“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” Friedman, M. 1970 The New York Times Magazine New York Times Company The article from which the quotation is taken, consider ideas of ethics in business and corporate social responsibility and ends with the unambiguous conclusion presented in the article. However, larger corporations do strive to promote their efforts on the corporate responsibility front. Why is this?
In this assignment I will discuss whether profit can coexist with ethical responsibility. I will look into ethics in businesses and corporate social responsibility in regards to Milton Friedman’s (1970) article in the New York Times Magazine. I will further look into the efforts that large corporations put towards promoting corporate social responsibility. Milton Friedman (1970), in the article “The Social Responsibility of Business is to Increase its Profits” feels that businesses are an ‘artificial person’ and have ‘artificial responsibilities’. Friedman feels that because of “Free Enterprise” businesses are able to operate how they wish, with an agenda “to make as much money as possible”. It is clear that Milton Friedman’s view is in some way subjective. This is because many organisations do exist as profitable and in consideration of society.
It is apparent that business attitudes have changed since 1970 and the awareness of ethics have become more significant. A recent article in the Guardian website suggests many large corporations have invested into acting on climate change as their role in being responsible. Press Association (2011) reports that “(68%) now say they put climate change central to their business, compared with 48% last year”. This shows that there has been a large increase in businesses implement Corporate Social Responsibility.
Simon Caulkin (2003) in his article “Ethics and Profits do mix” states that “large UK companies with codes of business ethics/conduct produced an above-average performance when measured against a similar group without codes”. This clearly shows that a business can be ethical and profitable at the same time, and that a business that is ethical can perform the same as a business which is not. There is a clear link between ethics and profit.
However, with some businesses change their attitudes, others just become negligent regarding this issue. A survey reported by Conal Walsh (2006), conducted by “Frazier Consultancy” on more than 1,300 customers, shows that there is concern regarding the top companies being unethical. Business that made the unethical list by customers was firm such as “McDonald, Nike, Shell, Addidas, and Coco-cola”.
Prem Sikka (2008) in his article “The Corporate Kleptomaniacs” feels that large businesses are hypocritical in the sense that they say they believe in Corporate Social Responsibility, but they use this as an excuse to “Maximise profits”. Their use of “Price Fixing” has been a key player in exploiting customers. The big businesses are meant to set example for small businesses, but are nether the less are but a bad example to them.
However, certain businesses have started to consider ethics as a way forward. Businesses such as John Lewis Partnership have implemented ethical trading as part of the day to day running of the business. Their products are supplied to them in an ethical manner. Their workers based internationally are paid a respectable wage. Their way of implementing Corporate Social Responsibility is by engaging and contributing to communities and implementing aspects such as recycling, using sustainable products and acting upon carbon footprint. They are clearly a business that has been able to coexist profits with ethical responsibility and Corporate Social Responsibility.
Milton Friedman feels that some organisations give towards charities and clubs and feel that they are implementing Corporate Social Responsibility as a business. Rather they are carried out on an individual social responsibility on bases that are not linked to the business.
Large Corporations have played a great role in implementing corporate social responsibility. Businesses such as Coca Cola have made efforts in being responsible. In 2006, a survey conducted by “Frazier Consultancy” showed that Coca-Cola was on the list of most unethical. However, Aakriti Kapoor (2011), reports that the company has made aims to achieve their goals in the areas of “energy conservation, water stewardship, diverse and sustainable packaging/recycling”. This is their plan as part of a “commitment 2020” to be more responsible.
The reason behind large organisation not disregarding Corporate Social Responsibility is because of the competitive environment that businesses operate in. Marks and Spencer have introduced a range of policies in regards to Corporate Social Responsibility. They have acted responsibly towards climate change, reducing waste, using natural resources, funding charities and communities and trading ethically. These policies will have an impact on retailers similar to Marks and Spencer’s because they will have to introduce similar policies, or they may lose out on potential customers.
Ben Eavis (2011) head of Corporate Responsibility at Sainsbury’s reports that the ethical values that have been put onto shelves, products such as “fair trade” have been bought on the rise. Ben states that “Fair Trade products have raised a great deal since the credit crunch” This implies that consumers are actively aware. Sainsbury’s have felt that “converting to fair trade is the right thing to do”. Been feels that although consumers want cheap products, they are still choosing to buy the ethical range. This has benefited Sainsbury’s in terms of profitability. In conclusion, it is clear that many businesses use Ethics and Corporate Social Responsibility as a way in maximising profits and exploiting customers. However, this has changed for many businesses and many businesses have dedicated their process of implementing ethics and corporate social responsibility into the main purpose of their business.
Milton Friedman, 1970, [Online] The Social Responsibility of Business Is to Increase Profit, <http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html> [Accessed 1 November 2011]
Conal Walsh, 2006 [Online] Big Mac tops ‘unethical’ poll <http://www.guardian.co.uk/business/2006/apr/16/theobserver.observerbusiness1> [Accessed 7 November 2011]
Press Association, 2011 [Online] World’s largest firms ‘acting on climate change’, analysis shows <http://www.guardian.co.uk/environment/2011/sep/14/worlds-largest-firms-climate-change> [Accessed 7 November 2011]
Prem Sikka ,2006, [Online] The Corporate Kleptomaniacs