The Role of Business

The Role of Business

Is Corporate Social Responsibility good for business or simply

goodwill?

Introduction:

What is the role of business? Is it to generate wealth for the company

and its shareholders, or is it purely for benefiting the public? This

is what I will attempt to answer in my essay.

There is more than one definition for corporate social responsibility.

One way in which it can be defined is the obligation of organisation

management to make decisions and take actions that will enhance the

welfare and interests of society as well as the organisation (Daft,

2003). In other words, corporate actions have social implications, and

managers have a responsibility to act in ways which benefit society as

well as the organisation (Boddy, 2005).

The difficulty that most companies of today are facing is that

investing money in order to become more socially responsible may

benefit one of the company’s stakeholders, but have the opposite

effect for another stakeholder. For example, investing money into the

workplace in order to make it a safer working environment would

benefit employees; therefore, they may have increased motivation,

which could increase productivity and profits. However, shareholders,

in the short term time horizon, may have no time for considerations in

social responsibility, as usually their objective from buying shares

in a company is to receive returns from their investment in the form

of dividends. The more a company spends on such things as being more

responsible, the less dividends shareholders in the short term. But if

shareholders actually looked at the long term side of things, they

could rece...

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...ies all around the world have to change the way their

organisation works in order to meet this shift in customer attitude if

they want to remain profitable. In my opinion, companies are becoming

more socially responsible mainly to remain competitive and for

increased goodwill, and not on the basis that it is good for the

company, which in some cases it can be.

Corporate social responsibility is very expensive in the short-term,

so whether or not a company decides to become more socially

responsible will depend on how willing the shareholders are to invest

in such a project. However, the company could see an increase in

profits in the long-term future if they were to do so.

References:

Daft, R. (2003) Management. South-Western, Ohio, USA.

Boddy, D. (2005) Management: An Introduction. Pearson Education, Essex