Corporate Social Responsibility Is a Must

Corporate Social Responsibility is a Must

In 1996, Roger Kerr criticized stakeholder theory and rejected the view that corporate managers have any moral obligations. He was in favour of Friedman's statement that 'the business of business is business', which separated business from society. The only responsibility for corporation is to increase profits as long as legal. And he quoted Adam Smith's famous metaphor of the invisible hand to support. However the invisible hand concept was introduced in 1759, which is out of date. The environment has changed a lot, the society expectations also changed as well. What is used to be right before may be not suitable for today. For example, gambling was not that popular as today, so casinos are blamed a lot by public so that many regulations restrict the operation nowadays than it used to be.

Roger also criticized the stakeholder theory. He thought that companies had no responsibility on stakeholders, such as consumers. Because such stakeholders make shareholders bear the cost of the so-called stakeholders' decisions.

However, in our view, corporate social responsibility is a must in this day and age. Goldman Sachs presents data showing that "companies perform well on governance, social responsibility and environment have performed better than the general share market over the past couple of years" (Gettler pp.2-4, 2007). According to Legitimacy theory, company does not exist as it ought to be, they earn their right to operate in the community. Because they are artificial entities that society chooses to create. Resources, such as the ocean, the earth and the atmosphere are commonly possessed by human beings. Organizations do not have an inherent right to resources. Failure to comply with social contract will be detrimental to the ongoing existence of the organization. Consequently, they are accountable to society for how it operates.

We hold the opinion that corporations are obliged to 'give something back to the community' in addition to their product. And there do exist a danger that managers could do so at the expense of the organization and its shareholders. For instance, certain businesses, especially highly polluted companies will be liable for a carbon tax charge commencing from 1st July 2012. The carbon tax paid to the government is a kind of thing that corporations being obliged to give back to the community because of their large amount of CO₂ emission. They should be accountable for the climate change. Similarly, superannuation companies paid for their employees each month is also a way of giving back to the community. Employees devote their time and effort in working for the company. They should get something back from their employer to guarantee them have enough available funds after retirement.

As is known to all, the regulation setting is in fact highly influenced by politics. If a company is legal but immoral, the society may put pressure on either the government, who is the regulation maker, or on the company itself to make it hard to