What Are the Social Responsibilities of a Corporation?

What are the Social Responsibilities of a Corporation?

The beginning of the 21st century has seen a heightened awareness of ethical issues mainly pointing towards corporate social responsibilities (CSR) of a corporation. Mallen Baker (2004) defines Corporate Social Responsibility as “how companies manage the business processes to produce an overall positive impact on society”. CSR does not mean mere charity through writing a cheque or providing monetary help to less privileged school or hospitals. It involves a necessity on part of a business/corporation by linking its resources such as employees, operations and profits towards up lifting society. CSR means that a corporation should not only be fair in its dealing with its consumers but also in its investors, employees and community as a whole. But one may argue what are the limitations of CSR and to what extent it can expand in terms of its meaning. The limitations namely - CSR not being able to challenge corporate power, competitive disadvantage and challenges in allocating time and resources. Many corporations understand such questions well and are smart enough to strategically include corporate social responsibility not only in its daily operations but also in future projects. Corporations believe that taking care of customers and public issues is good for long term business performance.

Milton Friedman’s (1970) article “Social responsibility of business is to increase profits” published by the New York Times Magazine points out that an executive of a corporation merely conducts business according to its employer instructions due to which corporate social responsibility becomes impaired. Moreover, a corporation contributes to the community monetarily or through gifts in order to obtain corporate charitable tax deduction. Such contributions generate goodwill, attract more customers and create a self image. As a result, “There is one and only one social responsibility of the businesses to use its resources and engage in activities designed to increase its profits”. If these allegations were to be true then corporations would not have extensive CSR policies made and executed. A good example is that of Coca Cola’s CSR initiatives in India which concentrates on building community, health and environment. Coca Cola has set up primary school education projects to benefit the poor children in slumps and villages, supported community based rainwater harvesting projects, provided employment to deaf school students and created jobs directly or indirectly for around 125,000 people across India. Coca Cola has also contributed the most towards Tsunami relief across Asia. Hence, these are some CSR initiatives taken by a corporation that are not based on making profits and self interest motives.

CSR takes into view how a corporation addresses its economic, social, and environmental impacts within its workplace, marketplace,