In a similar vein, but one which provides a list of stakeholders as well as dimensions of social responsibility, The Conference Board of Canada offers a somewhat shorter definition of corporate social responsibility:
It is clear that corporations do not only have responsibilities towards their shareholders, but also to a variety of stakeholders. Furthermore, although the term "corporate social responsibility" is widely used, it is really a broad heading which encompasses a host of different (but indirectly related) dimensions, each of which is an important topic in its own right.
One of the biggest myths in business management is the idea of profit maximization. How in the world do you maximize profits? Economics tells us that profits are maximized when marginal costs equal marginal revenues. But when does that happen? That's something few, if any, businesses can ever determine. So what's the point of a goal that doesn't exist?
To suggest that business should only be concerned with profits stems mainly from this strange notion that an invisible hand will guide society towards the good if only business enterprises seek more profits. Sure, the good of the rich? This so-called invisible hand is so invisible as to be absurd. I don't know about you, but I want something more tangible for the world in which I live. Let businesses run wild with their profit-motives, and the gap between the haves and have-nots continues to widen. Maybe Orwell was right, "some animals are more equal than others"? I hope not.
We as individuals have a responsibility towards society. Heck, we earn our "right" to exist because we serve some greater purpose. Do we survive in order to eat? I hope not. I would hope that we eat so as to live. As members of a society, we have both rights and obligations. And eating is nothing but a necessary, but insufficient condition of our existence.
Alas we invented the business enterprise. Are these not entities that are allowed to exist and grow? Sure. They are even recognized as entities from a legal point of view. They are arguably the largest influence in modern society. From whence did they earn their right to exist? Just because some people own them? Or should they earn their right by serving some greater purpose than pure profits? Just as humans eat as as to live, companies need profits so as to survive. But certainly profits should not and cannot be their sole reason for existence.
Recent events remind us, painfully no doubt, how corporate greed can negatively impact society. More and more there is a push for greater accountability and corporate governance. Much of the new stuff is done across the pond in Europe. More power to them! In the US, we are laggards. But it's never too late. Some efforts have been made towards a more socially responsible business environment. Indeed, at least two organizations, one in the US and the other in the UK, have come up with (widely supported) social auditing standards. It appears that the era of auditing only financials is coming to an end. Already many companies in Europe include social audits as part of their annual reporting. It's about time.
In the US, the Russell Sage College for Women is probably the first institution of higher education to offer a degree program pertaining to corporate social responsibility. Their Bachelor of Science degree in Business and Organizational Management views "management through the lens of social responsibility." Congratulations! Finally someone is taking concrete action. Let's hope that others will soon follow.
Corporate responsibility extends not only to the environment, but also to the people who make up a company. Too often, people are treated as replaceable body parts, much like machine tools. Unfortunately, the machine metaphor of organizations dominate management thought, thanks to the likes of Frederick Taylor and the idea of scientific management. But no, people are NOT machine parts. This falls on deaf ears most of the time. Hence we see the gap between executive pay and workers' wages increasing at an alarming rate. On the one hand a company cuts labour costs by slashing jobs (and thus wrecking families and whole communities), and at the same time rewards their executives with millions of dollars of bonus. Do these folks really need those extra millions in their bank accounts? Apparently they do. All the time saying how important the people are in their organizations. What a bunch of cattle excrement.
