Introduction
It is a common trend for big firms to align with environmental, economic, and social movements as a strategy for marketing their products. Big brands work closely with community groups that are driven by societal concerns, for instance, inflation, alleviation of poverty, and reducing discrimination in the workplace. Business organizations collaborate in such programs under the tag Corporate Social Responsibility (CSR). By focusing on the facet of CSR, enterprises facilitate their brand awareness which enables them to attract qualified employees and loyal customers. Even though the practice has gained momentum and the majority of firms have one or several projects under CSR, the aspect does not qualify to be part of the business responsibility. Being a separate and artificial citizen, the business does not have a social concise thus should not be tasked with promoting CSR. The key role of a business organization is to create monetary value for the shareholders and increase returns from its operational activities. Entrepreneurs find a gap in society, which they exploit as the basis of their profits.
Discussion
Business organizations should focus on creating more income for the shareholders. Generally, the main reason for conducting business activities is to add monetary value to the assets provided by the stakeholders to the company. According to the economists Milton Friedman, the responsibility of any firm is to ensure it provides an adequate return to the investors (Friedman, 1970). Based on Friedman’s opinion, by engaging in CSR, the company is diverting its focus from serving the financiers to helping the community. The facet implies that most of the gains will be channeled to other activities not intended by the stakeholders (Friedman, 1970). Furthermore, to finance all the CSR programs, the company will be forced to utilize the resources that should be used to advance investment. The approach will likely lower the improvement of the business making the owners receive limited revenue as opposed to if all the assets were directed to business-related operations. Therefore, making the enterprise execute social responsibilities hinders its ability to generate maximum profit for its stakeholders which should be the main focus.
CSR entails spending the stakeholders’ money that they might not be willing to give. Giving the business a CSR mandate allows the firm to purchase items that are not beneficial to the business owners. Instead of involving in CSR practices, the enterprise should give the money to its shareholders to decide what they feel is socially important and perform them in their capacity. The facet of CSR in most cases is driven by the chief executive officers which have social responsibilities. The managers act as agents of change in the process they make it seem as if the business performing its activities. In reality, a firm is not a ‘corporate citizen’ and it should not participate in CSR. The money for CSR projects is from shareholders and customers thus instead of undertaking the responsibilities on their behalf, they should be allowed to use the resources to solve problems they feel is appropriate.
Generally, when a business performs effectively and generates more income, it becomes easier for the employees to receive high wages. However, when the aspect of CSR is incorporated, the management might take advantage of the projects and persuade workers on how the intended program will impact their lives to make them lower wage demand. The approach will automatically create a system whereby staff members are paid less to enable the business to use some of the returns to facilitate its CSR responsibilities. Therefore, when workers are paid poorly, their efforts might decline to cause the business to become less productive in the market. The aspect might make the enterprise generate low income as a result of having unmotivated employees hence the whole focus of a firm which is to create value for stakeholders tampers significantly. Since spending on CSR might affect employees’ wages, the practice should not be tolerated.
In addition, the corporate executives are elected by the business stakeholders to serve the interest of the firm owners. When the individual extends their functions to manage and engage in social responsibilities, the person is regarded as a mere employee. Similarly, the agents do not have proper insight into how to spend money on CSR programs. Sometimes they do not comprehend how to allocate the resources to alleviate social issues such as poverty. This aspect makes it challenging for the corporate executive to effectively address CSR matters as intended. Therefore, the business is unable to handle CSR accordingly following the incapacity of the managers to solve the situations. Generally, the agents are specialized in improving the operations and performance of the enterprise but not in how to curb the problems such as inflation.
Furthermore, the facet of CSR might create room for unethical practices in the business. Since the organization is an artificial being, the agents in charge of facilitating the CSR programs might take advantage of the projects to embezzle the funds allocated for such activities. For instance, managers might opt to quote a high amount needed to execute the projects to have a surplus for their personal gains (Nave & Ferreira, 2019). Such conducts are inappropriate and the likelihood of occurring is significant making the CSR risky, especially when not planned accordingly. Furthermore, leaders may choose to focus on what satisfies their interests and those of their close friends thus ignoring the bigger picture of the CSR purpose. The engagements have the potential of encouraging issues such as corruption within the business hence lowering the overall performance.
Generally, it is the duty of the government to facilitate social responsibility by using the taxes collected from business organizations and other entities. Based on Friedman’s argument, all social issues including poverty, racism, unemployment, and inflation should be tackled by the authority. Therefore, it is appropriate for the business to remit corporate taxes to the government to promote the practices. Even though the government might take a long to address the problems, it is the right body with the required authority to execute the projects (Latapí Agudelo et al., 2019). The business should by all means restrained from engaging in CSR because it will make it impose taxes from one end and spend them on the other (Fiedler et al., 2019). The facet indicates a lack of proper insight into the expenditure and thus the stakeholders might be exploited by the corporate executives.
Friedman further argues that when a business embraces CSR practices in the community, they are more likely to create the aspect of totalitarianism. Generally, in a free economy and capitalist system, the business focus is to make more profit for its shareholders. However, engaging in CSR has the potential of hindering other small businesses from conducting their activities in the market (Friedman, 1970). By creating a CSR culture, employees and customers might be attracted to corporations that tend to solve societal problems. The facet may make such businesses gain overall control of the market thus having the ability to exploit the people in the long run.
Similarly, the resources needed to facilitate CSR programs are huge and it might be challenging for the upcoming businesses to effectively implement the practices to please and attract the attention of customers. Therefore, when it becomes a necessity for business organizations to be socially responsible, the new entrants in the market might not gain a competitive advantage and thus are more likely to make significant losses (Gentzoglanis, 2019). Based on this perspective, it implies that CSR can be a barrier especially when business is forced to be ‘corporate citizen’ in society. It is essential to abolish the practice to enable firms irrespective of their market share to have equal opportunity for business activities.
Conclusion
Generally, engaging in CSR practices requires a business to utilize stakeholders’ money which is against the will of owners. It is the responsibility of the firm to generate and create value for shareholders’ capital. Any form of activity that might tamper with the focus should be avoided. Based on Friedman’s point of view, CSR hinders the business from making the required profits which is the desire of investors. Furthermore, the economist stated that social responsibility is a government duty and it should ensure it addresses the social issues using the corporate taxes from the enterprises. In addition, the practice may make corporations intentionally deny the workers wage increment. The managers may use the projects as an excuse to lure employees to accept low salaries in the company. Therefore, a business should not be a ‘corporate citizen’ in the community.
References
Fiedler, I., Kairouz, S., & Reynolds, J. (2021). Corporate social responsibility vs. financial interests: The case of responsible gambling programs. Journal of Public Health, 29(4), 993-1000. Web.
Friedman, M. (1970). A Friedman doctrine: The social responsibility of business is to increase its profits. The New York Times Magazine, 13(1970), 32-33. Web.
Gentzoglanis, A. (2019). Corporate social responsibility and financial networks as a surrogate for regulation. Journal of Sustainable Finance & Investment, 9(3), 214-225. Web.
Latapí Agudelo, M. A., Jóhannsdóttir, L., & Davídsdóttir, B. (2019). A literature review of the history and evolution of corporate social responsibility. International Journal of Corporate Social Responsibility, 4(1), 1-23. Web.
Nave, A., & Ferreira, J. (2019). Corporate social responsibility strategies: Past research and future challenges. Corporate Social Responsibility and Environmental Management, 26(4), 885-901. Web.