Case For and Against Social Responsibility

2. Case For and Against Social Responsibility

Whether business SHOULD carry social responsibility beyond earning profit is a genuine, long-

standing debate in management thought, not a settled fact — MSBSHSE's syllabus specifically asks

students to weigh both sides.

The case FOR social responsibility:

• Business uses society's resources. A firm draws capital, labour, land, and raw material from society, so it is only fair that it gives something back in return.
• Long-run self-interest. A firm that treats its employees, customers, and community well builds goodwill, which in turn improves customer loyalty, employee retention, and ultimately profitability — social responsibility and long-term profit are not actually opposed.
• Avoiding stricter government regulation. A business that voluntarily behaves responsibly (fair wages, honest advertising, pollution control) gives the government less reason to impose tighter, more costly regulation on the industry as a whole.
• Better public image and relations. Socially responsible conduct improves a firm's reputation with customers, investors, employees, and the government alike, all of whom a business depends on to function smoothly.
• Moral/ethical obligation. Because a large business wields real economic and social power (as an employer, a polluter, an advertiser reaching millions), many argue that power itself creates a corresponding duty to use it responsibly.
• Sustainable environment for business itself. Protecting natural resources and the environment today ensures those same resources remain available for business to use tomorrow.

The case AGAINST social responsibility (most closely associated with the economist Milton

Friedman's view that "the business of business is business"):

• Profit maximisation is business's core job. On this view, a business's only social responsibility is to increase its profits, so long as it stays within the law and does not engage in deception or fraud; pursuing broader social goals is not what shareholders entrust managers to do with their capital.
• Managers lack the expertise to solve social problems. Businessmen are trained to run a business efficiently, not to solve poverty, education, or public-health problems — those are better left to specialists and to government.
• Increased cost of doing business. Money spent on social programmes is money not invested in the business, and is often ultimately passed on to consumers as higher prices.
• Concentration of power. If businesses take on a large, active role in deciding social priorities, this concentrates significant social and economic power in unelected private hands, which raises its own accountability concerns.
• Conflicting stakeholder priorities. What one stakeholder group considers "responsible" …