Social Responsibilities of Businesses

"Outline the argument for and against business having social

responsibilities beyond that of making a profit. In the light of this, do

you think businesses should make charitable donations to the Tsunami

appeal? Justify your answer."

26th April 2005

To best understand the nature of the posed question I propose the

articulated finding of the widespread acceptance that cooperate official

and labour leaders have a 'social responsibility' that extends beyond the

realm of serving shareholder and its members (Friedman 1962, p. 133). The

following essay is aimed at highlighting the role of businesses, whether

they are to have interest other than solely making profit and if so what

groups should benefit from the success of a company.

According to Wilson (2004, Vol.23, p. 23) arguments, the nature of

existence for business or corporations should be 'everything to do with

service to society, and only secondarily to do with profitability.' But

this is quite on the contrary to the apparently antediluvian view put

forward by corporate executives Friedman and Levitt (cited in Wilson, 2004,

Vol.23, p. 23) highlighting '.the business of business is making money, not

sweet music.' So why is there discrepancy between the ideal view of

business and which should be placed under higher priority the shareholders

or stakeholders (society).

To understand both points of view we need to identify the party's involved

and the relationship they have to the business and business operations. A

stockholder (shareholder) is one that owns or holds a share or shares of

stock in company, enterprise or organisation (The American Heritage

Dictionary of the English Language, Fourth Edition, 2005). Shareholders are

the financial backing in the organisation, they are generally people

interested in making a profit (in the form of dividends) and they supply

capital to the organisation. On the contrary stakeholder are seen as any

party that has an interest in an organization. Stakeholders of a company

include stockholders, bondholders, customers, suppliers, employees, and so

forth (Scott, 2003).

Given the definition or both involved parties it is clear to see that the

success of the business in making a profit will please the shareholders

however, to make long-run profits in turn requires compatibility and

complacency from its revenue source; the stakeholders. This requires the

need for mission and vision driven company which must be truly responsive

to stakeholders not only its shareholders (Wilson, 2004, Vol.23, p.23).

These 'social responsibilities' must however be driven directly at the

stakeholders involved with the business dealings in order to serve equally

the