Social responsibility

Social responsibility refers to the relationship between an organization, particularly a commercial organization, and the society in which it exists. The degree of social responsibility believed appropriate for an organization to practice has changed over the course of time and also varies from one culture to another. In more individualistic societies, such as the United States and the United Kingdom, the tendency since the Thatcher–Reagan revolution of the late 1970s and early 1980s has been for businesses to claim that they have little social responsibility. This has resulted in the construct of the “American business model,” which posits that a company exists in a social vacuum and that its only duty is to maximize returns to its shareholders. This tendency has become associated with the willingness of large corporations to avoid paying any taxes at all, to outsource jobs overseas at short notice, and to squeeze more work out of employees while at the same time minimizing their salaries and benefits. However, this idea has been challenged in the twenty-first century, with many companies taking a progressive approach to how they view social responsibility.

Overview

Social responsibility may be measured though the triple bottom line approach. This approach expands upon the standard bookkeeping practices that focus on the financial bottom line by incorporating measurements of an organization’s social and environmental impacts. The managers of a company are responsible for it being sustainable for the short and medium terms. Some firms also plan to be financially sustainable in the long term, but comparatively few firms continue in the same nature and purpose for an extended period of time and those that do generally reinvent themselves according to some important criteria along the way. The responsibility displayed should cover all the important stakeholders—that is, all those individuals and organizations that have supported the firms and require compensation from them in return. Governments, for example, provide schools to educate workers, infrastructure to enable distribution to take place, and laws to protect business practices. In return, firms should pay taxes to support governments and communities so that society can continue along the same lines. Meanwhile, suppliers and employees should be paid at the appropriate level and in a timely manner and so forth. Of course, there can be a great deal of negotiation concerning the exact details of these exchanges, and such negotiation can be central to the political development of a society.

In terms of social impact, firms may be expected to contribute to a safe and healthy society or, at least not make it worse. As certain goods and services come to be understood to be injurious to society—drugs, violent pornography, and cigarettes, for example—regulations may be introduced to limit them. However, in deregulated societies, it is much more difficult to enforce social responsibility on firms (apart from voluntary actions). The 2008 banking crisis demonstrated this by shining a light on the lamentable attempts at the industry to provide self-regulation.

In terms of the environmental impact of firms, this may be measured in terms of its pollution outputs and other negative externalities. The widespread acceptance of the polluter pays principle in societies around the world, although not with occasional struggles, has revolutionized the social responsibilities of firms in this regard.

Critics of traditional corporate social responsibility (CSR), such as global management consultant Harry G. Broadman, point out that such endeavors, particularly those conducted in developing nations, may be undertaken without consulting the supposed beneficiaries; may foster corruption and uphold existing social inequality; and may suffer from a lack of transparency resulting in inaction and wasted funds. Others such as economist Milton Friedman have argued that corporate social responsibility detracts from a business's primary mission of returning profit to shareholders, who could decide to contribute to social causes on an individual basis. A May 2015 National Bureau of Economic Research working paper also found that regulators punish companies that appear more socially responsible less severely for bribery infractions. Thus, the debates over whether companies should engage in social responsibility efforts and who benefits from those efforts remain ongoing, particularly as social justice issues become more and more popular in the public discourse of the early twenty-first century.

Bibliography

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