Corporate Social Responsibility: What’s the Big Deal? One of the most contentiou

Question

Corporate Social Responsibility: What’s the Big Deal? One of the most contentious debates among scholars has centered on the proper role for a corporation in the pursuit of its business. In large measure the debate has crystallized around two points of view. On the one hand, some believe that a corporation’s chief responsibility role is to make and maximize profit. This belief has often been referred to as the Friedman Approach in homage to the economist, Milton Friedman. Friedman espoused the view that as long as a corporation stayed within the rules, its only responsibility was to return the maximum profit to its shareholders. On the other hand, other scholars have asserted that the social responsibility for a corporation extends beyond just making a profit and includes a responsibility to act in a manner that promotes and supports the welfare of society at large. What do you think about this so called “Shareholder vs. Stakeholder” debate? Do you have any personal experiences where you have observed the effects of this debate in terms of corporate actions? On which side of the argument do you come down on and why?

Explanation / Answer

The primary responsibility of any organisation is to mazimize the profit for its shareholders. Welfare of the society at large is not a key responsibility.

But in my opinion I feel that maximizing profits and society welfare can go hand in hand and in fact can complement each other. Consider the example of Hindustan Unilever (HUL) in India. HUL empowered rural middle aged women by educating them and then in turn hiring them as sales persons to sell their products in rural areas. Not only did this result in a surge in rural sales for HUL but it provided a substantial wage to these women for their work. Modern organisations must look at social responsibility as an opportunity rather than a forced responsibility. Besides social responsibility campaigns help in creating a goodwill among the masses which in turn almost always translates into better sales or revenues.

To sum it up, I feel that organizations should strategically address social responsibility efforts with an eye on long term surge is sales/revenues.

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