153x Filetype PPTX File size 0.52 MB Source: www.wz.uw.edu.pl
SOCIAL CONTRACT and CSR • When looking at stakeholder theory as a prelude to different approaches in different parts of the world we encountered the ideas of social contract and corporate citizenship • A business just like individual people can be considered to have a social contract with the societies/states in which it is operating; and as a good corporate citizen it will accept that it has social responsibilities in that society. SOCIAL CONTRACT and CSR • The Chicago economist Milton Friedman thought that this social responsibility consisted solely of maximising profits for shareholders, a view which completely overlooks the existence and the interests of manifold other stakeholders. • If really necessary Friedman thought that the state could intervene to protect the interests of other stakeholders…but the very same Friedman also argued repeatedly for minimal government, for a minimal role for the state in the economy. SOCIAL CONTRACT and CSR • Hence in the end he is arguing that businesses should concentrate on maximising profits and thus shareholder wealth. As the title of his influential article so succinctly put it FRIEDMAN M (1970) “The social responsibility of business is to increase profits” in New York Times Magazine, 13 September 1970 . SOCIAL CONTRACT and CSR • This view has been highly influential in the theory and practice of Strategic Management but it hollows out any real sense of corporate social responsibility. A business is to pursue its own narrow self interest and the interests of other stakeholders may be ignored except insofar as they contribute to profits. • This approach with company strategy based solely on shareholder wealth maximisation is manifestly inconsistent with the ideas of social contract, corporate citizenship and consequent social responsibilities towards other stakeholders in the society or states where it operates. SOCIAL CONTRACT and CSR • Michael Porter and Mark Kramer argue that not only is Friedman inconsistent with the idea of social contract; the idea that business should focus exclusively on profits while ignoring the interests of other stakeholders has contributed (especially since the financial crisis of 2008) to an increasingly bad reputation for business as socially dysfunctional and crudely exploitative. • This leads us to discuss in detail their important article PORTER M & KRAMER M (2011) Creating Shared Value in Harvard Business Review January 2011
no reviews yet
Please Login to review.