Understanding the Evolution of CSR
The often-cited economist, Milton Friedman (1962), argued that "few trends could so thoroughly undermine the very foundation of our free society as the acceptance by corporate officials of social responsibility other than to make as much money for their stockholders as possible" (pp. 133-134). Friedman's influence has been far-reaching in the fields of business and economics. This is important to understand in terms of the evolution of CSR. Taking this into account address the following:
Formulate two convincing arguments—one in support of Friedman's assertion and one against it.
Research two organizations—one that exemplifies Friedman's exhortation for companies to focus only on stockholder wealth, and one that believes CSR is an integral part of an organization's competitive advantage and success. Compare and contrast the two organizations.
Provide three examples of organizations that show how Friedman's admonition above, if taken literally, could be used to legitimize otherwise unethical behavior.
Your well-written paper must adhere to the following parameters:
4-5 pages in length, not including the title and reference pages.
Cite six references, with at least four scholarly references. Remember, you must support your claims and/or assertions and prior knowledge with references. All facts must be supported, and all in-text references used throughout the assignment must be included in an APA-formatted reference list.
Review the grading rubric within this assignment for more detail on how this assignment will be graded.
Formatted according to the CSU Global Writing Center (Links to an external site.) .
Corporate Social Responsibility (CSR)
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Corporate Social Responsibility (CSR)
Corporate social responsibility (CSR) remains a popular strategy among business organizations that intend to increase their market share. CSR is an avenue through which businesses indulge in the needs of their customers. The strategy helps in popularizing the organization besides characterizing the entity as a caring one. The popularity of CSR in business raises debates on its future. That is, questions are raised about the validity of CSR strategies deep into the future considering the changing operational setting for businesses. In an attempt to define the unending value of CSR to business organizations, economist Milton Friedman (1962) claimed that "few trends could so thoroughly undermine the very foundation of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible" (pp. 133-134). This paper explores the above statement by Friedman by analyzing the history of CSR and its future in the business setting. An insightful understanding of the evolution of CSR should help in settling the understanding that Friedman could be right or wrong and CSR is a tool for strategic organizational outcomes.
Arguments for and Against Friedman’s Claims
The assertions by Friedman can attract both supporting and dissenting arguments. On one hand, the claim that "few trends could so thoroughly undermine the very foundation of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible" (pp. 133-134) is right. At the primary stage of its formation, any organization is mandated to make profits for its stakeholders and nothing else. The activities conducted at these early stages of the organization are aimed at creating more value through products and services. Customer loyalty is reached through the delivery of the products and services that the consumers need (Monebhurrun, 2018). Using the value creation approach, the proceeds from sales can be used to create better products and services that automatically attract more customers.
Friedman’s statement also tests the reliability of CSR as a strategy to propel organizations to success. CSR works when the organization partakes in long-term activities that include giving back to communities, taking part in philanthropic initiatives, and delivering a positive social value (Jali, Abas, & Ariffin, 2017). In its nature, CSR is long-term and the organization cannot be sure if its inputs can deliver the attention that it demands. Also, the value that organizations create through CSR does not last long enough to oversee its success. That is because societies change faster and social value is a matter of dynamism (Sulphey, 2017). Instead, using organizational resources to research and develop new and better products is a guarantee for success for business organizations. As long as businesses can offer better products than their competitors, they can continue commanding market leadership.
CSR also manifests considerable benefits to businesses even amidst its notable drawbacks. Primarily, it builds trust between business organizations and their customers. 88% of consumers are more likely to purchase products and services from business organizations that partake in societal needs (Popa & Salanta, 2014). Hence, business organizations that need their products to stay successful must adopt some essence of social responsibility. Businesses must also understand that they operate within settings where there are needs. An insightful business organization would encourage operating in a sustainable environment, for instance. Ignoring the need to partake in societal concerns such as environmental pollution could mean that businesses are contributing to behaviors that lead to depletion of the raw materials that they require for their existence. Ultimately, CSR is an indirect avenue towards increased market share and profits. Hence, as CSR has developed, focusing only on the creation of stakeholder wealth is highly unsustainable for long-term operations.
Illustrations...