Corporate Social Responsibility
Two questions:
o 1) Why might it be argued that corporations have social as well as financial
responsibilities?
o 2) What is the nature of these social responsibilities?
Enlightened Self-Interest: The corporation takes on social responsibilities insofar as
doing so promotes its own self-interest
There are four main business arguments for CSR
o 1) Enhance (Long-term) Revenues: Socially responsible corporations can be
rewarded with extra and/or more satisfied customers; Irresponsibility may result
in boycotts or other undesirable customer actions.
o 2) Reduce Costs: CSR can reduce costs as it helps with saving energy, reducing
waste, and cutting out inefficiencies.
o 3) Manage Risk and Uncertainty: Voluntarily committing to social actions and
programs may forestall legislation and ensure greater corporate independence
from government.
o 4) Maintaining the Social License to Operate: Adhering to CSR is necessary for
gaining and maintaining consent of local communities, employees, and
governments; These actors can effectively provide or revoke a social license to
operate to business.
Positive contributions to society are long-term investments in safer, better-
educated and more equitable communities which is beneficial to
corporations by creating improved and stable competitive contexts in
which to do business.
Friedman does not dispute these 4 points; yet he claims they are not CSR, but rather
profit maximization ‘under the cloak of social responsibility’
Moral Arguments for CSR
Externalities Argument: The positive and social impacts of an economic transaction borne
by those other than the parties engaging in the transaction.
o Provision of products and services.
o Employment of workers.
o Advertising.
Corporations are regarded as having moral responsibilities to deal in
particular with negative externalities such as pollution, resource depletion,
and community problems.
2) Power Argument: Corporations are powerful actors with access to substantial resources
and should use their power and resources responsibly in society.
Two questions:
o 1) Why might it be argued that corporations have social as well as financial
responsibilities?
o 2) What is the nature of these social responsibilities?
Enlightened Self-Interest: The corporation takes on social responsibilities insofar as
doing so promotes its own self-interest
There are four main business arguments for CSR
o 1) Enhance (Long-term) Revenues: Socially responsible corporations can be
rewarded with extra and/or more satisfied customers; Irresponsibility may result
in boycotts or other undesirable customer actions.
o 2) Reduce Costs: CSR can reduce costs as it helps with saving energy, reducing
waste, and cutting out inefficiencies.
o 3) Manage Risk and Uncertainty: Voluntarily committing to social actions and
programs may forestall legislation and ensure greater corporate independence
from government.
o 4) Maintaining the Social License to Operate: Adhering to CSR is necessary for
gaining and maintaining consent of local communities, employees, and
governments; These actors can effectively provide or revoke a social license to
operate to business.
Positive contributions to society are long-term investments in safer, better-
educated and more equitable communities which is beneficial to
corporations by creating improved and stable competitive contexts in
which to do business.
Friedman does not dispute these 4 points; yet he claims they are not CSR, but rather
profit maximization ‘under the cloak of social responsibility’
Moral Arguments for CSR
Externalities Argument: The positive and social impacts of an economic transaction borne
by those other than the parties engaging in the transaction.
o Provision of products and services.
o Employment of workers.
o Advertising.
Corporations are regarded as having moral responsibilities to deal in
particular with negative externalities such as pollution, resource depletion,
and community problems.
2) Power Argument: Corporations are powerful actors with access to substantial resources
and should use their power and resources responsibly in society.
