Corporate social responsibility involves different initiatives undertaken by a firm to take responsibility through assessing what the effect of its operations has on the environment and the social well-being of its customers. Corporate social responsibility is not only important to the environment and society but also helps the corporation by building its image in public.
From the case of Phishy Pharmaceuticals, being the CEO, it would be wise to recall the product from the shelves. This is because the objective of the company is not just to accumulate profits and maintain a positive public image among its potential and existing customers. Once the enterprise gets profits, they will be shared among the shareholders making them happy. However, according to Freeman’s stakeholder theory, the profits that are generated by the company are a consequence of its activities and not the primary cause (Brown and Forster, 2013).
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Phishy Pharmaceuticals should not just focus on its shareholders and leave out the other parties that will be affected by its activities, in this case, the Lose It Fast drug. Without putting the wellbeing of the other stakeholders such as the consumers, government and the public in mind, the firm will end up being bankrupt (Brown and Forster, 2013). This is because, the firm will make profits in the short-run, and this is despite the fact that settling for lawsuits might seem cheap at first. However, in the long run, the firm will end up losing its customers thus indicating it will have to cease its operations. Even though in future the company decides to come up with drugs that have no side effects, the image in the public will be one that is based on lack of trust for the company products.
References
Brown, J.A., & Forster, W.R. (2013). CSR and stakeholder theory: A tale of Adam Smith. Journal of Business Ethics, 1-12.
