Corporate Responsibility

Corporate responsibility involves two major participants, business and society. It encompasses four major areas of responsibility: economic, legal, moral and social. Combined, both parties are involved in these actions to protect and improve the welfare of both society and business as a whole. The business and stakeholders accomplish this within the economic structures and capabilities of both parties.

Businesses range in size, from a single proprietor to corporate giants and small and medium sized businesses in between. Both large and small companies face the same business issues and responsibilities, regardless of scale and employees. A society can be composed of individuals or small groups of people with certain common interests, manner of life, activities, purposes, values, traditions, goals and objectives. Examples of stakeholders include employees, consumers, minorities, competitors and cultural groups. Businesses are generally driven in the direction of the desires of the strongest society within a multitude of societies.

The four broad areas of corporate responsibility are founded on the basic nature of the corporation. Brummer (1991) defines a corporation as "privately based, economic entity with jural standing, whose members are expected to make decisions that will have significant impact on a number of constituents." It is not always agreed that corporations have all four responsibilities and the order in which they are responsible differs between researchers and theorists.

There are varying definitions of economic responsibilities of corporations have. Freidman (1970) states the main responsibility of a firm is defined by the corporate overriding goal of maximum return to investors. As long as the firm is committed to achieving this goal, the corporation is deemed economically responsible. Manne and Wallich (1972) follow this philosophy but focus on shareholder profits. In contrast to this, Simon puts the emphasis on a mere satisfactory level of profit for shareholders, followed by other constituents.

For corporations to operate smoothly without major disruptions, the company must comply with legal requirements: international, federal, state and local. It is deemed correct to develop, establish, implement and police a code of ethical and moral conduct for all members of its organization. Factors to consider are the unique laws and codes of ethics in each country, taxes, price fixing and bribery. Throughout the corporation, legal compliance should be dealt with stringently and immediately proactively, not reactive to external discovery and prosecution.

Moral and ethical standards are closely related to legal compliance and vary from country to country. Political contributions, bribery, proprietary information, product misrepresentation, disparagement, premature disclosures, acquiring or divulging confidential information, gifts and entertainment and conflicts of interest, are just a few examples of moral-ethical boundaries which need to be considered by the corporation and the person.

Developing code of morals and ethics can be a difficult task, when the frame of reference is large and sometimes complex. Existing laws, proposed laws, religious values, family norms, society and industry as a whole, the corporation and stakeholders are examples of factors to consider when developing a corporate moral and ethical code of conduct.

Corporations can give a certain percentage of taxable income to philanthropic causes. Considerations from the corporation perspective include whether they want to give any money at all to social causes and how much they want to give. They will then need to determine which agencies will receive money, how it is distributed and who should be involved in determining these issues. These decisions must take into account the views and reactions of company owners, stockholders, potential recipients, competitors and society. Conflicting views arise amongst parties affected by these decisions, as to whether the corporation is obliged to give money to charitable or educational organizations. One view is that they do not further the business interest of the corporation and money could be spent on facilities and jobs.

Corporate responsibility encompasses actions of the business and the wider society. Petit summarizes two fundamental points which justify being involved in social responsibility. Firstly, that "industrial society faces serious human and social problems brought on largely by the rise of the large corporation, and secondly, that "managers must conduct the affairs of the corporation in ways to solve or at least ameliorate these problems." This implies management of problems that come with growth and surviving the future industrial landscape.

Popular arguments against corporate social responsibility are varied. They include the belief that corporations would benefit society if they maximized their efficiencies and lowered costs. Other theorists believe that corporate executives lack the knowledge, perception, skills and patience to deal with society's problems.

Selected full-text books and articles on this topic

Value-Based Management with Corporate Social Responsibility
John D. Martin; J. William Petty; James S. Wallace.
Oxford University Press, 2009 (2nd edition)
Corporate Responsibility and Financial Performance: The Paradox of Social Cost
Moses L. Pava; Joshua Krausz.
Quorum Books, 1995
Counting What Counts: Turning Corporate Accountability to Competitive Advantage
Marc J. Epstein; Bill Birchard.
Perseus, 2000
Ethics and Corporate Social Responsibility: Why Giants Fall
Ronald R. Sims.
Praeger, 2003
Organizational Downsizing, Discrimination and Corporate Social Responsibility
Zeinab A. Karake-Shalhoub.
Quorum Books, 1999
Responsibility in World Business: Managing Harmful Side-Effects of Corporate Activity
Lene Bomann-Larsen; Oddny Wiggen.
United Nations University Press, 2004
Corporate Social Responsibility: Guidelines for Top Management
Jerry W. Anderson Jr.
Quorum Books, 1989
Corporate Control and Accountability: Changing Structures and the Dynamics of Regulation
Joseph McCahery; Sol Picciotto; Colin Scott.
Clarendon Press, 1994
Socially Responsible Investment: A Global Revolution
Russell Sparkes.
Wiley, 2002
Librarian’s tip: Chap. 9 "Corporate Social Responsibility"
Making Globalization Good: The Moral Challenges of Global Capitalism
John H. Dunning.
Oxford University Press, 2003
Librarian’s tip: Chap. 13 "The Business Community: Social Responsibility and Corporate Values"
A Future for Everyone: Innovative Social Responsibility and Community Partnerships
David Maurrasse; Cynthia Jones.
Routledge, 2003
Librarian’s tip: Chap. 1 "Socially Responsible Business: Global Trends"
Insurrection: Citizen Challenge to Corporate Power
Kevin Danaher; Jason Mark.
Routledge, 2003
Librarian’s tip: Chap. 1 "Corporate Power vs. People Power: A History of U.S. Corporate Accountability Struggles"
NGO Strategies for Promoting Corporate Social Responsibility
Winston, Morton.
Ethics & International Affairs, Vol. 16, No. 1, April 2002
PEER-REVIEWED PERIODICAL
Peer-reviewed publications on Questia are publications containing articles which were subject to evaluation for accuracy and substance by professional peers of the article's author(s).
Looking for a topic idea? Use Questia's Topic Generator