Corporate Social Responsibility

6 June 2016

Tutorial 6 — “The only role of business is the increase of profits”. Discuss.

Supporters of narrow view agree that the only role of business is the increase of profits. They believe that caring about the environmental, social and other problems should be the responsibility of government and non-profit making organizations sponsored by governments. (Pontinen J 2013 )

Corporate Social Responsibility Essay Example

A bright supporter of the narrow view is Milton Friedman who claims that the only social responsibility a business has is to maximize the profits of its owner or shareholders. Friedman feels that as long as the corporate executive carries out these desires in a way that follows the laws and ethical customs of society, this person has fulfilled his or her duty for the society. Corporate executives are charged with earning and spending corporate money. If an executive chooses an agenda of social responsibility that is in direct conflict with the company’s agenda of profitability. They lack the nessary expertise to assign them non-economic responsibilities would be to place social welfare in the hands of inept custodians. Therefore, he only role of business is the increase of profits. (Pontinen J 2013 )

Another defender of narrow view in corporate social responsibility is famous economist Adam Smith, whose “invisible hand” argument states that if every member of society in a free market economy strives to promote his own economic interests they are led to promote the general good. Thus, corporations should not be held morally responsible for non-economic matters, to do so would distort the economic mission of business.( Dudovskiy 2012)

Conversely, the supporters of board view disagree that the only role of business is the increase of profits. The supporters of the broader view believe that profit is important but not means that the company does not has the duties or responsibility to the other. Businesses cannot make decisions which are made solely with economic point of view, because they are interrelated with the whole social system.( Dudovskiy 2012)

One of the board view supporter is Keith Davis, who say that social responsibility arises from social power. If business has the power, then a just relationship demands that business also bear the responsibility for its actions in these areas. Business decisions do have social consequences because they are interrelated with the whole social system thinking is required as businessmen make decisions. Therefore, the role of business is not only maximize the shareholder’s profits but also need to care about the corporate social responsible. (Shaw, Barry & Sansbury 2009)

The other board view supporter is Melvin Anshen, who say that business and the society are bound by a “social contract”. It will no longer be acceptable for corporations to manage their affairs solely in terms of the traditional internal costs of doing business, while thrusting external costs on the public. The internal cost means the cost business incur in obtaining material and labour. The external cost means those cost generated by business but borne by public such as the environment contamination. Thus, while increasing the profit , the business must has a responsibility to the society .,

In conclusion, I think that only role of business is the increase of profit. In other words, I support the ‘narrow view’ more than the ‘broad view’. This is because business naturally has a main purpose to produce a profit. The owners of a corporate organisation hire managers for the sole purpose of increasing profits of the business so that the owners can realise a reasonable return on their investment. If they use the money to do the corporate social responsible activities, the profit of the company will reduce and the this will against the shareholder interest. In addition, according to the narrow view, the social responsibility should done by the government because only the strong system of government can done this mission. Therefore, the business just need to focus the increasing of profit .

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