FALLACIES OF CORPORATE SOCIAL RESPONSIBILITY
In a contemporary world, a business-society relationship has evolved well beyond a simple business model to a much broader - socially responsible - corporate stewardship. As of this result, Corporate Social Responsibility (CSR) emerged as a concept that encourages companies to be ethical and responsible with the environment it operates in so as to wider impact on society. Though, CSR is now argued so widely as to have become a subject matter for serious arguments. Whereas business‘s human side stressed the importance of social responsibility, it also opened the room for criticism for its opponents, some of who have expressed legit business concerns; others endorse the belief that social responsibility is an integral part of a business. The purpose of this paper is to present a summary of fallacies of CSR and its advocacy.
BUSINESS IS ALL ABOUT PROFIT MAXIMIZATION
Among the first and most famous proponents against corporate social responsibility might be Milton Friedman. In his article, dated thirty years ago and published in the New York Times, he argues that the primary objective of a business enterprise is to maximize shareholders’ wealth. It is the responsibility of a manager to pursue profit maximization activities within its area of specialization in order to sustain business’ long-term healthy growth (Milton, 1970). Moreover, Friedman condemned supporters of CSR for “preaching pure and unadulterated socialism…[because they] are notable for their analytical looseness and lack of rigor“ (as cited in Sparks, 2003). Many modern economists and scholars adhere to this view. Take, for example, Robert Reich (2010), a professor of Public Policy at the University of California who said: “Corporations aren’t people. They have no brains, no consciences, no capacity for intent or guilt...corporate accountability and responsibility are meaningless concepts. Corporations exist for only one purpose: to make money” (para. 4).
Another equally important argument is concerned with the company’s efficient resource allocation. Donating money for social purposes is a waste of shareholder’s money especially when there is a low expectation of substantial profit in return. Managers, hired by their superiors, have a responsibility to work in the best interest of their business owners. Any other managerial decisions in regards to pursuing expansion opportunities may result in various risks (e.g. loss on an investment), which definitely questions business’ ability to reach their profit target in a long-run (Christian, 2005, p. 16).
Moreover it is not just the shareholders money, it could also mean a reduction in wages, extending credit limits for the disadvantage of suppliers, higher consumer prices and less tax contributions. The corporation is not the agent that is eligible to exert distributive justice, this is the task of government and administration (Christian, p. 16).
That is right. Businesses are...