social responsibility and market failure
Social Responsibility and Market Failure:
A Position Paper
Social Responsibility refers to the loyalty of the executives of a company to important social objectives as opposed to shareholders, employers, and owners. A socially responsible company is much more likely to try to keep customer service high and prices lower, even though increasing prices would be in the better interest of the business. It is important for the economy because a socially responsible business positively influences the economy. Consumers will want to be patrons of socially responsible business, and people will want to work for an ethically sound business. Milton Friedman argued in the article “Social Responsibility of Business is to Increase its Profits,” that executives are employees of the owners, and that is where their direct responsibility lies.1 However, today there is much scrutiny given to businesses that aren’t socially responsible. About 10 years ago, only a handful of Fortune 500 companies created a sustainability report, and now a great majority has sustainability reports crafted. In fact, more than 8,000 businesses around the world have signed the United Nations Global Compact pledging to show good global citizenship in the categories of human rights and labor and environmental standards.2 I believe that social responsibility is lacking in the United States because of the weakened economic state. When the economy is growing and thriving, consumers are more willing to pay higher prices for goods and services if the added cost is going to socially responsible causes. Environmental protection and higher employee wages are social objectives that in “good times” can easily be carried out with a slightly higher cost to the consumer. In an economy recession or period of slow economic growth, consumers are looking for ways to spend less and save more of their money. To keep customers during this
A Position Paper
Social Responsibility refers to the loyalty of the executives of a company to important social objectives as opposed to shareholders, employers, and owners. A socially responsible company is much more likely to try to keep customer service high and prices lower, even though increasing prices would be in the better interest of the business. It is important for the economy because a socially responsible business positively influences the economy. Consumers will want to be patrons of socially responsible business, and people will want to work for an ethically sound business. Milton Friedman argued in the article “Social Responsibility of Business is to Increase its Profits,” that executives are employees of the owners, and that is where their direct responsibility lies.1 However, today there is much scrutiny given to businesses that aren’t socially responsible. About 10 years ago, only a handful of Fortune 500 companies created a sustainability report, and now a great majority has sustainability reports crafted. In fact, more than 8,000 businesses around the world have signed the United Nations Global Compact pledging to show good global citizenship in the categories of human rights and labor and environmental standards.2 I believe that social responsibility is lacking in the United States because of the weakened economic state. When the economy is growing and thriving, consumers are more willing to pay higher prices for goods and services if the added cost is going to socially responsible causes. Environmental protection and higher employee wages are social objectives that in “good times” can easily be carried out with a slightly higher cost to the consumer. In an economy recession or period of slow economic growth, consumers are looking for ways to spend less and save more of their money. To keep customers during this