Friday, October 5, 2012

Corporate Social Responsibility

a. According to Milton Friedman, businesses are responsible for utilizing their shareholders funds in profitable ways. In accordance with this view, the provision of public services is a matter for elected representatives. Explain what's meant by “Corporate Social Responsibility”, and, referring to material inside the situation study, outline the primary arguments for and against it.
40 marks
Society’s preoccupation of the social responsibility of businesses has existed due to the fact at least the early 1930s and likely even previous to this period. As it has been rooted inside the legal community, the CSR debate has been a issue of debate in many academic disciplines, with little discussion occurring in between and among them (Radin, 1999).

The CSR thought isn't simple to grasp or to carry out. It is hard to define, and as soon as done so, the resultant definition is frequently contentious. In addition, perspectives on CSR are undoubtedly tinged on the normative beliefs that one has about the apt role and purpose of an organization. For instance, classical economists will most likely have differing understandings of what CSR need to entail, compared to social activists. The classical economists, for example, do not expect that corporations ought to be anything other than productive and efficient organizations. Certain social activists, over a other hand, expect corporations to become leaders in responding to social issues, or at a minimum, to prevent, minimize or compensate for harm that corporations may perhaps inflict to society (Kahn, 1997).
There is no globally accepted definition of CSR, and the currently existing definitions are frequently ambivalent. For instance, the definition of CSR inside the New Balance Sheet states that “while there's no fixed definition, in our view, the term ‘corporate social responsibility’ is most efficiently applied to describe instances exactly where companies respond to interests in addition to those of their shareholders (The Canadian Democracy and Accountability Commission, 1999). Critics and proponents alike often cite the lack of agreement on a meaning of CSR as a major issue in advocating the CSR agenda.

The power and influence of corporations, real or perceived, as well as the impact of their economic, social, and political actions on society in general, have resulted inside a broad societal expansion that organizations be accountable for their actions. Put in easier terms, there is a growing public sentiment that companies have a responsibility to weigh the impact that their decisions have on the parties involved – and eliminate, minimize or compensate to your harm they might inflict on society (Kahn, 1997). The justification for this expectation is partly derived from a moral position that businesses are and need to behave like any other citizen in society, upholding ethical and moral responsibilities. The expectation that businesses need to be responsible for their impact on society is also justified on the basis that power has corresponding responsibilities. As Dodd (1932) asserts, “power over the lives of others tends to build on the component of people most worthy to exercise it a sense of responsibility.”

In the current case, Thames Water must live corporate social responsibility for all its stakeholders – the public which serves (which are also its customers, its employees, and also the regulatory bodies which it deals with. The contemporary facts show that it has extremely conspicuous inefficiencies, for the point that regulatory agencies already sanction it. Neither does it enjoy a good reputation from its consumers, who have perennial complaints about its services. These kinds of circumstances may well make Thames unsustainable; whilst it has a great financial record which the numbers support, this does not ensure that it'll thrive inside the long term. Today, investors are interested in businesses that promise growth as it has placed sufficient focus on all of the essential facets of customer, business development, best company practice, and learning and growth – apart from financials.