Corporate Social Report

Assignment:

Please state and elaborate on your personal position on the question: "Does business have a social responsibility?"

Business is expected to allow shareholders and investors to make money and to be profitable, that is, one business fundamental value is the economic one.

However, the achievement of such a value is awaited in accordance with the value of legality, or in lack of a legal framework with the value of morality. In other words, business must be done in a cost effective, legal and moral way. But to go further the responsibility to do legally and morally in continuing of profit is the notion of social responsibility called in a business environment: corporate social responsibility (CSR).

Although there is not an accepted and universal definition on what social responsibility is, one given by Carroll is reflecting quite closely the idea we have on it. CSR is defined by Carroll's four domain model. The first domain is of an economic nature, to produce goods and services needed by consumers and to sell them with the responsibility of the firm to maximize profits, while the second involves consumer's expectation for business to adhere to legal requirements. The third domain concerns 'ethical responsibilities' which are the duties of the firm to conduct business in accordance with social norms and societal customs. Finally discretionary or philanthropic activities, which are purely voluntary and guided by a business's desire to engage in CSR which is neither mandated, nor required by law and not even generally expected in an ethical sense.

Human behaviour, is directed by self-interest and the profit motive has often been characterised as grasping and careless about all other interests. However, it is obvious that the profit-making tools are also the providers of lot of good things for the collectivity. Of course, is a profit-making entity that exists in a competitive environment, and thus may be limited in its ability to solve a multitude of social problems particularly at the expense of the owners of the company and the shareholders. Mainly, they provide goods and services of all types. So business is for making profit for shareholders but it is also to respond to certain societal needs. By raising the issue of social responsibility business is forced to concern itself with the social dimension of its activities. Of course, this can be done well, or badly.

The question is does simply delivering their goods and services make business being socially responsible?

Many economists have taken a skeptical view of CSR and its sustainability within a competitive environment. They claim that business companies have no responsibility towards society past obedience to the law and their main and preponderant responsibility is to lead operation of the business to maximize shareholder wealth.

One of them, Milton Friedman, doubted that CSR was socially desirable at all. He maintained that the only social responsibility of a business is to maximize profits and create long-term value for the owners of the business. The role of the companies is to create employments, goods, services and wealth. This point of view considers that the shareholder, in pursuit of profit maximization, is the focal point of the company, meanwhile socially responsible activities and initiatives do not belong to the domain of business organizations, but are a major task of governments. Friedman pointed out that the stockholders, the customers or the employees could separately spend their own money on social activities if they wished to do so. He says that it is not the role of the company to solve the world's social problems but he also noted that there are many circumstances in which a company's manager may engage in actions that serve the long-run interest of the companies' owners and that also have indirectly a positive social impact.

This is a very narrow and old view of social responsibility in a business context. Indeed over the last decade or two, thinking about nature of the business and its relationship to the society has profoundly changed. It is certain and I do agree that those managing businesses have the duty to generate good returns to shareholders. Without the risk capital provided by shareholders business would not exist, however this is not the reason a business exists. The goal of business is to create value through trading transactions and the amount of value is proportionate to the willingness of customers to pay for services or goods. However doing profits at the expense of social or environmental impacts are wrong acquired gains and are unbearable.

Nearly half a century ago social responsibility may have been perceived as Friedman describes it, « hypocritical window dressing»