Wall Street Journal: The Case Against Corporate Social Responsibility

Article Review: "The Case against corporate Social Responsibility" by Aneel Karnani
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Institution
Corporate Social Responsibility
1. In the article "The Case Against Corporate Social Responsibility" published in The Wall Street Journal, August 23, 2014, Anee Karnani argues that the current approach to social responsibility among business companies will not solve society's problems. Her argument is not for the complete abolition of corporate social responsibility as the article's title seems to suggest, but a call for a different approach in enforcing social corporate responsibility within the corporate sector. He acknowledges that social corporate responsibility plays a big role in improving social welfare. However, it is necessary to realize that the sole purpose and priority of businesses is not to improve social welfare, but to maximize profits. Accordingly, it is unrealistic to expect business companies to sacrifice profits for the sake of promoting social welfare programs. The author points out that business managers' first allegiance is to the shareholders. Their major responsibility is to protect and promote shareholder interests. As investors, shareholders expect good returns from their capital. Therefore, business managers strive to ensure that they realize profits for the company because that is the reason they are hired. In this regard, business managers will avoid, resist, and steer away from business practices that will increase the company's costs and reduce profits. All social responsibility programs, such as funding schools, hospitals, needy students, and other community development initiatives are an expense to businesses, and it is therefore expected that no business can sacrifice its profits just for the sake of public interests.
The author's next argument is that business companies engage in social corporate responsibility not because they are interested in promoting social welfare, but because doing so increases profits. He gives examples of healthy foods and fuel-efficient cars. Marketers of healthy foods such as whole grain and organically produced food products are not really interested in the health of consumers, but exploiting a situation where more and more people are becoming health-conscious. The focus on healthy foods, therefore, is encouraged by the existence of a market niche of health-conscious consumers who are willing to pay for healthy foods. Similarly, the shift toward environmental friendly business practices such as using solar energy is a result of increasing cost of fossil-based energy such as oil and natural gas. In these circumstances, meeting social welfare by selling healthy foods and using environmental-friendly sources of energy is a by-product of entrepreneurs' greed for profits and cost-cutting measures. In this light, businesses can only pursue corporate social responsibility in situations where the public good align with profit generation. When profit making is at variance with the public good, business owners and managers cannot be expected or trusted to voluntarily sacrifice their profits to achieve a common...