In the last years of the twentieth century, AIDS hit the world. It was a disease that was seen by many as a direct death sentence. HIV, the virus that caused the disease, is immune to any vaccine or cure. The situation was slowly brought under control in the developed nations. However, in the developing nation, things continued to get worse. In 2002, 25.3 million people in Africa were infected with the disease. In South Africa, 4.7 million people were infected and out of the over 40 million people who were living with the disease, 24.4 million died. Drugs manufactured by the Western pharmaceutical firms to deal with the disease were too expensive for the developing nations. The prices on these medicines only demanded to be acquired by people who were earning highly, which most was not within the boundaries of Africa. As a result, there were demands from activists requiring that pharmaceutical companies save the situation by giving the drugs free or even abandon their patent rights. Responding to this, the pharmaceutical firms argued that the slow spread of the treatment for the disease had nothing to do with the price, but due to poor medical information and lack of clean water. They also argued that the drug was difficult to transport and administer. Additionally, the pharmaceutical firms still claimed that people who were working in the pharmaceutical industry believed that they were after saving the lives of the infected and not harming them. In my opinion, I think that the companies using the property rights to exploit the developing nations and; hence, not socially responsible.
What’s wrong with corporate social responsibility?
The concept of corporate social responsibility is not entirely new. While some companies utilize every avenue to make huge profits concerning their impact on the society, there is a history of small companies acting philanthropically by assisting the poor and through showing concerns to the needs of their employees. Creation of mutual and corporates portray the long concerns by corporations on their impacts on the society. The term corporate social responsibility was first brought into the limelight in 1953. Later in the 1070s, code of conducts started to be developed to control corporate globalization. Anti-corporate activism over human rights and environmental issues, which arose in the 1970s and 1980s, were significant in changing the attitudes of companies towards environmental and social issues. It was within this period when major boycotts were conducted against companies that were investing in South Africa. The Earth Summit held in 1992 was a major boost to the evolution of CSR as it sought to come up with ways of reducing the destruction of natural resources and pollution. Corporate social responsibility has continued to evolve since then. In the last decade of the 20th century, CSR now became a mature industry with key companies like KPMG, PricewaterCoopers (PwC) entering into the market. Currently, the world is moving from corporate social responsibility to corporate accountability. It is done by engaging in issues such as stakeholder and environmental accounting.
Debating the Responsibility of Capitalism in Historical and Global Perspective
The article is a working paper that critically analyzes the responsibility of businesses in a global and historical perspective. Until the 19th century, Indian, European, Japanese, American and other business leaders were not concerned with the business profits alone. They took their discussions beyond the profit- making responsibly placed upon them by the shareholders. There was also a variation reading how the responsibility was conducted. It still confirms that corporate social responsibility is not a recent thing. The rise of capitalism brought with itself the relationship between the capitalism and Christianity, which was the most dominant religion then. Although some companies have started to sway away, companies still believe in corporate social responsibility. The article gives four main factors that might have driven such companies to the belief, and they include fear of interventions from the government, self-interest, general belief that governments could not address all major social issues, and spirituality. All these factors are believed to have shaped the CSR spirit.
Rethinking the Social Responsibility of Business
Milton Friedman wrote an article where he argued that businesses have one and only one social responsibility, which is to utilize its resources to make profits. Milton was not of the argument that businesses are not only in the business to make profits alone, but also to promote the welfare of the society. John Mackey, the CEO and chairman of Whole Foods Market, strongly disagrees with Milton's argument. Mackey is a free market libertarian and a business man. He argues that a business should try to engage in value creation for all the stakeholders, not the shareholders only. He adds that any successful business will strive to put the customer first. Besides, he states that at Whole Foods, the concern is not only for the customers but for all other stakeholders. Mackey puts it clear that his opinion is not about showing hostility to profits. He recognizes that businesses must create value for their shareholders, and which can only be created through maximizing of profits. However, his main point revolves about ignoring the other stakeholders while trying to maximize the profits. In exploring the available opportunities, companies must ensure that they minimize and, if possible, eliminate the negative impacts of their businesses to the society. Importantly, he notes that satisfying the customers is a means to an end. Therefore, ensuring that the customers are happy is the road to maximizing the profits. With this, he tends to claim that the customers should come first, and others will follow. Therefore, companies should not only think about their shareholders alone, social responsibility is about showing concern for all stakeholders, customers being crucial stakeholders.
Do Well by Doing Good? Don’t Count on it!
It is very misleading to link profitability to corporate social responsibility. Unfortunately, most research works have concentrated on finding this relationship. The results of the works indicate that there is no strong relationship between both. It is despite the fact that doing ‘good’ does not appear to have a negative impact on the stakeholder value. Corporate misdeeds stand to be more costly to corporates, in case the public finds out. Although it is very hard to determine the probability of being caught after doing bad, evidence from many companies whose fraudulent activities have been exposed can explain how being found doing, malpractices can negatively affect the company. Similarly, it is unlikely that such good deeds will cost the shareholders anything. From the research conducted in the article, only 2% of the managers interviewed directly attributed the costs of social responsibility to the shareholders. For the other 98%, there was no change in the shareholder value due to the company undertaking corporate social responsibility. Additionally, profitability should and must never be the primary purpose of engaging in corporate social responsibility. In either way, the society will benefit if companies use economic incentives to do go and take on corporate social responsibility. However, attaching economic payoffs to CSR is a completely misguided.
Abd-Elmotaleb, Mostafa, Sudhir K. Saha, and Abd-Elnasser M. Hamouda. "Rethinking the Employees’ Perceptions of Corporate Social Responsibility: An Organizational Identification Framework." IBR 8.3 (2015): n. pag. Print.
Jones, Geoffrey G. "Debating the Responsibility of Capitalism in Historical and Global Perspective." SSRN Electronic Journal (2013.): n. pag. Print.
Mackey, John. Rethinking the Social Responsibility of Business: Putting Customers ahead of Investors. Reason, 2005. Print
Margolis, Joshua and Hillary Anger Elfenbein. Do Well by Doing Good? Don’t Count on it! Harvard Business Review, 2007. Print
Spar, Debora, and Nicholas Bartlett. Life, Death, and Property Rights: The Pharmaceutical Industry Faces AIDS in Africa. Havard Business School, 2005. Print