2. Stockholder Interests. To be able to carry on campaigns of social responsibility does not mean a competitive advantage. What happens is that there is a perception of success on those companies capable of conducting socially responsible projects. Besides, social responsibility will improve the prices of the stocks, in the long run, compared to the companies that do not. In the same way, the stockholders and the potential investor will regard the socially responsible company as more open to the public, hence, will trust more and invest. Also, companies who invest in social responsibility are likely to treat their employees in a fairer way. Which means more loyal, and motivated employees (Cheers 7)
3. Cost Savings. Companies who are socially responsible, and sustainable report savings in the energetic, and advertising sectors. For instance, if a company “goes green” it might be able to save money in the long run. Also, by using less paper, and packaging, the companies have been able to save thousands of dollars each year.
The Future of Social Responsibility. It is impossible for a 21st-century company to pretend that they can go by just by hiring workers and paying their wages. Having a company includes many more aspects that a company who is not socially responsible will never be able to foresee. In the same way, after reviewing what is to be social responsible, it is important to note that “responsibility” is not only extensive to our workers, and the company. It is also extensive to everything that our company is susceptible to harm. Besides, since businesses play a pivotal role in the creation of wealth into the society, it is also important that companies are capable of assessing the risks involved in unethical practices that might hinder any part of the environment or the workers. Wealth creation, although important, should be done in a respectful way, especially in companies whose reputation needs to be upheld in the highest standards. However, we are not saying that small companies should not invest in social responsibility. On the contrary, as we could see, to be socially responsible is a way to pave the company’s success if it is not done with hypocrisy, and with the general well-being in mind.
Cheers, Z. “The Corporate Social Responsibility Debate.” Senior Thesis (2011). Liberty University. Web. <http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1229&context=honors>.
“Corporate Social Responsibility The Shape of a History, 1945 – 2004.” History of Corporate Responsibility Project (2010). Center for Ethical Business Culture. Web. <http://www.cebcglobal.org/uploaded_files/pdf/CSR_-_The_Shape_of_a_History_-_working_paper_2005.pdf>.
Epstein-Reeves, J. “Six Reasons Companies Should Embrace CSR.” Forbes 21 Feb. 2012. Web. <http://www.forbes.com/sites/csr/2012/02/21/six-reasons-companies-should-embrace-csr/>.Hohnen, P., & Potts, J. (2007). Corporate Social Responsibility an Implementation Guide for Business. International Institute for Sustainable Development. Retrieved from http://www.iisd.org/pdf/2007/csr_guide.pdfKarnani, A. (2010, August 22). The case against corporate social responsibility. MIT Sloan Management Review. <http://sloanreview.mit.edu/executiveadviser/articles/2010/3/5231/the-case-against-corporate-social-responsibility/>
Maon, F., and V. Swaen. “MAINSTREAMING THE CORPORATE SOCIAL RESPONSIBILITY AGENDA: A CHANGE MODEL GROUNDED IN THEORY AND PRACTICE.” IAG- Louvain School of Management Working Paper. Louvain University. Web. <https://www.uclouvain.be/cps/ucl/doc/iag/documents/WP_22_Maon_Swaen_Lindgreen.pdf>.