Corporate Social Responsibility means the moral, legal, ethical and economic expectations of society from the organizations. The concept states that the organizations hold ethical and moral responsibilities in addition to their other responsibility of earning profit and complyance with the law (Suliman, Al-Khatib and Thomas 2016).
CSR also relate to the impacts on the environments and societies of work done by organization and business beyond the lawful obligation. The works include the effort taken for the protection of the environments, effort taken by the organizations towards their suppliers, employee, customer and community of their operations.
A corporation is a thing that can endure beyond the natural lives of its members and that has incorporators who may sue and be sued as a unit and who are able to consign part of their property to the corporation for ventures of limited liability.
The concept of limited liability: Members of a corporation are financially responsible for the debts of the organization only up to the extent of their investments.
There are certain differences present in between the two that can be categorised as follows:
For profit, non-profit; owned in private or owned entirely or few parts by the governments; that has been held, publicly or privately. Princeton University, for example, is a non-profit corporation. Companies like Eastman Kodak, by contrast, aim to make money for shareholders (Carroll 2015).
The contemporary business corporation has developed over numerous centuries. The corporate forms evolved at the time of the Middle Age. The initial corporation were the town, university, and the religious order, chartered by the governments and managed by the statute of the public.
The corporation is considered to be a legal person, in the eyes of the law. This implies that protections as well as rights are enjoyed by them, which any of the normal individual does. This includes the right of freedom of speech, due processes, against the unreasonable search and seizure, trials of the jury, and independence from the double jeopardy (Pedersen 2015).
The corporations are known to be a legal or artificial persons. The existence of the corporation within the lawful system put up the question of the position of the corporation as moral agents. According to the law, companies as artificial legal person, company have moral obligations just as individual. There are several rules regarding the corporate personality of the corporation. It has been observed in Saloman v Saloman  AC 22 that the company is a separate legal entity and therefore, it is no need to state that it has certain other obligations.
A company has to take certain moral decisions to facilitate the process of business. The procedure of moral corporate decision makings have been filtered by the frameworks of the structure of corporate internal decisions (CID). The frameworks consist of persons although it finally operate like the machines. Many argue that just the persons, who are within the structures, would be able to act in a moral or an immoral manner, and can be accountable for their action, morally. Others do not agree as to whether the overall structures would be liable for the illegal or criminal acts or offense and would be punishable under the laws. All the form of punishments cannot be applicable for the corporation (Salib et al. 2015). There are certain ambiguities present regarding the moral responsibility of the company. Though philosophers have argued a lot about the ethics and morality involved with Corporate Social Responsibility, but there exist no confirm answer that could resolve ethical problems.
This project will discuss the view of Milton Friedman and will later be contrasted with the views other scholars of CSR. There will be further argument in contrast to Milton’s’ point, that the stakeholders can in no manner indulge themselves into any kind of acts to increase profit. The discussion will also show the other side, that the companies should indulge themselves in CSR activities as it can indirectly have some positive effect on the performance of the company (Jelsma and Nollkamper 2017).
Stakeholder theory, which has been described by Edward Freeman and others, is the mirror image of corporate social responsibility (Harrison, Freeman and de Abreu 2015). Instead of starting with a business and looking out into the world to see what ethical obligations are there, stakeholder theory starts in the world. It lists and describes those individuals and groups who will be affected by the company’s actions. In a single sentence, stakeholder theory affirms that those whose lives are touched by a corporation hold a right and obligation to participate in directing it. Stakeholders provide both tangible and intangible resources to the company. Primary stakeholders are those whose continued association is absolutely necessary for a firm’s survival. On the other hand, secondary stakeholders is not necessary for the firm’s/company survival.
As a simple example, when a factory produces industrial waste, a CSR perspective attaches a responsibility directly to factory owners to dispose of the waste safely. By contrast, a stakeholder theorist begins with those living in the surrounding community who may find their environment poisoned, and begins to talk about business ethics by insisting that they have a right to clean air and water. Therefore, they’re stakeholders in the company and their voices must contribute to corporate decisions. It’s true that they may own no stock, but they have a moral claim to participate in the decision-making process (Ee, Halim and Ramayah 2013). This is a very important point. At least in theoretical form, those affected by a company’s actions actually become something like shareholders and owners. Because they’re touched by a company’s actions, they have a right to participate in managing it. The internal stakeholders are employees, manager and owners. While the external stakeholders on the list—shareholders, government, customers, suppliers, creditors and society.
In practical terms, however, a strict stakeholder theory—one insistently bestowing the power to make ethical claims on anyone affected by a company’s action—would be inoperable. There would be no end to simply figuring out whose rights needed to be accounted for. Realistically, the stakeholders surrounding a business should be defined as those tangibly affected by the company’s action. There ought to be an unbroken line that you can follow from a corporate decision to an individual’s life (Ismail 2013).
Adam Smith claimed that when each of us acts in a free-market environment to promote our own economic interests we are led by an “invisible hand’’ to promote the general good. Corporations should not be held accountable for non-economic matters – this distorts business’s mission and undermine the free-enterprise system. The objection to this argument is that it does not apply to modern conditions in the free market – corporations are extremely powerful but are pressured by public opinion to present themselves as responsible citizens
Social Critic John Kenneth Galbraith agree that business’s social role is purely economic and that corporations should not be considered moral agents. Modern corporations will enrich themselves while impoverishing society. For instance, they will pollute, allow racial and sexual inequalities to fester, deceive consumers and strive to eliminate competition and keep prices high through oligopolistic practices. The corporation has a natural and insatiable appetite for profit and should be controlled through a strong hand of government with imposed system of laws and incentives that can bring corporations to heel (Harrison, Freeman and de Abreu 2015). The objection to this argument is thatgovernment cannot anticipate all moral corporate moral challenges but manifests many of the same structural characteristics that test moral behaviour inside the corporation
Some who argue against broadening corporate responsibility say that corporate executives lack the moral and social expertise to make other than economic decisions. Physicians, for example, are to provide health care. The value of specialists lies in their limitations. They ought to not allow themselves to see much of the world that they become distraction. The objection to this argument is that the social role of corporations does not confine its or its employees’ responsibilities to profit making – often only business has the know-how, talent, experience, and organizational resources to tackle problems.
Corporations will impose their values on us. Broadening corporate responsibility will “materialize’’ society rather than “moralize’’ corporate activity. For example, ExxonMobil has published editorial-style advertisements in the newspaper criticizing the Clean Air Act Amendments and arguing against using economic sanctions to promote American foreign policy goals. The objection to this argument is based on the statement regarding the effectiveness of the materialistic theory over the society (Ghazzawi and Palladini 2014).
The criticisms of these arguments against broadening corporate responsibility have led many people inside and outside the business to adopt the broader view of CSR - which the obligations of the modern business corporation extend beyond simply making for it. Society grants corporations right to exist, gives them legal status as separate entities, and permits them to use natural resources. Society also has the right to expect corporations not to cause harm, to take external effects of their activities into account, and whenever possible to act for the betterment of society.
Carroll, A.B., 2015. Corporate social responsibility. Organizational dynamics, 44(2), pp.87-96.
D'Angelo, L. and Lu, P.H., 2014. Model Organizational Checklist for a Limited Liability Company. BUSINESS LAWYER, 69(4), pp.1251-1321.
Ee, O., Halim, H.A. and Ramayah, T., 2013. The effects of partnership quality on business process outsourcing success in Malaysia: key users perspective. Service business, 7(2), pp.227-253.
Ghazzawi, I.A. and Palladini, M.E., 2014. The Shift from Economic to Social Responsibility: The Tale of Two Arguments. Journal of Legal, Ethical and Regulatory Issues, 17(1), p.15.
Harrison, J.S., Freeman, R.E. and de Abreu, M.C.S., 2015. Stakeholder theory as an ethical approach to effective management: Applying the theory to multiple contexts. Revista Brasileira de Gestão de Negócios, 17(55), p.858.
Ismail, S., 2013. Critical success factors of public private partnership (PPP) implementation in Malaysia. Asia-Pacific Journal of Business Administration, 5(1), pp.6-19.
Jelsma, P.L. and Nollkamper, P.E., 2017. The Limited Liability Company. LexisNexis.
Pedersen, E.R.G. ed., 2015. Corporate social responsibility. Sage.
Salib, J., Sun, D., Wu, J., Wen, X. and Huang, C.C., 2015. Corporate Social Responsibility.
Schrempf-Stirling, J., Palazzo, G. and Phillips, R.A., 2016. Historic corporate social responsibility. Academy of Management Review, 41(4), pp.700-719.
Suliman, A.M., Al-Khatib, H.T. and Thomas, S.E., 2016. Corporate Social Responsibility. Corporate Social Performance: Reflecting on the Past and Investing in the Future, p.15.
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