Question

Issue: Is Increasing Profits the Only Social Responsibility of Business?

In a famous article Milton Friedman argues that businesses have neither the right nor the ability to make social responsibility a priority. Profit making must be the priority. Businesses serve employees and customers best when they do their work with maximum efficiency. The only restrictions on the pursuit of profit that Friedman accepts are the requirements of law and the "rule of the game" ("open and free competition without deception or fraud").

Peter Karoff and others believe that even in the absence of legal requirements, businesses must ensure that their products are safe and healthy. They must be just, practicing fairness in their dealings with vendors, customers, employees, and fellow citizens. Like other citizens who have prospered, they may fairly be expected to “give back” to the community in return for its protections and encouragements, in the form of support for the charity, the schools and colleges, and the arts.

In a concise 700-word minimum essay, please describe the two views on corporate social responsibility, and then present and defend your own position on this topic. You can use examples to prove your point and attempt to disprove the other position.

Answer 1

ARGUMENTS FOR SOCIAL RESPONSIBILITY

Business enterprises must assume social responsibility because of following reasons:

• Justification For Existence And Growth: It is justified for growth ad existence of business.
• Long-Term Interest Of The Firm: It is in long term interest of the business.
• Avoidance of Government Regulation: If social responsibility is fulfilled, government intervention can be minimized.
• Maintenance Of Society: it is necessary to maintain society in a crime free manner.
• Availability Of Resources With Business: Business has financial and human resources to fulfill it.
• Converting Problems Into Opportunities: It converts problems into opportunities.
• Better Environment For Doing Business: It provides better environment for doing business because when interest groups are satisfied, they cooperate better.
• Holding business responsible for social problems: Non compliance with social responsibility makes business responsible for social problems like corruption, forgery, scams etc.

ARGUMENTS AGAINST SOCIAL RESPONSIBILITY

There are some arguments against the concept of social responsibility:

• Violation of profit maximization objective: Social responsibility is against the objective of profit maximization.
• Burden on consumers: Ultimately social responsibility involves a cost. The burden of this falls on consumer.
• Lack of social skills: Business claims that they lack requisite resources for it.

REALITY OF SOCIAL RESPONSIBILITY

The various factors which have persuaded businessmen to consider their social responsibilities are:

1. Threat of public regulation: In reality business houses do not assume their social responsibility on their own but due to threat of public action.
2. Pressure of labour movement: Labour laws are also followed not out of a sense of social responsibility but because of increasing pressure of labour movement.
3. Impact of consumer consciousness: Consumers are also becoming aware of their rights since enactment of Consumer Protection Act, 1986.

• Development of social standard for business: No business can be done in isolation with the society. The performance of a business is judged on social standards..

4. Development of business education: Now a days business man are professionally qualified due to changing pattern of form of business. It is also making it socially more responsible.
5. Relationship between social interest and business interest: Business men are able to find that social interest and business interest are correlated.
6. Development of professional, managerial class: Professional management is also educated of the benefits it can get by fulfilling its social responsibility.