Social Responsibility in Business

In examining the foreign electric charge statements of five-fold companies, it is app bent that potbelly stoves allege to prioritize affable responsibility. Companies like all Foods, Ben &Jerrys, Camano Island Coffee Roasters merely symbolizeively contri moreovere to distinct sociable take a craps. Even Philip Morris prioritizes actively participating in societal concerns that are relevant to its short letteres over generating returns for its stockholders (Philip Morris, 2011). in that respect are umteen different views on the extent to which corporations should be involved in societal concerns.The three most bountiful are the stockholder scheme, the purpose of neighborly business, and the stakeholder theory. Of these, the stakeholder theory is the most appropriate. Be form corporations are con locatingred to be individuals within our society, they bear a received amount of responsibility to their fellow citizens, so it is non enough for them to act single i n the interest of their stockholders. However, corporations are empower to build wage, and at that placefore c witnessot be expect to act as purely fond businesses.Consequently, businesses must look for a golden medium within the stakeholder theory, acting in the interests of the stockholders, customers, employees and civil society. Milton Friedman, a major index of the stockholder theory, argues that beyond legal compliance, the cordial responsibility of business is to increase its profits, substance corporations hold responsibilities just now to their shareholders and the law (Friedman, 1970). one of the main points he addresses is the fact that when a familiarity conductor spends the companionships money on a hearty cause, he/she takes external from the maximum possible returns to the stockholders.In assenting to taking from the stockholders, the price of the increase whitethorn rise, taking away from the consumer, or wages might f wholly, taking away from the employees. Because of this, the manager is in effect autocratic levyes, on the one hand, and deciding how the tax proceeds shall be spent, on the separate (Friedman, 1970). Friedman claims taxes are the responsibility of the government and talent the corporations money to a social cause is a progress to of taxation without representation. This would be the case if the manager were merely donating the funds to a cause of his/her choosing.However, Camano Island Coffee Roasters (CICR) supports its own industry by ensuring that they participate in bonny Trade. In addition to participating in true(p) Trade, CICR helps the coffee farmers by do veritable they own the land they work, as vigorous as helping to keep their children rise up nourished (Gunter, 2007). By helping the farmers from whom CICR buys its coffee, it go throughs that it can use the top 1% of the functional coffee trade (Gunter, 2007). As a resolving of its acts of altruism, Camano Island Coffee Roasters ha s been able to ensure a top quality point of intersection and consequently has been a actually self-made corporation.Friedmans theory is similarly standardised to the trickle-down theory. He believes that by maximizing profits, corporations allow help the less(prenominal) fortunate by providing better goods and services as salubrious as higher wages. However, like the trickle-down theory, the result is the CEOs of corporations make millions of dollars, whereas the lower level employees simply make enough to survive. Ben and Jerrys is a perfect example of a political party that does not abide by Friedmans school of thought, and yet has been extraordinarily advantageful.They manage to add the highest quality product possible, in addition to paying their employees what they bawl living wage, making sure the lowest paid employees are still making well to a higher place the minimum wage (LEDA article). For Ben and Jerrys, the tax, as Friedman would call it, is taken from th e highest paid employees of the company. An article reviewing Ben and Jerrys business ethics says Consistent with their mission for social responsibility, the highest paid employees of Ben & Jerrys would not earn much than s until now times more than the lowest paid full-time employees (LEDA article).Despite the victory of socially liable corporations, Friedman would argue that these companies would go for had greater victor if they had foc apply solely on turning higher profits. whence it is critical to consider the possibilities for corporations to act in an unhonorable manner even when complying with Friedmans philosophy. When ford released the Pinto, it was aware of the potential for customers to be killed due to a flaw in the Pintos design.Despite this knowledge, based on a cost-benefit analysis, Ford determined it would be less costly to deal with the law suits brought by people who were injured or killed quite an than to recall and fix each simple machine. Ford was w ell within the legal requirements for car safety at the time and licitly sold the Pinto, disdain the danger. However, by not considering the consequences of its actions beyond solely the pecuniary, Ford was responsible for over fifty deaths (American Decades, 2001). According to Friedman, this decisiveness to value profit over human lives was perfectly ethical. On the other side of the pectrum from the stockholder-oriented philosophy is a new surface area of business called social business. By definition, a social business is a non-loss, non-dividend company whose focus is not on profits, alone on furthering a social cause (Yunus, 2010). Nobel Peace prize laureate Muhammad Yunus is the have of this field of corporate social responsibility. In 2006, Yunus collaborated with a French food company called Danone to launch the first social business, Grameen Danone. Its mission is to provide children in rural Bangladesh with nutrients that are lacking from their diet.An article on t he Danone website says the success of the project leave above all be judged on non-financial criteria the number of right away and indirect jobs created (milk producers, small wholesalers, room access to door addressers), improvements to childrens health, protection of the environment etc (Danone, 2011). However, based on the way we currently measure the success of corporations, Grameen Danone would appear to be a very unsuccessful business. Do social businesses and non-profit organizations command a change in the formal methods of determining the success of a corporation?It is highly unlikely that many corporations provide adopt such(prenominal) a antecedent method as social business. Therefore, sequence social businesses should be commended, and even used as inspiration, for their contribution to society, it is more logical for corporations to focus on the interests of both their stockholders and community. R. Edward freewoman is one of the founders of the stakeholder the ory, which says that companies hold responsibilities to five main groups including shareholders, consumers and the general public.Unlike social business, freewomans stakeholder theory is not meant to be a foil to the stockholder theory, but sort of, Freeman argues that the views of both Friedman and Yunus are just narrower versions of the stakeholder theory (Theoretical and Pedagogical Issues). Freeman says that in redbrick society businesses must consider triple stakeholders when making decisions. square Foods provides an example of a company which takes into account more than just making profits. Whole Foods purchases its products from local farmers despite the fact that this raises the costs of its goods.Even though this may hurt its checkbook, Whole Foods is able to sell healthier and higher quality products musical composition also supporting its local community. In addition to performing altruistic acts, many of Whole Foods customers are loyal because of its ethical metho ds of doing business (Conversation with washbowl Mackey, 2011). Whole Foods also goes beyond merely making profits by creating trust with its employees. When executing a merger with the company tempestuous Oats, Whole Foods needed to close down many of the Wild Oats locations because they were in markets where there were already Whole Foods stores located.However, instead of firing the Wild Oats workers, Whole Foods offered solid job shelter and alternate positions at the existing Whole Foods locations. In an interview, in regards to the job tribute system offered to Wild Oats employees, Whole Foods CEO tail end Mackey said, First of all, thats the right affaire to do, and secondly, if people have a separate of anxiety that they could lose their jobs, that inhibits their susceptibility to learn and adapt. I feel youve got to offer security if you want to get people to fit forward. Otherwise theyre too scared. (John Mackey Interview, 2008)Not simply does this stakeholder attack to business result in societally beneficial actions, but it also leads to more efficient, harder working employees. However, there are problems with the stakeholder approach to business ethics. Many argue that an credence of stakeholder theory, over stockholder, would undermine shareholder property rights and reject equity investiture (Ethics gone(p) Wrong, 2000). Advocates of this concept claim that because corporations must cater to the demand of groups other than their shareholders, the potential of the stockholders investment diminishes importantly (Ethics at rest(p) Wrong, 2000).Contrary to this idea, investment vehicles like the Calvert investing Mutual farm animal provide investment portfolios that integrate two distinct investigate frameworks a rigorous review of financial performance, and a thorough assessment of environmental, social and governance performance. (Calvert Investments, 2011). The success of the Calvert Mutual Fund provides evidence that even when considering corporations that apply stakeholder-oriented business practices, the value and trade-ability of equity capital does not diminish.Therefore, even if most corporations adopt a stakeholder-oriented perspective, the effects on the stock market and on equity capital forget be much less puckish than critics predict. Another issue often address by critics of the stakeholder theory is that an adoption of the stakeholder philosophy would result in an increase in self-serving behaviour among managers. This is because managers will be able to appeal to the conflicting demands of different stakeholders in order to circumvent genuine responsibilities, as well as ball up in self-serving behaviors.Advocates of stockholder-oriented business claim that adopting the stakeholder philosophy will not only multiply the amount of self-serving managers, but will also make it even more difficult to discipline such behavior. Alexei M. Marcoux, a critic of the stakeholder theory, says, Between the ability of managers to justify their self-serving behavior in terms of the balanced pursuit of stakeholder interests and the protections that a stakeholder-oriented corporate law must feed to managers the accountability of managers for their actions must necessarily suffer. (Ethics Gone Wrong, 2000). However, if firms are so intent on adhering to a strict ethical code, there will be internal room by which such dishonorable behavior can be disciplined. Furthermore, in the hiring process, firms will ensure that managers will not act in self-serving ways, but instead maintain high ethical standards. Among the heterogeneous philosophies regarding the social responsibility of businesses there is a spectrum ranging from exclusively profit-oriented to solely serving the community.However, because corporations are considered individuals within our society, it is incumbent upon them to use their position to achieve a balance between the responsibilities they hold to their shar eholders and the responsibilities they hold to the other section of the society. Therefore, corporations should adhere to stakeholder-oriented business ethics. Bibliography Yunus, Mohammad. Building complaisant Business. New York, NY PublicAffairs, 2010. Print. The Ford Pinto Case. American Decades. 2001. Encyclopedia. com. 5 may. 2011. Makower, Joel. Milton Friedman and the Social Responsibility of Business. World Changing(2006) n. pag. Web. 5 whitethorn 2011. . Marcoux, Alexei. Business Ethics Gone Wrong. CATO Institute22. 3 (2000) n. pag. Web. 5 may 2011. . Hooker, John. Why Business Ethics?. (2003) n. pag. Web. 5 May 2011. . Freeman, Edward, Ramakrishna Velamuri, and Brian Moriarty. Company Stakeholder Responsibility A New Approach to CSR. Business round table Institute for Corporate Ethics(2006) n. pag. Web. 5 May 2011. . Fassin, Yves. The Stakeholder Model Re? ned. diary of Business Ethics83. (2006) 113-135. Web. 5 May 2011. . Tupate, Patel. Ben & Jerrys a Moo-del of Co rporate Social Responsibility. LEDAn. pag. LEDA at Harvard Law School.Web. 5 May 2011. . Gunter, Marie. Fair Trade or Fairly Traded?. Articlesbase. 2007. Web. 5 May 2011. . Freeman, Edward, Andrew Wicks, and Thomas Jones. Stakeholder Theory The render of the Art. Theoretical and Pedagogical Issuesn. pag. Web. 5 May 2011. . Public Trust in Business- John Mackey of Whole Foods. Business Ethics and Leadership. Web. 5 May 2011. . Danone Website http//www. danone. com/en/what-s-new/focus-4. hypertext mark-up language Calvert Investments Website http//www. calvert. com/products-funds-by-sri-approach. html Philip morris Website http//www. philipmorrisusa. com/en/cms/Company/Mission_Values/default. aspx? src=top_nav