Question

Should firm be persuaded to incorporate a CSR perspective voluntarily or forced to do so? Why? Which of these two approaches in ideal? Which is more realistic?

The book is Strategic Corporate Social Responsibility CSR chapter#8

Answer 1

Business as an activity is always undertaken with the motive of profit by the Companies. Hence, professionally, it is absolutely fair for any Company to go for all such activities that can help achieve ‘Profits’ in a desired way. However, the concern arises when this motive is strived to be achieved by “all means”. In such means, often the loopholes of the legal system are sorted to seek the advantage in the Company’s favor. For example, passing off the original invention of someone’s as that of your own without being legally charged for it, because of the absence of patent mark by the original inventor. Similarly, besides compromising upon ethics, the Companies may often not be even bothered to serve for the well-being of the society, where direct considerations in the form of ‘sale proceeds’, ‘revenues’, ‘partnerships’, ‘commissions’, etc. are not obtained.

It is to be noted that gone are those days when business only meant to earn profits. Even Milton Friedman’s statement of business without undertaking frauds for minting money is all that is required, does not hold true in today’s circumstance. One may earn money but cannot hold it for long in business if one does not regards to ethics. Hence the focus needs to be on Ethics and on Social well-being as well. The stakeholders, be it the shareholders, customers or employees, form an integral part of the business to determine its success. With success, comes the money in the business, be it directly or indirectly. However, in a state where these stakeholders have been caused resentment due to the unethical practices of the businessman, the chances of its failure sooner or later are bound to happen. Hence business without ethics as well as Social responsibility, cannot bring money for long.

In this regard, the concept of social responsibility in business ethics has also gathered momentum even in small Companies, once the basic survival concept of the businesses stabilized while the Businesses that fail to consider Social responsibility, fail in the long run. But, given the generic tendencies of the organizations to resort to only profit means and disregard CSR concerns, if left on their own wisdom, I believe it is necessary to enforce the CSR activities on the Organizations. This is a practical approach because it ensures its observance, failing which appropriate actions could be necessitated against the violators. This is a positive reinforcement theory which I vouch for thus.