Corporate social responsibility is the management concept according to which the companies are required to incorporate the environmental and the social concerns in to the operations of the business. Basically CSR is a business approach that helps in contributing towards the sustainable development by delivering, environmental, social and economical benefits to all the stakeholders. There are many definitions and practices of the corporate social responsibility (E., 2009). According to the various empirical researches that have been conducted in the past few decades it has been observed that the corporate social responsibility provides a good pay off for both the stakeholders and the company. There are number of reasons for which the companies require the corporate social responsibility.
So the requirement of the corporate social responsibility in all the phases needs the companies to have a ethical obligation towards the various stakeholders (Alder, 2008). There has been a great influence of the organizations regarding their responsibility towards the corporate social responsibilities due to which the companies have started thinking beyond earning more and more of profits (M., 2008).
According to the World Business Council For Sustainable Development CSR has been defined as a commitment by the business according to which they are required for maintaining morality, ethical environment for contributing towards the economic development so that there can be the improvement in the quality of the life of the families and workplace along with the improvement on the quality of life of the community and the society (Adams, 2001).
According to the International Finance Corporation or IFC, the CSR has been defined as a business commitment for the economic development and this definition resonate with the definition of world business council of sustainable development through stating the fact that it is the responsibility of the business to work with the employees, local communities, families and the society in such a manner that everything is done for the benefit for the business on long term basis (Bartlett, 2003).
The Corporate social responsibility gained much of popularity in the 1960s and after that CSR has been considered as a important part of the company and with the passage of years there have been lots of responsibilities comprised within its definitions that includes moral and legal responsibilities.
There are basically two distinct views of corporate social responsibility that are the narrow view and the broad view of corporate social responsibility.
The Broad and Narrow View of Corporate Social Responsibility
One of the most disputed issues during this time in the companies is the corporate social responsibility. There are two extreme view of corporate social responsibility in the business, that is the narrow view and the broad view (Bowie, 2002). If we look from one angle that is the classical view, it is seen that according to the classical view, it is said that the business organizations are the economic organizations that have the sole motive of earning more and more profit and there is only one responsibility that they have towards the society and it is that they shall provide the goods and services that are necessary to the society in the exchange of providing the maximum profits to their shareholders. This classical view was very much supported by Noble prize winner and economist Milton Friedman. According to him it is the sole responsibility of the business and the company to carry out the operations of the business in such a manner that it’s satisfy the interests of the shareholders and these interests of the shareholders coincides with the maximum profits of the company (Chun, 2005).
While on the other hand there is social economic view about CSR according to which it is said all the business companies are the part of the society and therefore it has the responsibility towards the society in which it operates, there responsibility cannot be restricted to the maximization of the profits (Collins, 2005). The various supporters of the view said that after looking in to the financial aspect of the business organizations, the companies will be automatically benefited if they are responsible towards the society (Amao, 2011).
There have been a great scrutiny of both the view of the corporate social responsibility and both the views have been argued extensively as this arena is becoming something very essential for the society as a whole. As the passage of time the narrow view of the corporate social responsibility is getting fade and the socio economic view or the broader view of the corporate social responsibility is getting much momentum (Crane, 2007). On the international front as well there are many business houses who are adopting the corporate social responsibility along with the economic interests.
As explained in the above discussion the narrow view suggests that then main objective of the business is earning and maximizing profits. There are many scholars who support different views and argue on the narrow and the broad view of the CSR. As for example it has been stated by Levitt that there are basically two responsibilities of the business (Urip, 2010). One responsibility is the compliance with the basic standards of the business however the second is the profit maximization. According to Friedman it has been argued that the business should concentrate on the profit maximization and not the social well being of the company. It is further argued by the business that the business corporations are the artificial persons and hence they have artificial responsibilities. Business are the artificial organizations and have the main responsibility is on the proprietors and the executives who are the main people liable for the same (K., 2008).
It is further stated by the narrow view of the corporate social responsibility that it is the responsibility of the company for making money; hence the companies have the responsibilities and goals for making the money. It is also stated by Friedman that there are certain amount of social responsibilities for the various executives for making money and maximizing the profits. The social responsibilities of the company include spending the money of the shareholders for the general interests for the way of tax owners like the tax community causes (S., 2014).
Further, it is argued by Friedman that the main responsibility of the business organization is indulging itself in the various activities that helps in increasing the profits and that include the various profit maximization schemes that should be according to various laws that shall be made by the business in an free and open competitive market without deceptions and fraudulences (S. S. , 2007). When there is no use of force than the profit maximization cannot be considered wrong. However there are various instances in the business of the force due to which the markets and the businesses get wrong impression.
On the contrary the broader view of the corporate social responsibility states that other than gaining the objective of the profit maximization there are other various responsibilities of the business towards the society and the community where the businesses operate and address the negative consequences of the business on the community and the society (S. H. , 2009). There are different rules related to the corporate social responsibility for the companies and they depend on various factors. The distribution of the profit that is earned by the company needs to be decided in an exclusive manner. For this various values are imposed through the analyses of the various factors that might affect the profits of the company. For this various strategy plans are prepared from time to time so that better benefits could be provided to the society and the clients of the company. In this sense the broad view relates to the various market trends whose regulations are not dependent on the federal authorities. The change that needs to be implemented in the business always keeps on revolving around the various trends that are positive in nature. In the broader view of the CSR the social trends through which the society and the community could be benefited are considered are important for providing various benefits to the system. So, here it becomes imperative for the leaders to develop the various stages that are important for the implementation of the different changes that are important for the business.
While, on the other hand in the narrow view, the various benefits are associated with the particular aspects or the organization only. These are the most important factors that the companies often consider. If the company does not take proper steps in regards to this than it might be possible that the company may not be able to reap the expected benefits that are associated. For this proper measures are taken so that the negative impacts can be lowered in the various decisions of the organization.
Accepting the Broader View
There are number of supporters for both the broader and the narrow views of the corporate social responsibility. However, there are more benefits in the favor of the broader view due to the association of the various reasons associated with this view. There are various arguments that are presented from time to time to support the narrow view of the corporate social responsibility. The first argument that is based in the favor of this view is the Adam Smith’s invisible hand argument. According to this argument it is the responsibility of the organizations for the promotion of the self interests and during the stage the organizations would be guided by the invisible hand for doing the social good. On the other hand if the companies are forced to follow the CSR then they might not be able to meet the needs that are of materialistic nature (L, 2009).
However, it becomes worth noting that this view is very old and it does not exists in the real times. In the present times the corporations are more powerful as compared to the government. The second argument supporting the narrow view is that it is the responsibility of the government for the regulation of activities of the organizations and looking that they are ethically correct.
It is very important here to be mentioned that the government alone cannot regulate the ethically correct and unethical behaviors of the organizations (P., 2009). Further, it is quite of impossible for the government to predict the probable behaviors of the companies. The third argument here is that the organizations alone cannot be trusted for the good or the well being of the society or the community as the companies does not have probable expertise and knowledge. Also there are many organizations who are of private nature and are also capable of looking in to the well being of the community and the society. Another argument is that there are many corporate executives those who do not possess the social and the moral capabilities for taking the decisions for the social welfare of the society. It is worth noting that there is no person who is born perfect with all the capabilities. People are able to learn along with their responsibilities and work. The company shall never lack behind in case of the corporate social responsibility. Finally, it has also been argued that if people are given the responsibility of corporate social responsibility than they would convert the society in to materialistic and commercial place.
If we move towards the broader view, we would observe that number of contentions is there in support of the corporate social responsibility and its adoption as broader view. Firstly, there are many duties of the organizations towards the stakeholders, customers, employees, environment and suppliers. Secondly, there is a very well known saying that there are greater responsibilities along with great powers. Business organizations have number of responsibilities towards the society that are very much influential. Thirdly, the organizations have a universal social contract with the society. According to this contract the society is responsible for making the various rules, regulations and responsibilities under which the organizations are required to operate. Therefore if the society is concentrating on the environment and its sustainability than the organization shall also abide by the various norms created by the society (Crowther D, 2008).
CSR and Ethics
There is a lot of difference between the narrow and broad view of CSR which can be very well explained through the ethical theory and its application. According to the stakeholders theory there are many individuals who are affected by the actions, policies and procedures of the organization. But there are many stakeholders who have some specific legal rights. As for example, in the case of large organizations there are primary as well as secondary stakeholders. Under these conditions there are no legal rights with the environmental group. I would recommend the broader view of CSR , because if the narrow view will be used than many of the rights of the stakeholders will be ignored. In the past the corporations have normally been criticized for affecting the environment adversely and wasting the natural resources.
It is required that all the organizations shall abide to the various guidelines for a concrete CSR so that there is a transformation of the large organizations in to productive corporations that can affect the companies in a positive manner. There are many policies laid down by the CSR guidelines according to which the organizations are expected to give away some of their success and wealth to the society so that they could support the society. Secondly, it is very well known fact that the primary source of wealth is the natural environment and it is being abused by the humans. The organizations those who take the CSR seriously would understand there responsibilities towards the society and that they are not here to damage the society. It is recommended that all the organizations shall always remunerate their employees for the work so that the organizations can be successful in the near future. There shall be equal pensions, benefits, plans and salaries given to the employees. There shall be reasonable products and services provided to the employees.
At last it can be concluded that CSR is the duty of the organizations and that should be performed by the organizations in an effective manner. Generally, there should not be any kind of influence or force on the organizations for performing such duties. But, there are some social media, government, and the advocacy groups that force the organizations to perform the CSR. It is very much evident from the above discussion that an active CSR is very useful for the organization and the society. Hence it is required that the CSR is considered to be the basic values and concepts of the business and by following the path of active CSR the companies could shift away from the exploitations of the society. The CSR concept can further help in making the organizations responsible without the adding of any kind of pressure on the authorities.
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