CSR exam hints Part 2
Friedman's doctrine and CSR history:
Explain what is the historical relationship between “corporate form” and social responsibility.
A corporation is an entity with separate legal identity than its owners. In the past, we already provided the
foundations for corporate social responsibility. Businesses namely attempted to become more responsible.
Starting off with the Roman times, many corporations were founded such as asylums, homes for the
poor/aged as well as hospitals and many other things. In the Middle Ages, the corporate form was
typically in the form of religious orders, university as well as charity. During this time period, guilds were
developed and ensured an insurance for its members. Moreover, Islamic cultures transferred wealth to
heirs by “waqfs” with the purpose of avoiding expropriation by their ruler. They founded many entities
with a social purpose, damaging the rulers’ image. Until mid 1800s, corporations were granted by the
government and were formed for the initiatives that could benefit the state or the ruler. Not all corporate
forms were that socially responsible, think of the Dutch and East India companies.
Explain how should shareholders address social problems that they care about according to Friedman?
Friedman’s main point is that CSR is at the expense of the interests of the shareholders. Since his main
aim is shareholder wealth/profit maximization, he is against the “purist” CSR. Friedman is of the opinion
that shareholders can address social problems themselves by spending their own money and time in order
to pursue their CSR goal.
Would actions of industrialist era companies aimed at employee welfare that are referred to as “early
CSR” by Husted (2015) qualify as CSR engagement by today’s standards? Explain why/why not?
During the industrialist era, different countries pursued different “CSR” strategies. This paper focuses on
3 countries: US, Japan and Germany.
Starting off with the US, the main idea was that businesses should use their wealth on behalf of God/the
public/the common good. One should implement policies that do the most good but the least harm. Some
people, like Carnegie (1889) assumed that wealth should not be distributed to the poor only since they
could waste better wages in indulgences of the appetites. Instead, one should administer wealth to the
common good. Welfare of work gained high importance in the US, which was controversial given the
laissez-faire approach of the time. Benefits were provided for employees. Railroad companies hadn’t
really thought about their social responsibilities while they caused large smoke emissions. Consequently,
implementations were formed that aimed at reducing smoke emissions. This approach, however, failed
since there were no real prosecutions for violations of the smoke ordinances. Firms were reluctant to
participate in environmental reform due to its cost.
Second, Japan provided merchants with moral principles where there was a sense of duty which implied
lifelong employment. The employer and employee owed each other mutual duties in good/bad times.
Japan, around the 1880s, implemented regulations of working conditions (protecting children and
women). This, however, due to harmonistic view, received a lot of criticism. After the war, more CSR
was implemented through pension programs, health insurance, education, company housing, etc. Also
here, smoke emissions were attempted to become reduced through regulations.
Third, Germany started off with company welfare programs in the 19th century focusing on health
insurance, company stores and housing. In the Ruhr business elite, a social welfare program was
implemented also for the purpose of social responsibility. The Alfred Krupp welfare program provided
many benefits for workers. Here, there was also a smoke regulation which was voluntary. Still, many
members faced their social responsibility.
Friedman's doctrine and CSR history:
Explain what is the historical relationship between “corporate form” and social responsibility.
A corporation is an entity with separate legal identity than its owners. In the past, we already provided the
foundations for corporate social responsibility. Businesses namely attempted to become more responsible.
Starting off with the Roman times, many corporations were founded such as asylums, homes for the
poor/aged as well as hospitals and many other things. In the Middle Ages, the corporate form was
typically in the form of religious orders, university as well as charity. During this time period, guilds were
developed and ensured an insurance for its members. Moreover, Islamic cultures transferred wealth to
heirs by “waqfs” with the purpose of avoiding expropriation by their ruler. They founded many entities
with a social purpose, damaging the rulers’ image. Until mid 1800s, corporations were granted by the
government and were formed for the initiatives that could benefit the state or the ruler. Not all corporate
forms were that socially responsible, think of the Dutch and East India companies.
Explain how should shareholders address social problems that they care about according to Friedman?
Friedman’s main point is that CSR is at the expense of the interests of the shareholders. Since his main
aim is shareholder wealth/profit maximization, he is against the “purist” CSR. Friedman is of the opinion
that shareholders can address social problems themselves by spending their own money and time in order
to pursue their CSR goal.
Would actions of industrialist era companies aimed at employee welfare that are referred to as “early
CSR” by Husted (2015) qualify as CSR engagement by today’s standards? Explain why/why not?
During the industrialist era, different countries pursued different “CSR” strategies. This paper focuses on
3 countries: US, Japan and Germany.
Starting off with the US, the main idea was that businesses should use their wealth on behalf of God/the
public/the common good. One should implement policies that do the most good but the least harm. Some
people, like Carnegie (1889) assumed that wealth should not be distributed to the poor only since they
could waste better wages in indulgences of the appetites. Instead, one should administer wealth to the
common good. Welfare of work gained high importance in the US, which was controversial given the
laissez-faire approach of the time. Benefits were provided for employees. Railroad companies hadn’t
really thought about their social responsibilities while they caused large smoke emissions. Consequently,
implementations were formed that aimed at reducing smoke emissions. This approach, however, failed
since there were no real prosecutions for violations of the smoke ordinances. Firms were reluctant to
participate in environmental reform due to its cost.
Second, Japan provided merchants with moral principles where there was a sense of duty which implied
lifelong employment. The employer and employee owed each other mutual duties in good/bad times.
Japan, around the 1880s, implemented regulations of working conditions (protecting children and
women). This, however, due to harmonistic view, received a lot of criticism. After the war, more CSR
was implemented through pension programs, health insurance, education, company housing, etc. Also
here, smoke emissions were attempted to become reduced through regulations.
Third, Germany started off with company welfare programs in the 19th century focusing on health
insurance, company stores and housing. In the Ruhr business elite, a social welfare program was
implemented also for the purpose of social responsibility. The Alfred Krupp welfare program provided
many benefits for workers. Here, there was also a smoke regulation which was voluntary. Still, many
members faced their social responsibility.
