The tensions between corporate and societal interests is a hot topic of debate in them business literature under the heading of corporate social responsibility. The essential question is, do corporations have broader social responsibilities beyond their economic mandates? If they do, then how can these responsibilities be acknowledged and fulfilled through firm strategies? There are many opinions on these questions.
One dominant opinion holds that corporations are primarily economic entities whose sole purpose is to increase shareholder wealth by producing and selling goods needed by customers (Friedman, 1962). This conception harbors a narrow economic view of a corporation’s responsibility to society. In contrast is the view that corporations have grown to such large size and complexity that they affect many non-economic aspects of society. These areas include health, politics, culture, and social relations. Therefore, corporations should be held responsible for these non-economic influences on society (Davis, 1975; Drucker, 1984).
There is no unambiguous resolution of this debate. On the balance, however, it seems reasonable to expect businesses to be sensitive to the new demands placed on it by society and be responsive to them. It is also clear that the resolution of this debate depends largely on individual personal values.
In general, power and responsibility have a reciprocal relationship. The scope and power of corporations to influence all aspects of social life, and their symbiotic relationship to society, impose on corporations broad social responsibilities.
Credit: Advanced Strategic Management-MGU