In last 50 years, Corporate Social Responsibility (CSR) has become a subject of increasing interest for the business community. Many companies did not give a damn to CSR in past and now almost all the companies trying to sensitive for CSR. CSR consist of corporate responsibility towards society and environment in which it operates or it effects. Though it is a very subjective issue and each individual define it based on the values one has. Some of the early attempts were made by Eells & Walton (1961) and Davis (1960).
CSR has become increasing popular in media after the bankruptcy of Enron, Worldcom. McDonald had to invest millions of dollar in designing healthier food after the movie Super Size Me. Though one can argue that it is an open and free market and customers choose to go to another place to eat if the wish to but there is one important aspect is missing and that is the information without which a consumer cannot take rational decision. There are allegations against WalMart that after a certain level only White male can be promoted in the hierarchy if these are proved WalMart may go bankrupt and one of the biggest success of the retail will come to an end.
All sort of arguments (moral, economic and rational) have been given why CSR is important. There has been a gradual realization that it is something that has to be taken by the corporation to be successful organizations. For example Milton Friedman said that corporations are only responsible for the shareholders and they should not waste their money for any other activity and philanthropy done by corporation will bring efficiency and it can be done at personal level (Bill Gates Leaving Microsoft to work full time in the Gates Foundation). Porter and Kramer argued that in long run goals of the corporations and society and not conflicting with each other. He argued that healthy, better educated society is good for the growth of the company as well. And Kotler and Lee have argued that it is must for the growth of the company.
We have seen that some of the companies who did not care about the society have suffered a lot (e.g. Nestle milk case in some of the African countries caused backlash of the company even after decades, though company did not do anything illegal)
Though it is very difficult to understand where line should be drawn by government regulations, CSR and individual responsibility. But in a deregulated, free economy some of the companies have much wealth and political power than the governments of smaller countries so it is difficult to argue that government can do much. It is another thing that what is ethical today for the corporations become legal in coming year.
Managers need to understand CSR and implement in their organization very carefully for sustainable growth in 21st century.
CSR has become increasing popular in media after the bankruptcy of Enron, Worldcom. McDonald had to invest millions of dollar in designing healthier food after the movie Super Size Me. Though one can argue that it is an open and free market and customers choose to go to another place to eat if the wish to but there is one important aspect is missing and that is the information without which a consumer cannot take rational decision. There are allegations against WalMart that after a certain level only White male can be promoted in the hierarchy if these are proved WalMart may go bankrupt and one of the biggest success of the retail will come to an end.
All sort of arguments (moral, economic and rational) have been given why CSR is important. There has been a gradual realization that it is something that has to be taken by the corporation to be successful organizations. For example Milton Friedman said that corporations are only responsible for the shareholders and they should not waste their money for any other activity and philanthropy done by corporation will bring efficiency and it can be done at personal level (Bill Gates Leaving Microsoft to work full time in the Gates Foundation). Porter and Kramer argued that in long run goals of the corporations and society and not conflicting with each other. He argued that healthy, better educated society is good for the growth of the company as well. And Kotler and Lee have argued that it is must for the growth of the company.
We have seen that some of the companies who did not care about the society have suffered a lot (e.g. Nestle milk case in some of the African countries caused backlash of the company even after decades, though company did not do anything illegal)
Though it is very difficult to understand where line should be drawn by government regulations, CSR and individual responsibility. But in a deregulated, free economy some of the companies have much wealth and political power than the governments of smaller countries so it is difficult to argue that government can do much. It is another thing that what is ethical today for the corporations become legal in coming year.
Managers need to understand CSR and implement in their organization very carefully for sustainable growth in 21st century.
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