Social Responsibilities of Corporations

Essay by EssaySwap ContributorUniversity, Master's February 2008

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Social Responsibilities of Business Corporations: Do Corporations have Social Responsibilities that Extends much Beyond the Profit Maximizing Concept? Introduction In the early 20th century, business firms were predominantly concerned with maximizing their profits. However, in the 1970s, social activists began to question business enterprises? singular objective of profit maximization. They argued that since businesses derive their existence from society, they have some obligations towards its ?interest and welfare?. The concept of social responsibility mainly became popular after the publication of Howard R. Bowen?s Social Responsibilities of Businessman in 1953. Bowen argued that business enterprises should consider the impact of their decisions on society. Many philosophers consider social ethics and responsibilities as ?science of conduct? (Carter McNamara).

In the modern era, since the expectations of the society have changed a lot, organizations have become more aware of their social responsibilities. A careful analysis of arguments for and against the involvement of organizations in social welfare is truly necessary to determine whether an organization should implement social initiatives or should they go for only profit-maximizing alternatives.

Arguments against Social Responsibilities of Corporations Opposes the principle of profit maximization The principal objective of a business is profit maximization. Hence, any social involvements may not be economically fruitful for a business with respect to this motive.

Excessive costs When a business incurs excessive costs for social involvement, it passes the cost on to its customers in the form of higher prices. Society, therefore, has to bear the burden of the social involvement of business by paying higher prices for its products and services, which would otherwise, could have been available at lower prices.

Weakened international balance of payments A weakened international balance of payments situation may be created by the social involvement of organizations. Since the cost of social initiatives would be added to...