Corporate Social Responsibility (CSR) U4S4P45

Milton Friedman - "Few trends so thoroughly undermine the very foundations 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" (Friedman, 1962).

Of course, this was written at a time when Communism (and by association socialism) were the number one enemy of the free american.

CSR is not an issue for strategy makers in organisations of all types and sectors.

Questions...

• Does the org have a 'moral' responsibility to be a good citizen, or to consider the objectives of stakeholders other than the owners?
• Is there a clear distinction between CSR and corporate governance
• If you believe the organisation has a wider responsibility, how great an impact upon an organisation's objectives should these other stakeholders exert? Should this wider responsibility have an impact on the organisation's ability to make a profit or deliver a service?
• How much will this responsibility cost - and does the cost outweigh any benefit?
• Will acknowledging this responsibility have any impact in reality on the way the org operates?

CSR can present a problem for governments due to strong corporate lobbies arguing for the status quo.
Governments also have competing priorities, and prosperity vs society arguments may come up.

There is frequent relocation of manufacturing activities to developing economies to save costs. But these countries often have lower social standards, and so the potential for unwanted externalities may increase.
If the org is a "citizen" within society, then how bound should the organisation be by norms and morals that guide and influence behaviour in that society?

But what about ethics? Corporate ethics involve establishing and following a set of standards that regulat conduct and interaction with a variety of interested stakeholders - u4s4p52. So an ethical strategy is the product of negotiation with the various concerns of stakeholders (Goodpaster, 1991). But who should the manager answer to when conflict arises? Shareholder? Government? Consumer? Society?

CSR itself is potentially unethical - it does not properly reward shareholders for the risk they are exposed to by investing their capital.

However if employees believe their organisation is unethical their motivation may deteriorate leading to a failure of organisational purpose, and potentially even bigger failures.

Enron and Parmalat were both "brought down" by unethical employees. In this case all stakeholders lost out, including shareholders (except maybe competitors).