5. Social Responsibility

5. Social Responsibility - 5 Corporate Social...

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5. Corporate Social Responsibility The duty of a corporation is to create wealth by using means that protect, enhance or avoid harm to societal assets. Background 0. The classical view 0. responsibility of business to make money within the law 1. the invisible hand directed business to serve society 1. Social responsibility in Colonial America 2. Businesses were small and frugality was admired 3. Charity was a virtue 2. Charity in the Nineteenth century 4. As businesses grew, so did the nature of endowments 5. Carnegie built 2,811 libraries 6. But didn’t feel you should waste money by giving to the poor 7. Gave away millions for grand projects such as libraries and universities 3. Social Darwinism 8. Charity interferes with the natural evolutionary process 4. Corporations and the doctrine of Ultra Vires 9. Means beyond the law, 10. legal issue, profits were basically due to the shareholders, could not be given to charity by a corporation 11. Was not a right expressly implied in most corporate charters 12. Still- many individuals developed great philanthropic legacies The 20 th Century 0. Philanthropy was separated from social responsibility 1. As businesses grew, their impact on society increased 2. Massive social problems resulted from industrialization 3. Business feared governmental regulation 4. Justifications for broader responsibility 0. Managers are trustees of various interests and all stakeholders including the community 1. Managers were to balance the interests of all affected stakeholders including the community 2. The service principle evolved, if the business succeeded, it would help get rid of poverty and social injustices 5.
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