Corporate Social Responsibility

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Category: Business and Industry

Date Submitted: 03/15/2013 11:58 PM

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Over the decades the concept of corporate social responsibility (CSR) has continued to grow in importance and significance. The idea that business enterprises have some responsibilities to society beyond that of making profits for the shareholders has been around for centuries. Today one cannot pick up a newspaper, magazine or journal without encountering some discussion of the issue. So, while CSR was once regarded as largely a domestic business issue in leading countries of origin, in recent years its popularity has spread onto the world scene and we now see CSR initiatives in virtually all the developed nations and initial thinking and developing taking place in emerging nations as well.

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The idea that companies have a responsibility to act in the public interest and will profit from doing so is flawed. Large companies routinely claim that they aren’t in business just for the profit & that their intent is also on serving some larger social purpose. They trumpet their efforts to produce healthier foods or more fuel-efficient vehicles, conserve energy and other resources in their operations or otherwise make the world a better place. It’s not surprising that this idea has won over so many people—it’s a very appealing proposition. But it’s an illusion and a potentially dangerous one. In cases where private profits and public interests are aligned, the idea of corporate social responsibility is irrelevant. Companies that simply do everything they can to boost profits will end up increasing social welfare. In circumstances in which profits and social welfare are in direct opposition an appeal to corporate social responsibility will almost always be ineffective because executives are unlikely to act voluntarily in the public interest and against shareholder interests.

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CSR initiatives are not popular with shareholders as management has one responsibility and that is to maximize the profits of its owners or shareholders. They believe...