The Slippery Slope of Social Responsibility
A CHORUS OF VOICES from non-government organizations, shareholder activists and other groups is suggesting that corporations take the lead in addressing social issues around the world. Even the United Nations is pressuring chief executives to expand their social responsibility spending. Kofi Annan, that great paragon of virtue, is arguing that for CEOs, it's "principles" versus "profits."
For a CEO, there is a trap in going down this path (and we are indebted to the Competitive Enterprise Institute in Washington for some of this analysis): The corporation exists to create wealth for shareholders, managers, employees, suppliers and customers. By dispersing wealth to these constituencies, the corporation allows them to go out into the world and advance their values through religious, political and social institutions. The corporation should be evaluated solely on how much money it makes.
But the social responsibility mavens are arguing that the corporation is a social institution that has a duty to directly address larger problems. It's tempting for CEOs to embrace that view because they have been on the defensive for so many years. Embracing a broad view of social responsibility could be a way to reclaim lost legitimacy.
But it's a slippery slope because once a CEO accepts the argument that he or she has a "social responsibility," the activists will argue that the elimination of poverty and disease, the dismantling of discrimination and the promotion of religious freedom are the responsibility of the corporation. …