Corporate Social Responsibility

‘If a business wants to maximise profit, it cannot be concerned with corporate social responsibility’. Critically discuss this statement.

Introduction

The primary goal of any profitable organisation is to maximise profit the “process of adjusting business operations to achieve the highest possible level of profit” [ (Anon., 2007) ]. However a key issue for managers especially in today’s socially conscious society is to determine the role corporate social responsibility (CSR) plays in an organisation, whose primary goal is to maximise profit. Corporate social responsibility (CSR) can be defined as the “idea of integrating economic, environmental and social criteria into strategy and management to create long-term shareholder value” (Wade, 2005). The argument whether CSR and profit maximisation can be achieved concurrently has brought upon two opposing arguments about the meaning of being socially responsible. The first argument is known as the shareholder view which states that “management’s only responsibility is to its shareholders and maximising profit” whilst the second argument is known as the socioeconomic or stakeholder view “states management’s responsibility goes beyond making profits to include its stakeholders and protecting and improving society’s welfare” (Pearson Australia).

Corporate social responsibility and the Shareholder View

“Every business operates in a typical social environment, comprising of shareholders, customers, suppliers, government, local communities, employees and the environment” (Anon., n.d.). These entities are known as stakeholders, “a person, group or organisation that affects or can be affected by an organisations actions and decisions” [ (Bryson, 2004) ]. However according to the shareholder view a business’s only stakeholder are their owner(s)/shareholders, thus the sole focus of firms based on the shareholder view, is on maximising profit in order to benefit these stakeholders. The main advocate for this approach...