Corporate Social Responsibility Versus Profit Maximization
Corporate Social Responsibility versus Profit Maximization
Introduction
Nowadays, many large multinational corporations which occupy increasing shares in the market and high statues in the society are usually powerful in having both positive and negative effects on the public to a great extent. As a consequence, today, the concept of Corporate Social Responsibilities (CSR) draws much more public attention. Social responsibility goes beyond profit making and social obligation. CSR is a business intention focusing on minimizing the harmful effects and maximizing the benefit for the society (Mohr, Webb and Harris, 2001, p. 47). According to the Triple Bottom Line Concept of Elkington (1997), a company should be responsible for its social, environmental as well as financial performances, which is also known as the“profit, people and planet” approach. This concept encourages a company to take both the contributions and impacts they make to the social and environmental into account when measuring their corporate performance (Mellahi, Frynas, Finlay, 2005, p.109). To follow this concept, some corporations have started to look for a strategy which seeks to maximize both financial return and social good. However, some others state that corporate social responsibility contract the economic performance of one company. In this paper, the relationship between corporate social responsibility and the goal of profit maximization of one company will be critically appraised, and analyses will be given to the issue on whether there is a divergence or a positive interaction between them.
Relationship between Corporate Social Responsibility and Profit Maximization
Before looking at the different views towards the relationship between CSR and profit maximization, it is necessary to emphasize the concept of “stakeholder”. It is claimed by Branco and Rodrigues (2007) that in managerial decision making which is related to socially responsible activities, stakeholder is the
Introduction
Nowadays, many large multinational corporations which occupy increasing shares in the market and high statues in the society are usually powerful in having both positive and negative effects on the public to a great extent. As a consequence, today, the concept of Corporate Social Responsibilities (CSR) draws much more public attention. Social responsibility goes beyond profit making and social obligation. CSR is a business intention focusing on minimizing the harmful effects and maximizing the benefit for the society (Mohr, Webb and Harris, 2001, p. 47). According to the Triple Bottom Line Concept of Elkington (1997), a company should be responsible for its social, environmental as well as financial performances, which is also known as the“profit, people and planet” approach. This concept encourages a company to take both the contributions and impacts they make to the social and environmental into account when measuring their corporate performance (Mellahi, Frynas, Finlay, 2005, p.109). To follow this concept, some corporations have started to look for a strategy which seeks to maximize both financial return and social good. However, some others state that corporate social responsibility contract the economic performance of one company. In this paper, the relationship between corporate social responsibility and the goal of profit maximization of one company will be critically appraised, and analyses will be given to the issue on whether there is a divergence or a positive interaction between them.
Relationship between Corporate Social Responsibility and Profit Maximization
Before looking at the different views towards the relationship between CSR and profit maximization, it is necessary to emphasize the concept of “stakeholder”. It is claimed by Branco and Rodrigues (2007) that in managerial decision making which is related to socially responsible activities, stakeholder is the
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