Corporate Social Responsibility For Social Purpose: An Essay On The Significance.

Arguments for the Broad View

Discuss about the Corporate Social Responsibility for Social Purpose.

Moral responsibility is what differentiates between an animal and a human being. People guide all the actions of a corporation and hence, a corporation is morally responsible of its actions. Otherwise, the total impact of the wrong deeds will bring huge negativity in the communities.  According to Juš?ius and Snieška (2015), the definition of CSR or Corporate Social Responsibility states that it is a business approach, which helps the corporations to develop sustainable economic, socio-cultural, and environmental benefits for all the agents in the market. In general, the views on CSR can be categorized into two parts namely broad and narrow. The broad view, apart from profitability, talks about how the corporations are responsible for the society. The narrow view only focuses on profit maximization.

The social purpose suggests that a corporation should not create a product, or use methods to create products, which diminishes the normal societal values. It means the organization neither should produce such things that will hurt the economic, socio-cultural, and environmental values, nor should use such methods of production. Doing so will make the society deviate from the Pareto optimal, as it will make such move detrimental to the others of the society (Moon, 2014).

As stated by Chernev and Blair (2015), the corporations that are operating in the society have enough power to do good for the society. Sometimes the corporations have power more than the even the government. The corporations create jobs and employment opportunities, products for the consumers, generates revenue, and much more, which gives them a power of doing something in the society. If this power is used for a good cause, it will help those who belong to this society. If this power is used for personal benefits, it will create negativity in the society.

The social contract is the voluntary agreement among the people of a particular society. This agreement states that the members of the society have to cooperate for earning the social benefits, sacrificing personal benefits. It creates a mutual understanding and secure benefits for all the members of the society. The social contract does not have any exceptions for any individual, as all the members operate with one goal ahead.

Adam Smith introduced the concept of invisible hand in economics, where he clearly stated that economic agents should operate in the economy freely. This will lead them to their general greater good. Pursuing their self interests will help the organizations to function optimally.  It will help the corporations to meet the economic needs of the society. If the corporations are forced to think about corporate social responsibility, it might lead to reduction in meeting the material needs of the society. In the long run this will reduce the well being of the members of the society.

Arguments for the Narrow View

According to this narrow view, the government has the power of creating guidelines for the corporations on how to operate in the society (Cao, 2017). The government can also make sure that the corporations are acting ethically. The view states that it is the government’s responsibility to ensure that this mechanism works properly. Here, the government has to find out the amount of loss that the society might be incurring due to the operations of the corporation and help the corporations in balancing the negatives in the society. This process also saves the corporations’ cost of finding out and the amount of the societal loss due to the production and the cost of creating guidelines regarding how to become sustainable.

It is widely agreed that the executives of the organizations have little or no moral and social expertise to make deals, which do not incorporate economic decisions. If these people are left with the job of creating guidelines for the societal benefit, the plans might not be optimal as they will have the chance of putting their values on the other members of the society.

According the views of Okpara and Idowu (2013), materialization of society is an abstract concept. Hence, addressing the needs of the society is not easy for the corporations. It might take some other institution as well to create a proper guideline for a corporation for this purpose. The plans that have to be materialized in order to create the society a better place to live are guided by the corporate social responsibility approach of a corporation. The effect of CSR also uplifts the moral responsibilities of the economic agents making the arguments of broad view more humane.

According to Salib et al. (2015), the narrow view opts for the invisible hand where the marketing agents are supposed to operate as they can without worrying about the societal benefits. However, the corporations presently have huge market power, which is very different from the corporations of Adam Smith’s time. This requires adaptation of new techniques like broader view in the business process. Again, the government doing the job of monitoring each thing regarding the social responsibility of the corporations might not work the way it was intended to.  There might be various reasons for which the narrow view might not work properly like lack of availability of information. It is not a great theory to assume that the government is the best option for making the guidelines for the society or corporation.

Arguments of Broad View Versus Narrow View

The outline of Kant’s ethics relies solely on the belief that the action of a human being is determined by reason. Without a reason an action is not justified. The reason might vary from person to person for the same action. The Kantian ethics suggests that an action can be considered as right if it follows the principle of morality (Kobzar, Nikolayeva & Shvets, 2014).

Following the views of Servaes and Tamayo (2013), it can be said that, the universal law suggests that if an action is not maxim or truthful in nature it should not be universalized and the action has to be rejected and counted as immoral. However, in reality, this formula possesses some fallacy. Following the universal law, it can be pointed out that all the maxims, which cannot be universalized, might not be immoral in nature. Hence, this law should not just bind one’s actions.

The good will theory suggests that will is under the control of people in a holistic manner. Following the views of Deng, Kang and Low (2013), it can be said that, this creates an opportunity for taking a good action following a proper reason. Hence, it has to be monitored whether the will of the corporation has a good reason. Moreover, a good will works as a sense of duty. This makes an easy guideline for the corporations using broader view.  This duty has no place for self-interest or emotional attachments. Hence, a corporation, which adopts the broader view of CSR, is not necessarily doing its duty. The corporation has to make sure that the ideas are following the ethical grounds as mentioned above.

The main aim or objective of a company is to earn profit. No matter which view a organization follows, the main aim does not change. Some other concerns might be added in the list of the objective. As stated by Korschun, Bhattacharya and Swain (2014), the idiom “means to an end” states that there might be some actions or stakeholders, which have less or no value in it but can be used as a tool of achieving the objectives of the organizations.

According to Preuss (2013), an organization that adopts the broad view of Corporation Social Responsibility will not use any stakeholder as a way of achieving the organizational objectives. The reason behind not using the stakeholders as means to an end is the process fully exploits the people involved. This is against the principles of broad view of CSR. The broad view suggests that to the society

The usage of broad view in the organizations mainly suggests that the organization has a different target than the other organizations where profit maximization is the only objective. The broad view suggests that the corporations should consider the society where it is operating in the list of beneficiaries. This way the corporation will be able to create business strategies, which will help the environmental, economical, and socio-cultural causes.  On the other hand, the narrow view is concerned with making profit only. It has nothing to with the societal benefits and Pareto optimization.

According to Baumberg et al. (2014), the idea given by Kant states that, an action following a maxim, is ethical. A corporation can follow the ideas of broad view but for its personal agenda, which does not suffice the ethical requirements stated by Kant. Hence, a corporation following the broad view might not follow ethical rules as well.

References:

Baumberg, B., Cuzzocrea, V., Witteman, J., Ortoleva, P., Disley, E., Tzvetkova, M., ... & Beccaria, F. (2014). Corporate Social Responsibility.

Cao, X. (2017). Corporate Social Responsibility. In Fair Development in China (pp. 119-134). Springer International Publishing.

Chernev, A., & Blair, S. (2015). Doing well by doing good: The benevolent halo of corporate social responsibility. Journal of Consumer Research, 41(6), 1412-1425.

Deng, X., Kang, J. K., & Low, B. S. (2013). Corporate social responsibility and stakeholder value maximization: Evidence from mergers. Journal of Financial Economics, 110(1), 87-109.

Juš?ius, V., & Snieška, V. (2015). Influence of corporate social responsibility on competitive abilities of corporations. Engineering Economics, 58(3).

Kobzar, T., Nikolayeva, V., & Shvets, O. (2014). CORPORATE SOCIAL RESPONSIBILITY.

Korschun, D., Bhattacharya, C. B., & Swain, S. D. (2014). Corporate social responsibility, customer orientation, and the job performance of frontline employees. Journal of Marketing, 78(3), 20-37.

Moon, J. (2014). Corporate social responsibility: A very short introduction. OUP Oxford.

Okpara, J. O., & Idowu, S. O. (2013). Corporate Social Responsibility. Springer Berlin Heidelberg.

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Salib, J., Sun, D., Wu, J., Wen, X., & Huang, C. C. (2015). Corporate Social Responsibility.

Servaes, H., & Tamayo, A. (2013). The impact of corporate social responsibility on firm value: The role of customer awareness. Management Science, 59(5), 1045-1061.