The Socio-Economic View vs the Classical View

The Socio-economic View VS the Classical View

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The socio-economic view and the classical view are the two different approaches adopted by the managers of relatively larger organizations to prioritize and carry out things.

According to the socio-economic view, the social responsibility of the management goes far beyond making profits to involve social welfare and betterment. According to the experts there are four essentials of corporate social responsibility which are: economic, ethical, legal and philanthropic. All of these essentials can be directly linked to corporate social processes like issues management, stakeholder management and environmental assessment. (Philip Kotler, 2004)

Being socially responsible not only helps the organizations to create a positive favorable image of their company but also significantly improves share price in the long run and it has been also found that such organizations have relatively long-run secured profits. Moreover, it is considered to be in the best interest of the company to practice social responsibility as according to the recent public opinions, there is more support businesses which do that.

On the other hand the classical view of social responsibility says that the management is only responsible to maximize profits of the organization. Hence, it declares that there is only one social responsibility of the management and that is to run the business with the best interests of the stakeholders by improving the financial returns. (Mark Esposito, 2009)The management is responsible to utilize all available resources to increase profit provided that no rules of the business are violated including fraud or deception. Followers of the classical view of social responsibility believe that if practicing social responsibility adds to the cost of the business it will in return affect the return on profits. Those who are not in favor of social responsibility fear that pursuing the social targets...