Tuesday, August 20, 2019
Business Have Social Responsibility Other Than Maximizing Profits Philosophy Essay
Business Have Social Responsibility Other Than Maximizing Profits Philosophy Essay Companies do not operate in vacuum, according to Times of Malta (2010), yet they are a necessary part of society in which they operate. As a result, like any other responsible social citizen, businesses also have certain social responsibilities to fulfill such as maximizing profit without which the very existence of the businesses would be in jeopardy. There is of course another very vital reason as to why businesses should be considerate about fulfilling their social responsibility. If they perform as socially responsible citizens they would gain social approval that would enhance their goodwill among prospective customers and this in its turn would increase their sales. Moreover, they would not attract governmental penalties that would be their business in any risk of shutting down. Any form of unethical social acts will make it that much more difficult for them to convince prospective customers and impact will be more severe and more damaging to their organization than one can ima gine and can jeopardize their business to close down. The added problem of penalties imposed by the government, which would make it even more difficult for them to survive. At this stage, the difference between charity and social responsibility must be clarified. For example donating funds to a hospital is sure a creditable act it cannot be called as fulfilling social responsibility as a business does not fulfill any responsibility by doing charity. It is not obliged to do an act of charity but it is obligated to the society to fulfill its social responsibility. Carrying this similarity a little further, if a businessman earns money through illegal means and uses that money to open and run a hospital that treats poor patients free of cost, still that businessman cannot be said to have carried out his social responsibility. A business is said to be socially responsible if it does not engage in any activity that might harm the society even if it increases profit in the short run. Soci al responsibility of businesses implies nonparticipation in cheating customers through false advertisements and eliminating dishonesty to society itself. Social responsibility also includes decent working conditions to employees and taking care of their health and welfare. Profit, not social responsibility, should be the sole motive of business Profit itself should be the main aim of businesses. It might apparently sound rather outrageous, especially if we view this statement from the perspective of distancing profit from ethics and morality. Society may tend to view profit by itself as something unethical and immoral and any attempt at making profit is looked upon as being manipulative to society Milton Friedman illustrates, The Social Responsibility of Business is to Increase its Profits (Friedman 1970), tries to put things in proper perspective by discussing certain very basic and relevant issues in regards of businesses increasing profits as the initial goal. Before society look s into what is exactly meant by social responsibility of corporations one has to admit that corporations initial goal have a long prosperous future and are not expected to have similar social responsibilities that are not involved in the business aspect. At the most, one might admit that these businesses can have social responsibilities that would, quite obviously, be different from real social responsibilities of real persons that do not own businesses. Honoring social responsibility therefore falls on managers of those corporations as they are persons that implement and execute policies and activities. This brings us to another important aspect, that is, the relationships between managers and their stockholders, who are the real owners, of a corporation. Managers are responsible of any action on their part to fulfill so-called social responsibility. However, this does not mean that managers being individual citizens cannot do anything to fulfill what they might perceive as social responsibility. But they can do so with their own money and not with companys funds whose money and utilization has to be done according to the wishes and desires of their stockholders as they are working as a team for their business. Stockholders on the other hand can also with their own money engage in any form activity that they may believe to fit as fulfillment of social responsibility. Freidman also explains that That is why, in my book Capitalism and Freedom, I have called it a fundamentally subversive doctrine in a free society, and have said that in such a society, there is one and only one social responsibility of businessto use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.(Freidman, 1970) So, it is perhaps clear that the whole concept of corporate social responsibility is more of a controversial nature rather than hav ing a solid and logical base. But does that mean corporations should never engage in any activity other than profit maximization? The answer obviously cannot be in the No. According to Cosans in his scholarly article The Coperate Stake in Social Cohesion, a corporate has to operate within the legal and ethical norms of the society in which it operates and any violation of those norms would surely invite executive penalty and social censure and consequent loss of goodwill. Therefore, no corporation can take such a risk and can never engage in any activity that is either illegal or unethical (Cosans 2008). A corporation can surely set free the concepts of social responsibility if its investors decide so. A donation for a charitable purpose can be considered as an act of social responsibility, it can also be seen as an act that is motivated by genuine unselfishness to unwell and ill organizations less privileged individuals. Yet, it is perhaps needless to state that such attempts are t riggered purely by profit maximization motive and surely not social responsibility. As Freidman states if businesses to want to be socially responsible they must do it at their own expense The difficulty of exercising social responsibility illustrates, of course, the great virtue of private competitive enterpriseit forces people to be responsible for their own actions and makes it difficult for them to exploit other people for either selfish or unselfish purposes. They can do goodbut only at their own expense. (Friedman, 1970) So, however one may look at it, the main objective of corporations firmly remain maximization of profits. Corporations must fulfill their social responsibility John Steinbeck in his classic Grapes of Wrath had described profit making in such an controversial viewpoint that any one reading that text would instantly become a hater of large corporations. The setting is indeed overemotional where we find the bank on one side and the unfortunate starving farmers o n the other. The bank can be seen as such a monster that it cannot survive without making profit and it is prepared to oust people from their homes on to the roads where an uncertain future stares at them simply because it has to earn profit by some means or the other. The bank is owner of hundred thousand acres of land and is evicting small and marginal landowners from the only land they have simply because these poor farmers could not pay interest on small amounts borrowed from this bank (Steinbeck 1988). Steinbeck illustrates profit making in such harsh and dishonest ways in which the bank tries to make profit from the farmers who cannot afford to pay the bank. Just because they are poor quite obviously does not give them the right to usurp the money they had taken as loan. Steinbeck though very expressive in describing the sadness of these poor people is however silent on why should investors in these banks suffer due to the inefficiencies of these poor farmers. Though it did no t rain that year and farmers were unable to grow cotton for no fault of theirs but this definitely cannot be a justification for denying investors of the rightful due. The bank workers suggest the farmers to choose for social security measures and leave to West California, but the farmers remain stubborn on refusing to vacate the land Grampa had acquired after killing Indians and snakes. Steinbeck illustrates no remorse for the bank who had lent out money to these farmers and the employees of the bank and rather he remorses for the farmers. One might say, the author remains focused on describing in graphic detail the agonies and deprivations of these poor farmers and not understand the banks point of view as an organization and its duties. Even through the farmers harsh and immoral comments saying bring one war and once the cotton prices get high they would be able to repay all the money they owe to the bank (Steinbeck 1988). Possibly Steinbeck also realized the emptiness of the exp ression he had used to describe the vulnerability of the farmers and he tries to bring some balance through the driver who caustically remarks that such language might bring praise for the tenant man but would not be enough to earn three dollars per day the tractor driver is earning. The sorrow is sensitive by the unrealistic attempt by the tenant man to defend his dwelling from collapsing by lifting his rifle but not being sure who to aim at. It seems Steinbeck was also not sure who exactly to blame for this unpleasant situation and he chose the most convenient enemy the faceless profit eating monster called the bank. Such an outcome of profit making will only raise eyebrows rather than any serious thoughts (Steinbeck 1988). Moses Oketch however presents an highly balanced and reasonable view of why corporations should fulfill their social responsibility. While admitting that earning of profit is essential for the survival of a business and unless it survives it cannot perform any responsibility in terms of social or otherwise, Oketch speak out that for any business to prosper it needs to earn the trust of the community wherein it operates. This trust can only be earned if the corporation works towards social consistent that looks beyond the narrow imprison of shareholders to the wider ground of stakeholders. If it can execute unbiased and reasonable norms of corporate governance it would win unqualified support of its employees and who does not know that motivated and committed human resource is the greatest asset any corporation can ever possess. Oketch terms transparent and fair governance as one example of how corporations can fulfill their social responsibility. Zero tolerance of corrupt practices also would paint the organization in very favorable light in the eyes of society and it would consider the organization to be even more trustworthy. Other examples of social responsibility include engaging in partnership with governments and non-governmental or ganizations to undertake programs that might not have any direct bearing with its line of business but are burning social issues nonetheless like fight against HIV and AIDS. The main thrust of Oketchs argument is that a business must undertake socially cohesive measures as part of its social responsibility if it wants to survive and prosper (Oketch 2004). Conclusion If we keep the viewpoint of Steinbeck aside and look into the positions taken by Friedman and Oketch we find that there is hardly any difference between the two approaches. Both these authors endorse the primacy profit making and while Friedman does not elaborate more than mentioning that every business should operate within the legal and ethical framework of the society they are functioning in, Oketch goes on to detail the various steps a corporation should take to fulfill its social obligations and responsibilities. He further elaborates the extent of corporate attention from only shareholders to all stakeholders. But Friedman also hints at it when he mentions legal and ethical obligations. All the actions that corporations should initiate for social consistent have a single aim that of increasing mutual trust with society as a whole. Friedman termed it as goodwill and I guess was not very far off the mark. Therefore it can be concluded that if a corporation takes all necessary steps to make certain a steady long term profit, it is clear to carry out all those activities that are termed as corporate social responsibility not out of any social or ethical or even moral compulsion but out of pure and complete profit motive.