The Social Responsibility of Business Is to Increase Its Profits
01 Jan 2007-pp 173-178
TL;DR: When I hear businessmen speak eloquently about the social responsibilities of business in a free-enterprise system, I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life as mentioned in this paper.
Abstract: When I hear businessmen speak eloquently about the “social responsibilities of business in a free-enterprise system”, I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned “merely” with profit but also with promoting desirable “social” ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are — or would be if they or anyone else took them seriously -preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.
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Posted Content•
TL;DR: In this paper, the authors address the question of how and why corporate social responsibility (CSR) differs among countries and how it changes, and apply two schools of thought in institutional theory to conceptualize the differences between CSR in the USA and Europe.
Abstract: We address the question of how and why corporate social responsibility (CSR) differs among countries and how and why it changes. Applying two schools of thought in institutional theory we conceptualize, first, the differences between CSR in the USA and Europe and, second, the recent rise of CSR in Europe. We also delineate the potential of our framework for application to other parts of the global economy.
3,300 citations
Cites background from "The Social Responsibility of Busine..."
...CSR is therefore differentiated from business fulfillment of core profit-making responsibility and from the social responsibilities of government (Friedman, 1970)....
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Journal Article•
TL;DR: In this paper, the authors integrate elements from the theory of agency, property rights and finance to develop a theory of the ownership structure of the firm and define the concept of agency costs, show its relationship to the separation and control issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears costs and why and investigate the Pareto optimality of their existence.
Abstract: This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm. We define the concept of agency costs, show its relationship to the ‘separation and control’ issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears costs and why, and investigate the Pareto optimality of their existence. We also provide a new definition of the firm, and show how our analysis of the factors influencing the creation and issuance of debt and equity claims is a special case of the supply side of the completeness of markets problem. The directors of such [joint-stock] companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master’s honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company. — Adam Smith (1776)
3,246 citations
TL;DR: The business case as discussed by the authors is the underlying arguments or rationales supporting or documenting why the business community should accept and advance the corporate social responsibility (CSR) cause, which refers to the bottom-line financial and other reasons for businesses pursuing CSR strategies and policies.
Abstract: In this review, the primary subject is the ‘business case’ for corporate social responsibility (CSR). The business case refers to the underlying arguments or rationales supporting or documenting why the business community should accept and advance the CSR ‘cause’. The business case is concerned with the primary question: What do the business community and organizations get out of CSR? That is, how do they benefit tangibly from engaging in CSR policies, activities and practices? The business case refers to the bottom-line financial and other reasons for businesses pursuing CSR strategies and policies. In developing this business case, the paper first provides some historical background and perspective. In addition, it provides a brief discussion of the evolving understandings of CSR and some of the long-established, traditional arguments that have been made both for and against the idea of business assuming any responsibility to society beyond profit-seeking and maximizing its own financial well-being. Finally, the paper addresses the business case in more detail. The goal is to describe and summarize what the business case means and to review some of the concepts, research and practice that have come to characterize this developing idea.
3,033 citations
Cites background from "The Social Responsibility of Busine..."
...Another incentive for the development of the business case was probably a response to Milton Friedman’s continuing arguments against the concept, claiming that businesses must focus only on long-term profits....
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...The doctrine of profit maximization is endorsed by the classical economic view led by the late Milton Friedman (1962) where ‘there is one and only one social responsibility of business – to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud’....
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...The case against the concept of CSR typically begins with the classical economic argument articulated most forcefully by the late Milton Friedman (1962)....
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...The doctrine of profit maximization is endorsed by the classical economic view led by the late Milton Friedman (1962) where ‘there is one and only one social responsibility of business – to use it resources and engage in activities designed to increase its profits so long as it stays within the…...
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TL;DR: In this paper, the authors address the question of how and why corporate social responsibility (CSR) differs among countries and how it changes and delineate the potential of their framework for application to other parts of the global economy.
Abstract: We address the question of how and why corporate social responsibility (CSR) differs among countries and how and why it changes. Applying two schools of thought in institutional theory, we conceptualize, first, the differences between CSR in the United States and Europe and, second, the recent rise of CSR in Europe. We also delineate the potential of our framework for application to other parts of the global economy.
3,015 citations
References
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Journal Article•
TL;DR: In this article, the authors report the results of their investigation into the best practices of four manufacturing firms with reputations for delivering high levels of customer satisfaction, and suggest ways companies can improve their customer satisfaction measures and practices.
Abstract: Although researchers have concentrated on various measures of customer satisfaction (CS) and the relationship of CS to firm performance, they have done little to determine what constitutes the best practices of firms focusing on CS as a corporate strategy. These authors report the results of their investigation into the best practices of four manufacturing firms with reputations for delivering high levels of customer satisfaction. They found that, although the firms developed a CS strategy for different reasons, each had similar characteristics that enabled them to concentrate on satisfying the customer. While the firms generally outperformed the average firm in their industry in profits and asset utilization after adopting a customer satisfaction strategy, they were not as successful in increasing market share; nor has the market valued them as highly as it has valued others in their industry. Finally, the authors suggest ways companies can improve their customer satisfaction measures and practices.
319 citations
Book•
01 Jan 2004
TL;DR: In this paper, the authors provide a complete treatment of business-to-business marketing, including market analysis, relationship management, supply chain management, marketing strategy development and electronic commerce.
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279 citations
Book•
01 Jan 1998
TL;DR: In this article, the authors present an overview of the business-to-business marketing environment, including how buyers buy, how to identify the customer, and how to make and move the goods.
Abstract: Part I Introduction: 1. The Business Marketing Environment. Part 2 How Buyers Buy: 2. Fundamentals of the Purchasing and Materials Management Function 3. Management of the Business Buying Function. Part 3 Identifying the Customer: 4. Business Marketing Research and Information Systems 5. Market Segmentation, Positioning and Demand Projection. Part 4 Making and Moving the Goods: 6. Product Development, Management, and Strategy 7. Business Price Planning and Strategy 8. Business Marketing Channel Participants 9. Business Physical Distribution Management and Strategy. Part 5 Promoting and Selling the Goods: 10. The Personal Selling Function in Business Marketing Strategy 11. Business Sales Management 12. Advertising and Sales Promotion Strategy in Business Markets. Part 6 Trend in Business-to-Business Marketing 13. Marketing of Business Services 14. International Business Marketing 15. Ethical Considerations in Business-to-Business Marketing. Part 7 Comprehensive Cases.
258 citations
TL;DR: A conceptual approach to the segmentation of industrial markets together with results from an exploratory survey of current segmentation practices in industry and two examples to encourage appropriate use of market segmentation in planning and control of marketing strategies are presented.
251 citations