Question

Explain business's role beyond profit maximization.

Answer 1

Corporations, on a large part, harm the environment through their activities. The environmental disaster caused by the destruction of the Amazon forest, mining, oil spills, water pollution and use of harmful chemicals and pesticides are well known. To negate these corporation-induced disasters, organizations have introduced the concept of triple bottom line that refers to people, planet and profit, in that order.

Economists like Milton Friedman and Theodore Levitt have argued that the responsibility of a corporation is maximizing profits for its shareholders and social concerns and general welfare should be left to the government.

Corporate Social Responsibility often referred to as ‘CSR’ are the activities taken by a corporation to rectify the harm it has caused to the environment and social well being. The responsibility of a corporation goes beyond making profits and increasing the value of shares to its owners and shareholders. The ultimate stakeholder is the community.

CSR activities can take several forms. It can take the form of building schools and/or hospitals, planting trees, providing nutrition to vulnerable groups, donating medicines and food to areas devastated by natural calamities, etc. Corporations also indulge in activities for their staff by providing extended maternity leave, flexible working hours to new moms, paternity leave and child care.

In recent times, corporate social responsibilities have become popular and corporations are eager to participate in community activities. The triple bottom line – people, planet and profit – seems to have become the motto of many corporations.