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What Is the History of Corporate Social Responsibility?

20th Century economist Milton Friedman was not in favor of CSR due to his belief that business had only one responsibility; to increase profit for shareholders.
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The history of corporate social responsibility (CSR), also referred to as corporate citizenship, stems from the idea that companies, like individual persons, should behave in a socially responsible way. This concept includes all their activities and undertakings, especially in their dealings with other companies. Their moral responsibility to society should always be considered in all levels of planning, and during the implementation of those plans, and their normal operations.

While it is hard to put an exact date to it, the history of corporate social responsibility probably began in the eighteenth century. Adam Smith, a renowned Scottish philosopher and economist, wrote in The Wealth of Nations of his support for market interactions that are freely participated in by individuals and organizations, saying that they could serve the needs of society. He further said that people engage in commerce or business out of selfish reasons, or for their personal benefit. This implied that the consumer should be the one to take the role of looking after the welfare of society, and that he should support actions that advance the interest of society.

Another famous personality in the development of corporate social responsibility is Milton Friedman. He was not in favor of the idea of CSR. His belief was that business simply had one responsibility, and this was to increase profits for its shareholders. Friedman was a prominent American economist and a Nobel Prize winner who was once an adviser for President Reagan.

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Clearly, businesses exist primarily to make profit. However, proponents of CSR argue that it won’t hurt businesses and companies to develop a corporate conscience. They might have to incur some short-term costs in undertaking socially responsible activities, but it will ultimately be to the company’s advantage. People in general will patronize products that are good for the environment, or that support charity or a noble cause, rather than other products that do no promote any social benefit.

However, the fact remains that any company must make profit, or at least break even, in order to survive. It will go out of business if all it does is to pursue socially responsible endeavors. Ultimately, investors will withdraw support for even the most socially responsible companies or the most ethical corporations, if it continues to make losses. This reality has always been evident throughout the history of corporate social responsibility.

The history of corporate social responsibility continues to evolve up to the present time. The current thinking is that companies cannot persist on ignoring environmental and social issues. Doing so can be detrimental for business. Past experience has taught everyone that it is to both the company’s and the public’s benefit to engage in ethical activities that do not pollute the environment and that promote the welfare of the workers and the community.

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browncoat
Post 3

@KoiwiGal - I think the real problem is that corporations are too big these days to really be controlled by ethics. Ethics are something that either come from human conscience or from law and many corporations are too big to be influenced by either of those.

If you look at the history of corporate social responsibility, most of the time it has either been a company influenced by a single person or been motivated by legal influences or by some kind of profit gain (for example, using charity as a means of garnering good will among customers).

I don't know what the answer is, except to make sure that companies don't get that big.

KoiwiGal
Post 2

@clintflint - I don't understand economics entirely myself (I don't think many people do) but it seems to be much more complicated than that. There's a line between building a company to the point where it is robust enough to survive in competition and the vagaries of the market and building it purely for profit and that line is very fine and easily crossed.

Because if you don't make sure your company is focused on profit, you aren't going to get any backing and it will fail. And all that social responsibility isn't going to happen if the company doesn't exist in the first place.

clintflint
Post 1

I don't understand why we've got into this mindset that businesses need to be constantly expanding in order to survive. This is where the problem comes from as far as I'm concerned.

There simply is no way for corporations to grow past a certain point, and trying to force that growth usually seems to entail firing employees or otherwise doing things that aren't socially responsible.

I know companies are in competition with each other, but this seems to be more about making as much money as possible, without any eye to the long-term consequences.

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