What does 'corporate social responsibility' mean? Does it involve charitable contributions, recycling, and embracing alternative lifestyles?
This commentary is almost one year old, but I stumbled across it today and found it pretty interesting, especially the 'experiment' carried out in Masschusetts.
Sometimes it is hard for folks not running public companys to remember that a corporation's goal is to act on behalf of its owners (shareholders).
Is Corporate Social Responsibility Responsible? - Forbes.com
So...is it irresponsible for a CEO or board to deploy corporate assets for social causes?
What do you think?
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3 comments:
I think it is vitally important for the corporations to show social responsibility. You have to understand that, the corporations work within the boundary of the society and if the society itself is not there, then there will be no corporations. Also, from the capitalistic point of view, the corporations better do their bit for the society if they want to survive, because to sell their products the corporations need to build the market from scratch, which is one but important aspect of society.
Excellent article I agree 100%. A public company should seek to maximize shareholder returns, and then give those returns to shareholders and let them decide what cause to give to.
Shareholder A may support pro-life causes; shareholder B wants to buy carbon offsets (whatever those are!).
There is the argument that "corporate citizenship" is simply good public relations and helps a company's stock price (and therefore it does help shareholders.) But I for one would just as soon have my dividend to donate to the charity of my choice.
Daniel,
I am not so sure about that. I guess, I as a shareholder will not be able to count my dividends, unless the corporation takes care of building up a market. So while the corporation seek to maximize the return to the shareholders, dividends are not the only way to return the value back to them. They will have to build up a market by way of giving back to society directly rather then only through the shareholder's dividend. As you can recall, Microsoft is giving away the Student license of their products almost free of cost in several countries, including USA. I guess, according to your reasoning if they wanted yo maximize the dividend payment to you, they could not have done that. Rather, the students would have to rely on good souls like you to do your bit to let them have free copies Microsoft product. I doubt that would have ever happened.
This needs a soul searching - empty rhetoric like "I will give money to charity" does not help.
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