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A Comparative Study On Social Responsibility Of A Business Add in library

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Question:

Evaluate Cohen’s article on social responsibility. Consider how his perspective aligns with those of classic management experts Drucker and Friedman?
 
 

Answer:

A Comparative Study on Social Responsibility of a Business

Introduction:

The study compares the opinion of famous Author William A. Cohen and his perspective on corporate social responsibility. William A. Cohen is presently the president Institute of leader Arts, he was among Druckers first batch of executive PhD graduate. He is the author of many well known books like “A class with Drucker”, “Drucker on Leadership” and many others. His works are mostly based on Drucker and his own views. Based on their case studies and

The concept of social responsibility:

Social responsibility is an ethical guideline that suggests a unit irrespective of an organization or individual. Responsibility towards the society is Social responsibility. It is a duty that is expected to be performed by organizations or individuals to balance between the social systems. It sustains the equilibrium between welfare of the society and the economic development (Benn & Bolton, 2011).

The social responsibilities that are taken by an organization for its stakeholders and the society, is known as Corporate Social responsibility. Many people called it as Business social responsibility. A business is liable for the impact on environment by its activities. Corporate social responsibility takes care to that part of the Organization. CSR is a compulsive inclusion of public welfare. Though it is a new concept yet, has become an integral part of a company. In the article of William A. Cohen, it referred a real life incidence of two people, one was Andrew Carnegie and the other was Julius Rosenwald. They had a different perception of social responsibility from each other. Where Carnegie use to give money from his private fortune for social good, there Rosenwald considered social responsibility as a fraction of his ongoing business. 

 

Cohen’s thought on Social responsibility:

According to Cohen, what Drucker implied was that corporation should act as a social institution and must possess some social responsibilities. Cohen termed Social responsibility as the “in thing”.  Many organizations have their entire department that supports social responsibility, the appropriate measure of improving their actions, and developing ongoing social programs.

Social responsibility to its workers:  CSR can frame the perception of organizational justice towards the organizational workers. The corporate leaders are responsible for workers in and out from the organizations perspective.

Social responsibility to its shareholders: the term shareholder means those who are impacted by the activities of an organization. Cohen supported Drucker that the first responsibility of an organization is that to achieve the organizational goal. Amidst the process the shareholders remain as an asset for the organization. The social responsibility of an organization towards its shareholders is earning profit in order to maintain the sustainability of the organization.

Social responsibility towards the society: in society level Cohen quoted Drucker where he stated that the existence of a healthy organization cannot be in a society full of sickness. Even though the organizations are not responsible for a sick society, still it should take the social responsibility.

The alignment of Cohen’s perspective with Drucker:

According to Drucker, an organized society is an interdependent society. Both Drucker and Cohen agreed on the fact that a good leadership results in an effective social responsibility. Citing the example of Rosenwald, they explained that without a good leadership the company would never be able to achieve its social responsibility. Drucker believes that leadership had no substitute; hence it is a vital phenomenon in a business (Cohen, 2009). Drucker and cohen both accepted that public good and self-interest can be kept apart. For the common weal of a society an organization is supposed to be responsible. It is the part of every organization, who ultimately contributes for the social welfare.

 

Comparison between Cohen and Friedman’s opinion:

According to Friedman, business cannot have responsibilities, even in a vague sense. The corporate executives are not bound to engage in a social responsibility, but they are bound to their owners. If the executive chooses his ethical values over that of the company’s then he will be considered as spending the customer’s money. A private business owner cannot be manipulated. Hence the firm’s social responsibility decision lies upon to the owner himself. Friedman argued that social responsibility should not be exercised by the employees who are responsible for making decisions for an organization (Mulligan, 1986).

Cohen had a different opinion referring to Julius Rosenwald’s approach to business social responsibility. He found that under the leadership of Rosenwald there had been a huge progress in sales at Sears Roebuck. This did not stop Rosenwald to invest money in educational institutions. But Rosenwald firmly believed in the fact that welfare of a company is based on its customer’s skill, well-being and knowledge. Cohen agreed that educating and developing the skill and knowledge of the customer, of an organization, is an effective business social responsibility. Cohen supported this fact because this idea brought Sears Roebuck’s company as one of the largest merchant in the world.

 

Aligning their theories about current business climate promoting ‘green environment’:

Where Milton Friedman focused more on business profit, there Drucker explained the importance of the role that and organization should play for its society. Cohen explained that a business should not just focus in its profitability but also a contribution to the society.

In 2009 a corporate social responsibility model was proposed by Castello and Lorenso. In their model they explained management system as a major factor in developing the change in corporate social responsibility (Gottschalk, 2011).  A new trend has been introduced about green certificate for corporate. The green business takes responsibility to check the impact made by various organizations to its environment (Lyon & Maxwell, n.d.). This is a support to the society that follows the concept of Peter Drucker as well as William A.Cohen.

Today the world is facing various environmental issues; organizations are majorly blamed for it. It is because of the equipments used, the emission, and the pollution which are the consequences of manufacturing and other factories. In order to reduce these problems Organizations took initiative.  Like in NAT steel of Singapore they firmly believe in green reservation (Natsteel.com.sg, 2015). This is because Singapore one had a huge water crisis due to pollution in Singapore river.

 

Conclusion:

The modern concept explains that managers should be guardians and instigators of a communal change towards development for sustainability. In green context corporate should show their intention for a healthy environment. Due to global warming and other environmental changes, the organizations have recently started taking care of their environment. Earlier the corporate issues were more about the labors but today the organizations had to make the green concept another vital factor. Through the arguments of various scholars, it has been found that an organization that abides social responsibility stand out to be successful in business.

Recently corporate social responsibility has become more about Organizational gain than about social responsibility. It can be better understood, if a company establishes a hospital in its name, then the name turns out to be an advertising as well. The society would see that the company made a hospital, but in reality the company created a good will as well as a brand value.

 

References

Benn, S., & Bolton, D. (2011). Key concepts in corporate social responsibility. Los Angeles: SAGE.

Cohen, W. (2009). What Drucker taught us about social responsibility. Leader To Leader2009(51), 29-34. doi:10.1002/ltl.315

Gottschalk, P. (2011). Corporate social responsibility, governance and corporate reputation. New Jersey: World Scientific.

Lyon, T., & Maxwell, J. Corporate Social Responsibility and the Environment: A Theoretical Perspective. SSRN Journal. doi:10.2139/ssrn.1011793

Mulligan, T. (1986). A critique of Milton Friedman's essay ?the social responsibility of business is to increase its profits?. Journal Of Business Ethics5(4), 265-269. doi:10.1007/bf00383091

Natsteel.com.sg,. (2015). NatSteel. Retrieved 19 February 2015, from https://www.natsteel.com.sg/csr

 
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