Companies and enterprises in today’s world need to comprehend ethical behavior and have a sense of corporate social responsibility to succeed. Both CSR and ethical behavior, in the eyes of many, underscore the need for companies to adopt ethical, sustainable business practices that will benefit not only the quality of their products but also their operations and the way the public views their clients(Freeman,p.450). The issue of whether businesses should take on social responsibility has sparked a protracted and controversial debate in the area of corporate ethics. This debate centers on two fundamentally opposed viewpoints that guide business behavior and decision-making. On the one hand, the position advanced by economists like Milton Friedman adamantly asserts that firms have no intrinsic commitment to address larger societal issues and that their only goal is to maximize profits for their owners(Friedman,p.6). On the contrary, scholars like Edward Freeman support the idea that businesses have a wider obligation to their stakeholders, such as their employees, clients, and the general public, in addition to their shareholders(Freeman,p.455). This essay seeks to critically analyze these competing views on CSR and provide instances from the actual world to support each one and show how CSR benefits businesses and society by analyzing the practices of the clothing sector. It will also discuss the crucial role that government regulation plays in influencing corporate behavior, highlighting the importance of creating a clear framework that directs and rewards ethical behavior in the business world.
First, the move to more ethical capitalism is covered in R. Edward Freeman’s article “The New Story of Business.” Freeman places a strong emphasis on corporate social responsibility and urges companies to take interests other than shareholders into account. He emphasizes the advantages of moral behavior and calls for a change to a fair strategy that incorporates social issues into business plans(Freeman,p.455).On the contrary, According to Milton Friedman’s 1970 article “The Social Responsibility of Business is to Increase its Profits,” a company’s main responsibility is to maximize profits for its shareholders. Friedman argues that allocating funds to social causes compromises the fundamental principles of capitalism and advocates putting more emphasis on economic performance than on broader societal obligations(Friedman,p.6).
Argument on the significance of corporate social responsibility (Example)
Patagonia, an outdoor clothing company known for its high-end outdoor clothes and various environmental sustainability initiatives, demonstrates a dedication to CSR. The sustainability initiatives of Patagonia include the use of organic materials, waste reduction, support for environmental concerns and sharing information about its supply chain, donating one percent of its sales to environmental charities, and launching a website called Worn Wear where used Patagonia apparel may be sold(Rachini). Due to the company’s ethical business practices and devoted consumer base, this strategy has enhanced brand loyalty and profitability(Freeman,p.461). Furthermore, Patagonia’s commitment to CSR has established it as a market leader, offering products that are built to last helps the business to expand and encourage other businesses to follow suit.
Opposition to Corporate Social Responsibility (Example)
Volkswagen’s “dieselgate” issue, in comparison, demonstrates a lack of CSR. The “Dieselgate” incident in 2015 resulted in a serious ethical and corporate social responsibility (CSR) breakdown for Volkswagen (VW), a German automaker renowned for its environmental initiatives and corporate social responsibility (CSR) efforts. VW was discovered for breaking the Clean Air Act in the US even though it tried to present itself as a conscientious business(Zhang et al.,82). The scandal centered on VW installing “defeat devices” in diesel cars, which were pieces of software that altered how well the cars performed in emissions testing and led to much greater nitrous oxide emissions in real-world driving conditions. This unethical strategy increased fuel economy while producing pollution well over legal limits. Thus, VW’s earlier claims about having low emissions and being environmentally friendly were disproved. The corporation purposefully falsified emissions statistics to maximize short-term profits at the expense of the environment’s and society’s welfare(Zhang et al.,80). This fraud brought hefty fines, harm to the company’s reputation, and legal repercussions, highlighting the dangers of ignoring CSR. Volkswagen’s contempt for moral obligations serves as more evidence that businesses that are only interested in making a profit can eventually harm both society and themselves.
I agree that businesses need to take social responsibility seriously. Adopting CSR has both short- and long-term advantages, and it helps organizations align with society’s ideals. Ethical business practices, like those used by Patagonia, encourage client loyalty, boost reputation, and spur innovation. Companies that act responsibly can reduce risks, strengthen their relationships with stakeholders, and make a beneficial impact on society((Carroll et al.,1258). Additionally, embracing CSR can contribute to a future that is more equal and sustainable for both corporations and communities. However, The Volkswagen case serves as a prime example of the contrary perspective, which favors immediate profit over moral considerations. A company’s reputation could be harmed and legal repercussions could result from such a strategy. The stability and societal influence of firms can eventually be harmed by ignoring CSR, even while they try to maximize profits.
Although it’s tempting to see this issue as either all good or all bad, it’s crucial to appreciate how complex the situation is. While businesses must stay profitable and competitive, this does not prevent them from upholding their ethical obligations. Integrating ethical practices that support company objectives while also taking into account the larger impact on society can be part of a balanced strategy(Friedman,p.14). In order to prevent businesses from squandering social resources or engaging in unethical behavior, government regulation should establish baseline standards for moral conduct. Regulation should promote accountability and transparency, rewarding CSR-focused businesses and penalizing those that don’t. It’s crucial to strike a balance between encouraging innovation and preserving societal well-being. Transparency, accountability, and the adoption of sustainable practices can all be promoted by regulation(Carroll et al.,1259). However, too much regulation could inhibit innovation and impede the expansion of the economy. Furthermore, the government’s function is frequently viewed from a profit-maximizing standpoint as being restricted to maintaining fair competition and defending property rights(Freeman,p.463). This perspective, however, ignores the potential negative externalities that businesses might produce, including pollution or labor exploitation. It may be necessary for the government to step in and address these problems while defending the interests of society.
In conclusion, the subject of corporate social responsibility is still important in modern business ethics. It is clear from looking at examples from the clothing industry that adopting CSR may result in positive social impact as well as increased corporate success(Freeman,p.463). I agree that businesses should practice social responsibility because it encourages moral behavior, improves ties with stakeholders, and helps ensure a sustainable future. Businesses may make money and still be socially and ecologically responsible Companies can be encouraged to prioritize social responsibility through effective government regulation, ensuring a harmonic balance between profit growth and societal well-being.
Works Cited
Carroll, Archie B. “Corporate social responsibility: Perspectives on the CSR construct’s development and future.” Business & Society 60.6 (2021): 1258-1278.
Freeman, R. Edward. “The new story of business: Towards a more responsible capitalism.” Business and Society Review, vol. 122, no. 3, 2017, pp. 449–465, https://doi.org/10.1111/basr.12123.
Friedman, Milton. “The social responsibility of business is to increase its profits.” Corporate Ethics and Corporate Governance, pp. 173–178, https://doi.org/10.1007/978-3-540-70818-6_14.
Rachini, Edoardo. “Sustainability in the fashion world: a competitive advantage not a limitation.” (2021).
Zhang, Michael, Glyn Atwal, and Maya Kaiser. “Corporate social irresponsibility and stakeholder ecosystems: The case of Volkswagen Dieselgate scandal.” Strategic Change 30.1 (2021): 79-85.
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