Corporate Social Responsibility (CSR) is a company’s initiative to assess and take responsibility for a company’s impact on the environment and social wellbeing of the planet. It applies to efforts a company instill which goes beyond what is mandated by laws and regulations. When it comes to corporate social responsibility (CSR), do you think companies should lean toward Milton Friedman’s (economic freedom) or Archie Carroll's (pyramid) ideology?
Corporate Social Responsibility(CSR)
The major two approaches towards CSR are Milton Friedman's 'Economic Freedom' proposal and Archie Carroll's 'Four Responsibility' model. These two are based on the responsibility span of any profit making organisation towards the society.
Milton Friedman's economic freedom model is not supporting the special place for CSR in business. His argument is, a responsible business person takes many steps with positive impacts on society as a whole. For example, in a free market system, if the price is of product or service is reduced by the organisation, it reduces the inflation in the economy. If the firm is spending on pollution control of his production system, it is a great step by the firm towards environmental protection. Similarly, if the firm is employing the uneducated jobless people in unskilled works, they become earning members of the family and thereby the firm is uplifting many families economically. For all these activities, firm is spending shareholder's money. According to him business has only one responsibility. It should increase profits by utilizing resources efficiently with in the rules and regulation, with transparency and straightforwardness. If the management deviates from the above, profits may come down and the firm has to go for actions like price rise, affecting society as well as the firm itself.
Archie Carroll argues that any firm has four important responsibilities to assume while doing business. They are, economical, legal, ethical and discretionary. Economic responsibility of a firm is to repay it's creditors and shareholder's by producing products and services of good value to society. Legal responsibility refers to the compliance with the law of the land. Ethical responsibility is the willingness of the firm to accept the believes in the society and behave accordingly. Then comes the discretionary responsibility. It refers to the responsibility to take action for the well well being of the society. Starting schools and hospitals in backward area or start skill development training for youth in surrounding area are examples of such responsibility. The above four responsibilities are in the order of priority.
I strongly believe in Archie Carroll's model of responsibility of any business organisation. The sole aim of the firm cannot be profit making alone. The society is supporting indirectly all firms in many ways. They allow the government to give support by policies and actions which benefits the business moneywise and other resources wise. All resources physically present is the property of nation, thereby the property of the people. Even the physical place may be the sacrifice of the people in that area. Tax payer's money is using to provide infrastructure facilities for goods movement, storage etc supporting business in a huge way. In this context the profit making firms have the direct responsibility towards, people, nation and environment. It has to look into the welfare of people in all possible ways. A portion of the shareholder's money has to be diverted for CSR activities for the general upliftment of the society. It has big responsibility towards cleaning and preserving environment for the health of world. Pollution control is one of the biggest platforms to perform. A firm focussing only to make profits mostly will not do anything to society in general. Promoting CSR is the way. Many mining companies and ore processing firms are working based on Friedman's principle, are making huge profits by destroying the environment and doing nothing to rebuild it. I see it as a crime. But if the firm is adopting Carroll's model of responsibilities, it will have a preplan to adopt damage relief strategies and enhanced welfare programmes in it's CSR plan.
A profit making business firm has to adopt Archie Carroll's responsibility model for the welfare of society and sustainable environment with holding social values.
Corporate Social Responsibility (CSR) is a company’s initiative to assess and take responsibility for a company’s...
Corporate Social Responsibility (CSR) is an initiative to assess and take responsibility for a company’s impact on the environment and social wellbeing of the planet. It applies to efforts a company imparts, which go beyond what is mandated by laws and regulations. When it comes to corporate social responsibility (CSR), do you think companies should lean toward Milton Friedman’s (economic freedom) or Archie Carroll's (pyramid) ideology? Explain why you think your answer is better for the company and its stakeholders
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