The Importance of Corporate Social Responsibility and Its Limits

Article excerpt

Abstract Companies are, in a broad sense, a group of different agents that have a relationship with shareholders, citizens, providers, and customers. In other words, they are known as stakeholders. Corporate social responsibility may help to establish clear boundaries among the different interests of the groups described above. In this paper, the authors will describe, analyze, and formalize the critical responsibility parameters, as well as the variables that shape them. Corporate social responsibility is proposed as a new management tool and not as a fashionable concept. Furthermore, the advantages and limitations of corporate social responsibility will be analyzed in order to define a management model for achieving responsibility among organizations. Finally, the model limitations are presented, both in the verbal and the mathematical formalizations.

Keywords Corporate social * Responsibility management

JEL M00

Antecedents and Commitments

Corporate social responsibility is becoming a relevant subject, and it appears repeatedly in the vast majority of academic and professional journals. Most of them have dedicated a special issue to it, and an increasing number of articles have been published concerning corporate social responsibility. In this paper, the authors ask themselves whether this is simply a new fashionable concept, as many others within the business argot, or, on the other hand, is it becoming a leading principle of top management and entrepreneurs' behavior.

In the first part of this paper, different dilemmas concerning corporate social responsibility are analyzed, and the authors' perception about it is depicted. Then, the authors will describe a method for measuring and evaluating corporate social responsibility, as well as its limitations.

Corporate Social Responsibility Understood as a New Management Tool

In order to develop this proposal, it is necessary to define corporate social responsibility. It is very important to thoroughly understand the concept of company, not from a macroeconomic point of view as the economic science does (specially the neo liberal trend), but from the business economy point of view.

Figure 1 represents--graphically and briefly--the concept of a company as many business economists see it: this is a company understood as a transforming organ, thanks to social agents (people) and technical and technological means, all of them working in a global and competitive context. By looking at this concept of a company, the following is always present:

* People/human beings: employees, shareholders, providers, collaborators, customers, competitors, and public agents (local, state, or federal).

* Context: the company develops its economic activity in a geographical area, within an economic, social, and political context.

At this point, a question emerges: does the company, or even better, the company's top management have any responsibility--implication or commitment--concerning the people and the context where they develop its activity?

It is fair and reasonable--following the trend of those who consider shareholders as the main human collective concerned--that top management within the company has to work driven by shareholders interests, mainly focusing on the profit and loss account, trying to maximize profits (Gil 2003, p. 51). In other words, "If management would accept the idea that they have a social responsibility different from achieving the maximum profit for shareholders, it would be undermining the foundation of our free society" (Milton Friedman 1966, p. 173). (1)

This point of view can be confusing for two reasons:

1. It does not take into account the fact that in order to make a profit, all the people described before have to cooperate and perform their activities within a geographical space, regardless of its size. If certain aspects are not attended to and if there is no responsibility toward these collectives, a sustainable profit will not be reachable. …