Free market theory and corporate social responsibility

Corporate Social Responsibility CSR advocates and business magazines point to these companies and claim that CSR is not only the right thing to do, it also enhances profits. CSR activists start the discussion with the answer: GE should invest in wind power; Wal-Mart should pay its workers more.

Free market theory and corporate social responsibility

Many companies produce externally audited annual reports that cover Sustainable Development and CSR issues "Triple Bottom Line Reports"but the reports vary widely in format, style, and evaluation methodology even within the same industry.

In South Africa, as of Juneall companies listed on the Johannesburg Stock Exchange JSE were required to produce an integrated report in place of an annual financial report and sustainability report.

This requirement was implemented in the absence of formal or legal standards. One of the reputable institutions that capital markets turn to for credible sustainability reports is the Carbon Disclosure Projector CDP. Due to an increased awareness of the need for CSR, many industries have their own verification resources.

The United Nations also provides frameworks not only for verification, but for reporting of human rights violations in corporate supply chains. Ethics training[ edit ] The rise of ethics training inside corporations, some of it required by government regulation, has helped CSR to spread.

The aim of such training is to help employees make ethical decisions when the answers are unclear. Organizations see increased employee loyalty and pride in the organization. This can include raising money for local charities, providing volunteers, sponsoring local events, employing local workers, supporting local economic growth, engaging in fair trade practices, etc.

Companies that ethically market to consumers are placing a higher value on their customers and respecting them as people who are ends in themselves.

Free market theory and corporate social responsibility

They do not try to manipulate or falsely advertise to potential consumers. This is important for companies that want to be viewed as ethical.

Three Approaches to Corporate Responsibility

Social license to operate[ edit ] Social License to Operate can be determined as a contractual grounds for the legitimacy of activities and projects company is involved in. Unless a company earns and maintains that license social license holders may intend to block project developments; employees may leave the company for a company that is a better corporate citizen: Based on the Requisite Organization research of Dr.

Elliott Jaques to achieve this goal a company needs to: Identify the business strategy and business objectives Identify the social license holders employees of a company, labour unions, local and national governments, communities, activist groups, etc.

Develop the Social License Development Strategy to remove the negative factors and ensure positive intention of all the social license holders to support all the business objectives of the company.

Perform ongoing monitoring and quantitative measurement of changes in the Social License to Operate of the company Potential business benefits[ edit ] A large body of literature exhorts business to adopt non-financial measures of success e.

The business case for CSR [79] within a company employs one or more of these arguments: Triple bottom line[ edit ] "People, planet and profit", also known as the triple bottom line, form one way to evaluate CSR. Profit is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital unlike accounting definitions of profit.

Another criticism is about the absence of a standard auditing procedure. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved through payroll givingfundraising activities or community volunteering.

CSR has been credited with encouraging customer orientation among customer-facing employees. Several executives suggest that employees are their most valuable asset and that the ability to retain them leads to organization success.

Socially responsible activities promote fairness, which in turn generate lower employee turnover. On the other hand, if an irresponsible behavior is demonstrated by a firm, employees may view this behavior as negative. Proponents argue that treating employees well with competitive pay and good benefits is seen as a socially responsible behavior and therefore reduces employee turnover.

This interest is driven particularly by the realization that a positive work environment can result in desirable outcomes such as more favorable job attitudes and increased work performance.

The authors noted that while developing and implementing a CSR strategy represents a unique opportunity to benefit the company. As a result, employees tend to discard employers with a bad reputation.

Reputations that take decades to build up can be ruined in hours through corruption scandals or environmental accidents. CSR can limit these risks. These initiatives serve as a potential differentiator because they not only add value to the company, but also to the products or services.Most of the discussion of social responsibility is directed at corporations, so in what follows I shall mostly neglect the individual proprietors and speak of corporate executives.

In a free-enterprise, private-property sys­tem, a corporate executive is an employee of the owners of the business. Corporate social responsibility as a specific theory affirms that corporations are entities with economic, legal, ethical, and philanthropic obligations.

Socio-economic School

Corporations responsible for a triple bottom line seek sustainability in the economic, social, and environmental realms. Corporate social responsibility (CSR, also called corporate sustainability, sustainable business, corporate conscience, corporate citizenship or responsible business) is a type of international private business self-regulation.

Business Ethics Assignment #7 Marco A. Garza Chapter 3: Corporate Social Responsibility 1. Explain the connection between the economic model of corporate social responsibility and “free market” or “neoclassical” economic theory. The main relationship between the two is that the economic model of social responsibility has its roots in free market economic theory%(11).

The free market myth and its Influence on CSR Constantijn van Aartsen corporate social responsibility has provided a tool through which corporations can cherry-pick The overarching question is how and to what extent free market theory. Free Market Theory And Corporate Social Responsibility.

Social Responsibility Theory To combat the pressures that threatened freedom of the press, this theory was first introduced in and was recommended by the Hutchins Commission on Freedom of the Press. It stated that the media should serve the public, and in order to do so, .

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