Do firms practice social responsibility or better management? Essay

Do firms practice social responsibility or better management?
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Introduction
In 1970, Milton Friedman published a short provocative essay that challenged the ethical obligations that advocates of CSR were placing on large corporations. Milton expressed his thoughts at a time when the idea of corporate social responsibility was gaining momentum and went on to have a significant effect because it was published in a mainstream publication. Milton identified business entities as mere tools of increasing the wealth of shareholders and placed the burden of addressing social and environmental issues on the government. However, advocates of CSR argue that business corporations, especially multinational organizations, must actively address social issues because their operations contribute to the existence of such issues. Despite some businesses taking CSR seriously, others have completely dismissed the idea while the integration of CSR into others has not made them to be more socially and environmentally responsible. This paper addresses the issue of corporate social responsibility by examining the definition of CSR, the exact non-economic responsibilities of companies, the integration of CSR into business operations, and whether activities that seem to promote CSR actually address social problems or are just new investment opportunities.
What is Corporate Social Responsibility?
As a business concept, CSR is not easy to define because various people and institutions have different perspectives on what it entails and those perspectives keep on changing. Nevertheless, businesses around the world are expected to only engage in activities that increase profit while also benefiting society and the environment. As a result, businesses, especially multinational corporations, are not just perceived to be business entities but rather social institutions that are considered critical in addressing various social problems. In the United States and Canada, corporate social responsibility is mostly related to the power of managers and the impact of their decisions. This perspective aligns with the definition of CSR in the 1950s when it was conceptualized in terms of the social responsibility of managers rather than business entities. In the 1960s, managers were more scrutinized when scholars “argued that socially responsible business practices led to long-term benefits for businesses and that managers need to keep in mind the impact their businesses have on society” (Birch, 2017, P. 49).
However, the notion that managers should use their influence to turn business corporations into socially responsible entities came under attack when Friedman’s article ‘The Social Responsibility of Business Is to Increase Its Profits’ was published. Friedman’s thoughts dismissed the power of managers and presented shareholders as predominant forces in business entities. The idea of managers working to solely increase the wealth of shareholders as presented by Friedman is similar to the era of managerial capitalism where businesses became vertically integrated, horizontally diversified, and run by salaried managers. Under managerial capitalism, there was a clear distinction betwe...