Theories for and against Corporate Social Responsibility

Free Market View v Corporate View

The Free Market View

Free market makes arguments against CSR. The view stipulates that the aim of a business is to provide goods and services that are aimed at making profit. It states that the only social responsibility a firm should have is the use of its resources and engaging in activities designed to make profit and engages in open and free competition. By firm giving money, it is like the firm taxing itself and the mangers have no right to give away the investors money while they have been employed to make profit on behalf of the investors (Stigson 2002). Free markets support capitalism which has been the core of the economic and social investments in great economies. Free markets have enabled improvements in health. The view also finds it critical to for a firm to offer better salaries to its employees, better working conditions with an aim of improving standards of living and creation of wealth for the workers. Free markets contribute to effective management of resources. Regulations are important to address changes and balance when there is a market failure though it is the work of the government to address such failures. The regulations should be on the minimum side to enhance and promote initiatives and creates market entry barrier.

The other social goals of the firm erode the primary goal of the business. The cost of CSR is passed on to the customers or consumers which lead to increased prices. The increased prices make customers run away which reduces competitiveness.  It also reduces profits and the economic efficiency of the firm (Stigson 2002). The management only have the obligation to manage the business in the interest of shareholders alone not the stakeholders. Corporate Social Responsibility gives businesses unnecessary responsibility which should be taken upon by the individuals and government.

Corporate View

The corporate responsibility view, stipulates that firms don’t have unquestioned right to operate in the society and they depend on the same society. The firms rely on a society’s input to operate and the social institutions (Stigson 2002). Firms and societies have a mutual obligation towards the society as they recognize that they rely on each other.

Stakeholders Theory

The stakeholder’s theory stipulates that businesses and firms have the responsibility to society with internal and external stakeholders not just the shareholders. This responsibility involves responsibility even for the natural environment not just the social environment. This theory supports social and corporate responsibility as they incorporate every aspect of the society not just the personal (Stigson 2002). It thus supports the idea of firms moving from personal responsibilities to corporate and social responsibilities.

The theory has the following arguments for firms to leave personal responsibility to social responsibility. First is that it is ethical and morally upright to help the community they operate in. Second is that it improves the public image of the firm (Stigson 2002). Third is that it avoids unnecessary regulations as the society has a right to the environment it operates in which can lead them to impose unnecessary regulations to the firms. Forth is that socially responsible actions are profitable in various circumstances like a national reserve which involves it to help a community living in the national reserve can reduce animal-human conflict which will enhance harmony in their business.

Value Theories of CSR

Theory of Maximizes Profits for Shareholders

This is the conventional theory of CSR explains that a firm should concentrate on making profit for the shareholders as its main objective (Goodpaster 2001: 1-22). The interests of other parties in the company’s operations or agenda should be viewed as the corporate objective. This is how a firm should move from a personal responsibility of its profit making objective to join with the interested parties who are the stakeholders for the social responsibility. It also believes that the management of the firms should be left to make decisions on behalf of the firm.

The Theory of Social Responsibility for Protection of the interests of the corporate stakeholders

This is a school of thought that maintains that maximizing the profits of the shareholders should be the main purpose or objective of the firm (Goodpaster 2001: 1-22). However, it should not be the only objective of the firm. The firms are interrelated with the social environment in which it operates.

This theory stipulates that when a firm makes decisions in its operations, it has to put in mind the interests of the suppliers, customers, employees, creditors and the government. If it does otherwise, it should take responsibility or liability of the damage or harm caused to the stakeholders.

Theory of responsibility on good citizenship

These are a group of theories that belong to the same school of thought. This theory maintains that firms should take profit making to be the core objective but they are also liable to helping solve social problems (Goodpaster 2001: 1-22). For instance, giving charities and promoting the societal needs. The tourist related businesses should promote society needs like a Wildlife service should make donations like support sporting events to promote talent, give donations for education of the vulnerable children, and facilitate promotion of health care.

Theory of Social Responsibility on Morality minimum requirement

This is a theory that is composed of the same school of thoughts. It states that if a firm is deemed to have fulfilled its social responsibility. This is as long as it avoids causing harm to society or if it correct is the harm that it causes on a society (Goodpaster: 1-22). This is referred by some scholars as conservative idealism. In this sense, firms comply with the law voluntarily.

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