One group of board directors believes that the company should embrace CSR as

One group of board directors believes that the

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One group of board directors believes that the company should embrace CSR as part of a “stakeholder” orientation in which the company explicitly pursues the interests of investors, customers, employees, and the community. Another group believes that the company should develop a program of CSR initiatives as a means by which the company pursues investor interests through the long-term maximization of profitability. Which group would you support and why? The pursuit of CSR as a goal in itself (as part of a balanced objective function) raises some complex issues for a public company’s board and its top management. What social goals should a company pursue: environmental protection, development projects in the local community, human rights in the third world, the interests of unborn children, animal rights, or what? The issue is much less controversial for a private company – especially one where a single owner or single family is in control. At Body Shop, Anita Roddick’s environmental and political goals were much easier to incorporate within the firm’s strategy before the firm went public. Irrespective of public or private status, there is still the problem of establishing tradeoffs between CSR objectives, profit goals, the interests of employees, and the goals of other stakeholders. The advantage of pursuing CSR as an aspect of the pursuit of profit – even if indirect and long-term – is that it avoids both of these issues. The choice of CSR objectives is determined by the business of the firm and by the pressures from society. If the firm is in the energy or transportation sectors, then environmental sustainability is inevitably a key issue; if the firm is manufacturing in the Third World, then child labor and exploitation demand a policy approach. Similarly, the pursuit of CSR does not require a reformulation of the firm’s decision criteria. Even though the bottom line impact of social legitimacy is difficult to quantify, broad magnitudes are discernable. Indeed, investments in CSR may be regarded as options.
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