Changing Relationships Between Business and Society

Changing Relationships Between Business and Society: a Hybrid

Brandy Ellington

New England College of Business

The relationship between business and society seems to be ever-changing. There was a time when business served one purpose: to make money. Famed economist Milton Friedman said “the business of business is business”. There are economists today who still take a similar position to that of Friedman. However, businesses don’t seem to be empowered to operate solely by that philosophy any more, as they are increasingly pushed to adopt more and more corporate social responsibility that is not necessarily economic in nature. Companies large and small are now influenced by laws, government regulators, and the public. Each of these entities has its unique footprint on business, yet not all are completely effective in changing the relationship between business and society (Windsor, 2001).

The Relationship and History

Corporate social responsibility is another phrase describing the obligation or relationship business has with society, without regard to economics. Economists have weighed in on this business/societal relationship for decades now and the earliest opinions on business and society were laissez-faire, with Adam Smith emphasizing economic self-interest and unfettered pursuit of opportunity in 1776. Taking social responsibility was borne from Progressivism at the beginnings of the 1900s. This concept takes many forms including volunteer programs, charitable giving, hiring quotas for at-risk populations (disabled, veterans, felons), environmental commitments, employee non-discrimination policies, perhaps a global citizenship policy. In the 1950s Howard Bowen became “The Father of Corporate Social Responsibility” and defined it this way: “obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society”. Friedman followed behind and objected to the concept because he felt nothing should get in the way of business making money. He saw a situation where there was room for public policy and business ethics, but felt they should come as a reaction to a situation, rather than being proactive because being proactive in setting up a social responsibility program would be engaging in something other than making money. However, it is widely accepted that this type of proactivity is actually a long-term strategy of many businesses, designed to eventually pay off (Windsor, 2001).

 The Law

        Laws can be passed in an attempt to ensure fairness, punishment for wrong-doing, and to stress regulations for certain procedures. Sarbanes-Oxley is a regulation that increased penalties for fraud, laid groundwork for CEOs responsibilities for financial statements, and roles of auditors and outside firms. The Transatlantic Trade and Investment Partnership (TTIP), a trade alliance between the European Union and the United States includes laws on child labor, worker’s rights, and sustainable land development. The issue that arises from solely legal enforcements is that there are essentially no ethics involved in decision-making, it gives the appearance of an ethical program. In addition, many of the recent misdeeds by banks and finance companies were actually legal, so laws and regulations often wouldn’t have helped in the situation. Merely relying on legal programs and regulations does not holistically address a corporation’s social responsibilities (EU, 2015).