Question

In: Finance

First what are the social responsibilities of a business ( Or Corporate Social Responsibilities to various...

First what are the social responsibilities of a business ( Or Corporate Social Responsibilities to various Stakeholders)?  Do theses social responsibilities conflict with the responsibility to maximize the wealth of the owners of the business ( i.e shareholders) or can the coexist?  Why or Why not? Why is this topic important to you? ( It should be if you think about it).

Solutions

Expert Solution

Do these social responsibilities conflict with the responsibility to maximize the wealth of the owners of the business? Why or Why not?

Yes, many times social responsibility are conflicting with the shareholder wealth maximization. The shareholders want the maximum profits and do not take into account the responsiveness towards the society. But in this due course, they do not look at the long-term prospect of the business and healthy sustenance of all.

They conflict with the social responsibility because of the following reason:

1. Shareholders aspire only profit maximization

2 There is always a cost incurred in CSR activities which leads to less profit

3 They ignore the aspect of long-term continuity of the business

4 They eliminate the needs of the society where the business coexists

Why is this topic important to you?

The topic is important to each individual in this era since nature is depleting at a fast pace with a growing rate of hunger, poverty, and ill-literacy in various parts of the world. As a business stakeholder, it is important to realize the importance of long-term sustainable development which will need a contribution by all.


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