Is Corporate Social Responsibility a Way to Cover Exorbitant Charges

1268 Words Nov 27th, 2015 6 Pages
Contents 1. Introduction 2 2. Motivations behind CSR 2 2.1 Self-Interest 2 2.2 Ethics 2 3. Arguments for CSR 3 3.1 Innovation 3 3.2 Cost-Saving 3 3.3 Brand Differentiation 3 3.4 Long-Term Thinking 3 3.5 Customer Engagement and Employee Engagement 3 4. Arguments against CSR 3 4.1 Misdirections 4 4.2 Controversial Industries 4 5. Conclusion 4 6. References 4

Is Corporate Social Responsibility a way to cover exorbitant charges?
1. Introduction
Various authors have different definitions of what Corporate Social Responsibility. According to Lorde Holmes and Richard Watts, 1998 in their publication ‘Making Good Business Sense,’ they define CSR as “the continuing commitment by businesses to behave ethically and contribute to
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2.2 Ethics
Under the altruistic/ethical reason for CSR, firms believe that it’s paramount to do social good no matter the impact such actions would have on the financial position of the business. This principle depicts the business just as any other person with ethical responsibilities.
While it is likely that enterprises are likely to engage in CSR as a result of self-interest, it’s quite unlikely that business will undertake CSR as an altruistic reason. This is because altruistic reasons go against business principles of profit maximization. For publicly held companies, such an action as pursuing CSR for altruistic reasons will go against shareholder interests creating a conflict between them and managers. Milton Fredman, 1970 was against altruistic reasons for CSR. He wrote in the New York Magazine that “the social responsibility of a business is to increase profits. In most cases, it's only a privately owned enterprises that will be able to undertake CSR for ethical purposes depending on the interest of the owner(s).
3. Arguments for CSR
Further, we need to look at the arguments for CSR. According to James Epstein, 2012 in an article in the Forbes Magazine, “Six Reasons Companies Should Embrace CSR” he gives the following six reasons to urge businesses to adopt CSR: Innovation, Cost-Saving, Brand differentiation, Long-term Thinking, Customer Engagement and Employee Engagement.
3.1 Innovation
Under Innovation, Epstein, 2012
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