Social Responsbility of Organisations
...quences on society and the corporation itself that result from a corporations actions, the authors examine the 30-year studies of this theory and the development of the stakeholder theory. Studies examining the relationship between the two are noted and the findings of the 127 published studies are summarised in table 2 in the article. The authors proceed to refer to the thirteen recent research reviews that have been conducted and published on the relationship between corporate social performance and corporate financial performance. Margolis and Walsh (2003, p.278) state; The reviewers see problems of all kinds in this research, concerns about the reliability and validity of the CSP and CFP measures, omission of controls, opportunities to test mediating mechanisms and moderating conditions… The imperfect nature of these studies makes research on the link between CSP and CFP self-perpetuating. Margolis and Walsh (2003, p.278) use the research reviews findings to support their claim that there needs to be exploration into the question what the effect a corporations actions have on both society and the corporation and that a pragmatic approach needs to be considered. The article and textbook both discuss the classical view of social responsibility. The arguments against social responsibility put forward by economist Milton Friedman is outlined by both the textbook and article. Friedman’s claims (cited in Margolis & Walsh 2003, p.272 and Robbins, Bergman, Stagg and Coulter, 2003, p.136) that the only important stakeholder is the shareholder and the primary goal of the organisation is to maximize the return to the shareholder on the investment is used by both as the major argument supporting the classical view. Wealth creation and profit maximization is discussed in both as arguments for the side against social responsibility. The theory that if a company is making profits and achieving its economic goals than it is ultimately helping society is described in both as argument against social responsibility. The other arguments presented against social responsibility that both the authors and the textbook compare upon are that it increases business power, that governments are responsible not businesses for social issues, that it is a misappropriation of business resources, the free enterprise system is undermined, there is lack of accountability and that ultimately there is a cost and someone has to pay. Robbins, Bergman, Stagg and Coulter (2003, p.136-137). Arguments supporting the socioeconomic view of social responsibility presented by Robbins, Bergman, Stagg and Coulter (2003, p.139) in the textbook are; it is ethical to be socially responsible, reduces government regulation, creates positive public image, increases profits over the long term, balances power with responsibility, increases share price over the long term, kept business in tune with public expectations and that business already have the necessary and unused resources to assist society. Margolis and Walsh advise that the major argument but forward by those who support corporate social responsibility is that by being socially responsible it assists in maximising wealth creation but they themselves criticize this line of argument. Margolis and Walsh (2003, p.273) state that those supporting social responsibility have a challenge to justify its’ view in a world dominated by the theory that maximizing wealth for the shareholder reigns. Both the article and textbook address how there have been increased demands for increased social responsibility in recent years and how many managers and corporations are responding. They both use the Body Shop as an example of a corporation committed to being socially responsible and at the same time operate as a viable business. The article and the text discuss the relationship between corporate social performance and corporate financial performance and studies to correlate the two. They both acknowledge methodological weaknesses in the studies that have been conducted to measure corporate social responsibility and its positive effect on the economic performance of the corporation, Margolis & Walsh (2003, p.78) and Robbins, Bergman, Stagg and Coulter (2003, p.141). The textbook concludes that most studies find a positive relationship between the two and that there is no evidence to suggest that a company’s economic performance is damaged in the long term. Margolis and Walsh’s (2003, p.278) conclusions are in contrast to the text, they argue that recent reviews of the studies reveal the link between the two to be illusory. The article states that the studies strengthen the tension between the two views of social responsibility and do not assist in determining what effect a corporations responses have on society and the corporation itself. The normative view of business ethics is discussed in the article and the textbook. The article proposes that this view is the option that should be used by corporations in dealing with social responsibility. Margolis and Walsh (2003, p.284) state that normative theory is about clearing up the competing issues, assessing the objectives and concerns for each course of action side by side and investigate the varying conclusions. Richardson states...