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The concern about businesses impact on the social and natural environments has existed in some form since the dawn of trade (and therefore business itself). Evidence of this ranges from the death penalty for socially negligent business practice in Ancient Mesopotamia (now forming part of Iraq, Syria, Turkey and Iran) during 1600 BC, to the Dutch East India Company shareholders protesting the lack of transparency within the organisation (BRASS Center, 2007). However, the evolution of this mild social awareness into what we now call Corporate Social Responsibility (CSR) only took place in the early 20th century, coinciding with the advent of industrialisation and the birth of the modern day corporation. Over the last few decades, however, society has seen the formation of the world s largest, wealthiest and most powerful corporations. Businesses have been able to grow to unprecedented sizes, some to the extent that they have even outgrown certain countries economies. Wal-mart, for example, has annual revenues which exceed the GDP of 85% of the world s nations (Winfield, 2011). The consequence of this growth is that the stakeholder pool grows with the corporation, resulting in an inflation of the business s reach and influence (be it positive or negative). Now, there is some degree of expectation of corporations to exercise a certain level of responsibility towards the business society a collective representation of the stakeholders in the business. Essentially CSR refers to the debate around the moral agency of corporations, and therefore the moral duties (e.g. to act socially responsibly) of them. Several views have been developed on the matter of CSR, the most extreme of which being the Amoral View which states that corporations have no moral duties whatsoever. On the other end of the spectrum stands the view that Corporations have a moral duty to all stakeholders, and should balance their interests equitably ; also called the Stakeholder Model (Winfield, 2011). Other views, such as the Classical View take a kind of middle ground in the debate, arguing that some moral duties exist for corporations, but that they are limited, most importantly, by the potential gain for shareholders. The Classical View is a common middle ground taken by philosophers debating the concept of Corporate Social Responsibility. It states that a corporation s most important moral duty is to make profits for its shareholders, while still meeting a moral minimum (Bowie, 1991). Not everybody agrees on what exactly this moral minimum is. Some argue that it is only to act within the confines of the law, whilst most others maintain that it also includes elements of common decency, such as honesty and good faith (Levitt, 1958). "There is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud" (Friedman, 1970). Milton Friedman, a prominent American economist of the 20th century, concurred with the classical view that a business s number one priority is to act in its shareholders best interests, while competing fairly and honestly in the market. He argued that a corporation is formed with the objective of

making profits for its investors, and the management of the corporation is therefore appointed with the instruction to meet this objective. This view encourages Adam Smith s concept of the invisible hand . That is to say, Friedman concurs that profit is what drives the economy, and therefore businesses pursuing maximum profits will, in turn, maximise economic wellbeing (Shaw, 2008). Elaine Sternberg holds a similar view to that of Friedman. As justification for the classical view, she adds that non-profit goals are teleopathic (Sternberg, 1994). Teleopathy, a term coined by Sternberg, in its most primitive deconstruction, means goals disease and refers to the idea that any non-profit yielding activities in which a corporation engages misguide the corporation, and hinder its ability to achieve profit maximisation. She elaborates that a business s defining objective is the maximisation of long-term owner value. Sternberg hereby makes it clear that profit maximisation is not at all times the ideal strategy. A short-term expansion policy, such as raising unmanageable amounts of debt in order to boost profits, is excluded from a corporation s moral duties as such a strategy could lead to long-term difficulties. The Classical View could also be explained along the lines of a markets-based model (Shaw, 2008). In addition to the idea of the invisible hand, as explained above, supporters of this model purport the idea that businesses should fulfil a purely economic role, and that the government should establish the necessary regulations and mechanisms to address irregularities which result as a byproduct of traditionally capitalistic activities. According to John Galbraith (????), Smith s invisible hand is inadequate as a tool for solving social and economic problems. He adds that governments need to interfere in the market to keep businesses in check and to ensure that their self-enrichment is not to the detriment of others. A brief look at even the most capitalistic economies today offers evidence that businesses left to their own profit-pursuing devices do not generate the greatest welfare for society. Another aspect of the markets-based model is the proposition that corporations are inadequate as benefactors to society, and lack the moral expertise to bring about positive social change. The concern is not only that businesses attempting to better society will instead adversely affect stakeholders, but also that corporations will impose their capitalistic values on the beneficiaries of their corporate social activities thereby shaping society, rather than letting it shape itself (Shaw, 2008). Those who propose legality as a moral minimum believe that corporations should maximise profits without breaking the law. This view introduces a common misconception towards morality the belief that legality is tantamount to morality. Although many laws do pertain to moral issues, such as those against murder, rape and theft, hundreds of amoral or trivial/unnecessary laws also exist brought about by either one judge s decision in court, or as a result of political pressure. Regardless of this, it is impossible to argue that the law lays the basis for all moral behaviour. It is entirely possible for a corporation to obey the law while still acting immorally. For example, dishonesty in many situations is not directly prohibited by law. Furthermore, because most laws are prohibitive, they impose negative duties (duties not to do certain acts), rather than positive obligations; which many moral duties encompass. Anybody who argues that a corporation s primary objective is to make profits/increase value for its shareholders is making a hasty generalisation. A broad assumption is being made as to the priorities of investors. Shareholders might want the corporation to pursue non-profit goals, such as offering

perks to employees or investing in social enrichment activities in the local community (Winfield, 2011). Furthermore, shareholders are typically the least loyal of a business s stakeholders. With a few exceptions, shareholders tend to invest in shares with the intention of selling again in the near future, when the price is right. Why then should a corporation s sole duty be to reward those who are more interested in short-term share prices than actual long-term profits? And why should there be no sense of recognition for the loyalty and support which the employees, customers and the natural and social environments have exercised towards the corporation? These stakeholders are far more dependent on the business, and at the same time have a far greater part to play in the success of it. Adam Smith s invisible hand is one of the less sound arguments for the Classical view of CSR. The assumptions on which Smith s model is based are evidently not applicable to most modern capitalist economies. Large businesses, despite increasingly stringent pro-competition regulations, are still tempted into anti-competitive operations. Despite laws preventing practices such as collusion and price fixing, cartels are still common-place in society with businesses realising gains which outweigh the penalties imposed for collusion. With regard to the invisible hand resulting in the greatest economic efficiency, it should be noted that even the most capitalist economies (such as the USA) suffer from severe inefficiencies and inequality. Besides this, there has been a significant increase in the pressure placed by various stakeholders on businesses to act as responsible corporate citizens with more than 80% of youth in the USA admitting that they make their purchasing choices largely based on the level of CSR practiced by the business (Shaw, 2008). The suggestion that governments should be solely entrusted with the job of formulating incentives and regulations to ensure social wellbeing is also open to criticism. Government regulations, although sensible constraints for business operations, are often not enforced effectively. Many irregularities/illegalities in the activities of corporations are never uncovered, and governments lack a thorough knowledge of the underlying, private objectives of corporations (Shaw, 2008). Furthermore, since when is government the archetype for moral behaviour? Besides the apparent problem of corruption within political structures, it would be difficult to argue that politicians are any better qualified as moral agents than corporate managers. Simply being in a position to exercise power on socially beneficial activities does not make one an expert on the subject. Oftentimes government is elected on grounds far removed from so-called moral qualifications . The notion that businesses are unable to address social issues due to a lack of expertise is flawed. Although for many smaller businesses this may be the case, larger corporations are often the few members of society who are able to effect beneficial changes. Of course there is a distinct gap in the suggestion that could implies should . However, while ability does not necessarily mean obligation, corporations are by and large amongst the most competent parties, in terms of experience, talent and resources, to exercise positive social investment. They will, for one, have the available funding which countless Non-profit Organisations lack (Shaw, 2008). The fear that corporations will impose materialistic values on society through social activities is also unfounded. Businesses already exercise an enormous influence over society through advertising, lobbying and press releases. How will a contribution towards social upliftment further this imposition of capitalistic values (Winfield, 2011)?

The other popular, broader approach which is used to define the moral duties of corporations is the Stakeholder model. This model states that a corporation has a moral duty towards all its stakeholders, not just shareholders. Proponents of this view believe that the interests of all stakeholders should be balanced, and treated equitably (Winfield, 2011). An important point to note is that, unlike the proposition of the classical view, there are no universal rules which can be applied to all corporations and their stakeholder pool. Instead, a case-by-case analysis should be used to evaluate the needs, rights and social standpoint of stakeholders, and to then cater for them accordingly. This is a result of the huge disparities which exist in the constituents of different corporations and their stakeholders. Simon Zeddek (2001) explains that when corporations have a greater sense of corporate social responsibility, they will take greater account on their actions for repercussions they may cause the impact on environmental and social issues . CSR constructs a sense of accountability within corporate structures and their management by being aware of CSR and the pressures/consequences thereof, a heightened sense of the consequences of ignoring such moral duties is formed. In addition to this, studies have uncovered evidence that there is in fact a direct positive correlation between CSR and the financial prowess of a business (Cochran & Wood 1984; Turban & Greening 1996; Waddock & Graves 1997; Berman, S.L et al. 1999). Surely then this knowledge offers some proof as to the mutual benefits of CSR for both business and society severely contradicting Sternberg s criticism of CSR as teleopathic - as well as a huge incentive for businesses to engage in socially responsible activities, in the form of fattened profits? Finally, businesses and their directors need to be made aware of their modern-day place in society. They are large, wealthy and powerful enough to significant local and broader communities, and often pursue maximum profits to the detriment of society in general. A long-term approach should be taken for business activities, keeping in mind that non-shareholder stakeholders often have the biggest influence over a business s financial success and corporations can use the same size, wealth and power, which influences society negatively or neutrally, to bring about a positive social change. The ability of a business to pursue materialistic gain is enabled by society, why then do businesses leave in the dark those who are by and large responsible for their success? As Immanuel Kant puts it, businesses should not treat these other stakeholders means to an end (as they would under the classical view) but rather as ends in themselves (Kant, ????). Clearly the theories and assumptions on which the Classical view of CSR is based are significantly flawed. The idea of businesses operating on the basis of the classical view relies too much on these rules and assumptions being adhered to a prerequisite which is clearly not met in actuality. While the stakeholder model could be described as being too difficult , difficulty should never be an excuse for something being inadequate (Winfield, 2011). Technological, social and economic development would be virtually non-existent if the idea of difficulty deterred any drive for improvement.

By tracing hundreds, even thousands of years back into the history of civilisation, evidence is found to confirm that pressure for businesses to operate responsibly is a far older phenomenon than many may believe In the past, businesses were rarely big enough to have either an inadvertently or deliberately significant influence on society, and those that were large enough had no sense of compulsion to act socially responsible due to a lack of public consciousness regarding social and environmental issues (Asongu, 2007).

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