The practicality of corporate social responsibility (CSR) is one of the hotly debated topics in the business world. The disparity in opinion surrounding CSR can be attributed to the fact that it is an ethical question rather than a logical one. While many including Bill and Melinda Gates have highlighted the functionality of socially responsible practices in business, others have been quick to express their dissatisfaction with the concept. One of the most notable voices in the fight against enforcement of CSR policies is Milton Friedman. This paper seeks to argue against the main ideas presented in Friedman’s renowned publication in the New York Times Magazine . Contrary to Friedman’s views, CSR is both practical and necessary in the business world.
According to Friedman, the sole social responsibility of a business is to generate profits, so long as it is done within the rules of the game. In his article, he argues that investing in non-profitable activities such as charity programs is detrimental to businesses. While Friedman’s argument could have been viable in the past, stakeholder attitudes have over time inclined towards ethical business practices. Companies that invest in CSR have found it rewarding, particularly due to its appeal to consumers and stakeholders. Harmoniously, the profitability associated with CSR activities has resulted in a rise in stakeholder investment among ethical businesses ( Guay, Doh & Sinclair, 2004 ). The impact of business ethics has also been felt in the job market, with graduates opting for ethical employers. Furthermore, recent research on consumer behavior suggests that customers prefer products that make claims of CSR on their labels (Hiscox & Smyth, 2006). In view of these points, Friedman’s assertions that stakeholders and employees are indifferent to business ethics stands corrected.
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Friedman seems oblivious to the fact that businesses can advance greatly owing to investment in social responsibility. In recent times, social marketing and CSR activities have proven to be profitable. Currently, one of the most prominent figures in venture philanthropy is the Bill and Melinda Gates foundation. The Foundation’s dedication to social responsibility has attracted investors and clients in equal measure. Today, the Bill and Melinda Gates Foundation holds almost $50 billion in assets, and donates funds worth almost 10% of its assets every year (Bill & Melinda Gates Foundation, 2020). Due to its benevolent activities, the Bill and Melinda Foundation has attracted donations from Warren Buffet in addition to generating great profits from investments managed by the Bill and Melinda Gates Foundation Trust. Another key figure reaping benefits from social marketing is TOMS Shoes. The company, which donates a pair of shoes for every purchase, has amassed a large following due to its philanthropic business model. These real-life examples establish the important role of socially responsible practices as far as business returns are concerned.
In his article, Friedman also argues that business executives should not be tasked with the responsibility of directing CSR operations as such activities are beyond their scope of expertise. He supposes that a business executive would not know how to spend CSR funds, and would be incapable of creating social benefit owing to counteracting forces such as inflation. However, advances in the CSR debate have led to the development of company policies that guarantee CSR is implemented sustainably. In the absence of a functional CSR policy, templates have also been availed. Furthermore, the rise in students pursuing courses related to CSR stands as evidence that gaps in CSR are being effectively addressed.
To sum it up, while Friedman’s article is a decent critique of CSR activities, most of his ideas have proven impractical in present times. In view of the evidence presented in this paper, the role of CSR in modern ventures cannot be understated. Corporate social responsibility has been at the forefront in addressing numerous societal challenges such as health care, waste management, gender equality, and education, among others. Moreover, considering the social and environmental detriments arising from business activities, corporate social responsibility is not only necessary, but also self-justifiable.
References
Bill & Melinda Gates Foundation. (2020, January 01). Foundation Fact Sheet. Retrieved from https://www.gatesfoundation.org/Who-We-Are/General-Information/Foundation- Factsheet
Friedman, M. (1970). The social responsibility of business is to enhance its profits. New York Times 32(13): 122–126. Previously published in Friedman, M. (1962) Capitalism and freedom . University of Chicago Press.
Guay, T., Doh, J.P. and Sinclair, G. (2004) Non-governmental organizations, shareholder activism, and socially responsible investments: ethical, strategic, and governance implications. Journal of Business Ethics 52(1): 125–139.
Hiscox, M.J. and Smyth, N.F.B. (2006) Is There Consumer Demand for Improved Labor Standards? Evidence from Field Experiments in Social Labelling. Department of Government, Harvard University.
