SOCIAL RESPONSIBILITIES OF THE FIRM

Social Responsibilities of the Firm

Introduction

In the realm of economics, corporate social responsibility (CSR) happens to be a crucial managerial economics concept. This is more so the case given that the implications that this very concept has for economic entities happens to be rather broad and pronounced. There appears to be general consensus that commercial enterprises ought to ensure that they adhere to the laws and regulations established within the jurisdictions in which they operate. However, over the last few decades, there has been debate over what other responsibilities firms have beyond compliance with the relevant laws and regulations. This text concerns itself with the social responsibilities of firms. In so doing, it will amongst other things explore the concept of corporate social responsibility, assess its theoretical framework, and highlight the extent to which it is sustainable.

Discussion

The Concept of Social Responsibility

From the onset, it would be prudent to note that as Akerlof and Kranton (2005) point out, some surveys conducted in the past have established that a firms performance on the social front happens to be one of the most significant considerations that customers and investors alike take into consideration before making a decision on whether or not to engage the firm. It therefore follows that CSR is increasingly being considered a key organizational ideal by managers. It is for this reason that many organizations today, including small/medium enterprises and multinationals, are actively seeking to be recognized as having made a mark in as far as CSR engagements are concerned via the various certifications such as ISO14001, the Corporate Giving Standard, etc.

So what exactly is CSR? It should be noted that to a large extent, CSR does not have an assigned definition. In essence, this means that there are numerous definitions that have been offered by various authors in an attempt to assign a concise meaning to CSR engagements. According to Paton (2005), CSR could be perceived as the various undertakings that enterprises engage in as part and parcel of corporate governance in an attempt to see to it that the various undertakings of a company are not only ethical, but also of benefit to the society. On the other hand, the World Bank (as cited in Kotchen, 2006) defines corporate social responsibility as the commitment of businesses to behave ethically and to contribute to sustainable economic development by working with all relevant stakeholders to improve their lives in ways that are good for business, the sustainable development agenda, and society at large (p. 79). The said definition clearly indicates that CSR engagements extend far beyond the responsibilities of the firm mandated by law or the various regulatory standards.

In the past, various economists...

For instance, as Paton (2005) observes, at the onset of the CSR debate, the main concern was whether the social responsibility of enterprises extends beyond the production of goods and services, profit maximization, as well as employment of personnel. As a matter of fact, these appear to have been the neoclassical borderlines of CSR engagements or undertakings.

Among prominent economists who delved into the discourse was Milton Friedman. Amongst other things, Paton (2005) points out that Milton Friedman was of the opinion that profit maximization was the primary CSR role of an enterprise. It is important to note that the profit maximization ideal in this case is with reference to the promotion as well as advancement of shareholder wealth and wellbeing. Further, it could also be described or defined in terms of what...

…CSR scheme. According to Starbucks, all its actions are firmly rooted in the belief that it should impact the community in which it operates positively (Starbucks, 2021). As the company further points out, alongside the phenomenal growth it has experienced since it was established, it has also doubled up on its resolve to create what it refers to as a positive global social impact (Starbucks, 2021). Towards this end, the company seeks to actively engage in the strengthening of communities, environmental conservation, and ethical conduct on the commercial front (i.e. in as far as the ethical purchase and production is concerned). Other companies that have an equally strong CSR reputation are inclusive of, but they are not limited to, Michelin, Cannon, Sony, Microsoft, as well as Disney. As has been indicated in the text above, the motivations for the said ngagements could be diverse. However, regardless of the motivation, there appears to be a wide range of benefits that businesses could reap. These have also been highlighted elsewhere in this text.

Conclusion

In the final analysis, it should be noted that to a large extent, CSR has also been closely linked to public relations exercises or engagements of commercial enterprises. This is to say that some firms lack the mission orientation of CSR and instead subscribe to the profit orientation. In my opinion, there would be no harm in combining the two orientations. This is more so the case given that as businesses seek to engage in undertakings that are both ethical and of relevance to the society, they inevitably gain on the reputational front which could translate to more customers and better caliber of employees. It would, however, be prudent to note that there is need for further or additional investigation on the mode, conduct, and relevance of interactions between commercial…