EDD Young Leader 2017 introduces his upcoming high level panel at the European Development Days 2017 on 7th June.
"The basic idea is that businesses, and the executives who manage them, actually do and should create value for customers, suppliers, employees, communities, and financiers (or shareholders)." [1]
"There is one and only one social responsibility of business – to use its 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." [2]
The debate between the Freeman and Friedman concepts will move on to generations without finding a concrete middle-ground. While the former theory has gained widespread popularity, it is imperative to know why and how the shift in perspective has challenged the concept of CSR entirely. When we analyze today’s context, we can see that CSR may have become popular because of Friedman’s practical theory instead.
Business management scholars have been searching for a business case for CSR since the origins of the concept in the 1960s[3]. In retrospect, while CSR might have originated from concerns over businesses’ detrimental impacts on society , it cannot be overlooked how its usage has changed in the present day. Its meaning has quite significantly shifted away from the ethical standpoint, towards more of business rationale.
The CSR of the 1960s and 1970s was motivated by social considerations, not economic ones.[4] “While there was substantial peer pressure among corporations to become more philanthropic, no one claimed that such firms were likely to be more profitable than their less generous competitors.” In contrast, the essence of the new world of CSR is “doing good to do well.”[5]
Is it moral to pursue CSR as a means to profit? The answer is complicated so far as to raise even more questions. If the CSR of any company is directed only because of the monetary/economic gains, does that lose the value of CSR in itself? Moreover, if this is the case, is Friedman’s theory actually more practical and valuable? Hence, should a business only care for the economic growth and other things shall follow?
On the other hand, if a company is genuinely interested in giving back to the society, but fails to bring about substantial profits to invest in CSR programs, the feasibility of such program diminishes. The answer might be a new concept of embodying CSR not just as a wing of the company but the core – an CSR inclusive enterprise. People are becoming more and more conscious about fair-trade, transparency and in general, the connections and relationships between the façade of the business and the people behind them. Hitherto not only expensive certifications, but the future lies in a more inclusive business where the “customers” directly participate in changing lives of the “producers”. The future customers are looking for more meaningful products and services disregarding cheaper commercial options. Therefore, the future is of participative development where it’s not just Yours and Mine – Investing in Development is everyone’s Business!
Learn more at the Panel discussion organized by Habitat for Humanity titled “Yours and Mine – Investing in Development is everyone’s Business!”
Moderator:
Deepali Sood – Director of Partnerships, Habitat for Humanity EMEA
Speakers:
Ulrika Modeer – State Secretary for International Development, MFA, Sweden
Jeffrey Prins – Programme Manager, IKEA Foundation
Rob van der Meer - Director of Public Affairs & Climate Change at Heidelberg Cement AG
Dr Sidi Ould Tah - Director General of the Arab Bank for Economic Development in Africa
Nishchal Banskota - Young Leader, Founder of Nepal Tea LLC
[1] R. Edward Freeman, "Managing for Stakeholders." In Ethical Theory and Business 8th Edition, edited by Tom L. Beauchamp, Norman E. Bowie, and Denis G. Arnold (New Jersey: Pearson, 2009), 56.
[2] Kurucz, Elizabeth C., Barry A. Colbert, and David Wheeler. "The Business Case for Corporate Social Responsibility." Oxford Handbooks Online, 2009. doi:10.1093/oxfordhb/9780199211593.003.0004.
[3] Edward Freeman, Strategic Management: a Stakeholder Approach, 1984, which traces the roots of CSR to the 1960s and 1970s, when many multinationals were formed.
[4] Kurucz, Elizabeth C., Barry A. Colbert, and David Wheeler. "The Business Case for Corporate Social Responsibility." Oxford Handbooks Online, 2009. doi:10.1093/oxfordhb/9780199211593.003.0004.
[5] D.J. Vogel, “Is there a market for virtue? The business case for corporate social responsibility.” California Management Review, 47, 2005, pp. 19–45.
