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The Corporate Social Responsibility Debate

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Introduction

Critically evaluate the arguments for Corporate Social Responsibility and isolate whether you think it is a sensible business strategy. The debate over business's role in society is based around two opposing arguments. On one side, it is argued that social issues are peripheral to corporate agenda. This perspective maintains that corporations and society pursue different goals, and that the objectives of one can only be achieved at the expense of the other. Companies are profit maximisers, and the sole purpose of business is to generate shareholder value. On the other hand, social responsibility proposes the contrary; companies which participate in activities that positively contribute to society will see the benefits to their reputation and subsequently their bottom line. In other words, there is an implicit social contract between business and society, with responsibilities, opportunities and mutual advantages. This essay will critically evaluate the supporting and opposing arguments surrounding the Corporate Social Responsibility (CSR) debate. I will define CSR and explore the positive aspects of adopting it in an organisation, as endorsed by CSR advocates such as Dick Hubbard and based on research from various sources and business case studies such as McDonalds and Timberland Co. I will cover the positive arguments for CSR such as its ability to enhance a company's reputation and brand name, to expose market opportunities and to attract and maintain valuable staff. ...read more.

Middle

He wants his employees to feel part of a team. Hubbard believes this kind of workplace cultivates innovation and loyalty [Hubbard, 2005]. Employee volunteer projects reinforces a culture of teamwork and gives staff the opportunity to demonstrate skills such as leadership, that they may not have been able to utilize in their usual job [Holliday, et al. 2002]. For example, in the 1990's Jeffery Swartz transformed Timberland Co. by establishing a values-based ethos within both the company's workplace environment and its reputation externally [Daft & Samson, 2003]. The company spent millions in philanthropic ventures, offering paid sabbaticals for employees to work six months full time in charitable organisations and sponsoring projects such as building homeless shelters and violence-protection schemes. This is an example of discretionary responsibility [Carroll, 1979; Swanson, 1995], whereby Timberland co. took it upon themselves to enhance the quality of life of the community around them. Although critics may argue that Timberland Co. are neglecting their economic responsibilities to stakeholders by channelling large amounts of money into philanthropic activity, 50 percent of Timberland's employees claim the main reason they work there is because of the company's charitable values. Employee turnover is low and Timberland constantly ranks in Fortune Magazine's top 100 best companies to work for [Fortune, 2006]. This publicity positively impacts the company financially. Therefore adopting CSR is a sensible business strategy, because the practice of discretionary responsibility contributes to outstanding employee loyalty. ...read more.

Conclusion

However, I support the opposing notion that when CSR increases cost and reduces profit, it is not a viable business strategy. For Levi Strauss, the consequences of the excessive and costly actions of Bob Haas show the dangers of taking CSR too far. Companies also have ethical obligation to be wise stewards of money invested by shareholders, and to be accountable for financial decisions. I agree with Friedman and Kerr that social goals which compromise a company's profitability are indeed disadvantageous and detrimental to social welfare in the long run. In conclusion, there are valid arguments supporting and opposing Corporate Social Responsibility. CSR can enhance a company's reputation and brand name, promote transparency and integrity, evoke employee loyalty and expose market opportunities while simultaneously benefiting society. On the other hand, its disadvantages include increased costs, ethical issues regarding the use of shareholder capital, variation in the interests of the public in different contexts and the fact that environmental and social contribution is difficult to measure and account for. The concerns of critics such as Milton Freidman and Roger Kerr can be partnered with those contrasting ideas of advocates such as Dick Hubbard to create a Corporate Social Responsibility Strategy that is sensible and justifiable. I believe businesses should balance their principle objectives with the broader interests of the societies of which they are a part. I support the sensible and careful execution of CSR whereby accountability and wise stewardship are an integral part. Incorporating these values make CSR a sensible corporate strategy, beneficial for both business and society. ...read more.

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