Posted: November 30th, 2013
In the article “The Link between Competitive Advantage and Corporate Social Responsibility” Porter and Kramer, argue that companies have to develop a corporate social responsibility program. They argue that these companies have to incorporate this program in all their business activities. According to the authors, corporate social responsibility is only practiced well when it is taken further. Donations to the local charities are not enough to constitute a great practice of corporate responsibility. Companies that do not practice the corporate social responsibility may lose to their competitors. Therefore, the authors believe that corporate social responsibility enables a business to gain competitive advantage. On the other hand, in the article “The Social Responsibility of Business is to Increase its Profits” Milton Friedman centers on socialism, capitalism and individualism. Milton criticizes the businesses that claim to practice social responsibilities. Milton believes that the corporate executive should respond to employers and not the society. Milton argues that social responsibility practice should not be forced on the businesses. He believes that businesses should work towards profit maximization.
According to Milton, the business does not have any responsibility. However, the people engaged in the business are the ones who have responsibilities. Milton believes that since the corporation is an artificial person, it can have artificial responsibilities. Therefore, the individuals who have responsibilities are the corporate executives who owe responsibility to their employers. On the other hand, Porter and Kramer believe that organizations should practice the corporate social responsibility. The authors believe that organizations can practice the corporate social responsibility by trying to reduce the ways in which the organization influences the environment. They can also practice the corporate social responsibility by ensuring that the employees are paid fair salaries. In this article, the corporations owe a corporate responsibility to the society. This is in contrast to Milton’s article that centers on the corporate executives social responsibility.
In Milton’s article, the corporate executive has the responsibility to the employer. This is because he is the employee. Therefore, his responsibility is to carry out the business with the aim of making maximum profits. If the objective of maximum profits is reached, then the corporate executive will have fulfilled the desires of the employer. Therefore, the corporate executive’s responsibility is to fulfill the desires of the employer. On the other hand, Porter and Kramer’s article argues that the organizations owe corporate social responsibility to the society. This is in contrast to Milton’s article where the corporate executives owe a responsibility to their employers. The organizations should ensure the practice of maximum corporate social responsibility in order to gain competitive advantage. The companies should also account for the social cost of their corporate activities. They should compensate the society for the negative effects of their company.
According to Milton, a corporate executive only practices social responsibility when he responds to other responsibilities other than those of his employer. These are the charitable activities practiced and donations to the church. When the corporate executive engages in these activities, he uses part of his income to contribute or return to the society. In addition, he may also deny himself an opportunity in order to join the country’s army. These all constitutes the corporate executive’s social responsibilities. This is so because he sacrifices his own money and not that of the employer. In addition, he uses his own energy. On the other hand, Porter and Kramer’s article considers the organization’s corporate social responsibility. This is in contrast to Miller’s article that centers in the individual’s social responsibility. The organizations are the ones responsible for the corporate social responsibility. These corporations part with their own capital in order to make the society a better place. Example, the companies intend to solve the global warming problem by reducing the emission of the toxic gasses to the environment.
Milton argues that the corporate executive can have a social responsibility according to his capacity as a businessperson. However, this act will be against his responsibility of responding to the employers desires of profit maximization. For example, the corporate executive may reduce the prices of products in order to curb inflation. He may also increase the business expenditure in order to reduce pollution of the environment beyond the company’s interests. All these activities reduce the business profits against the business’s will. In addition, it is not necessary for the employee to practice this since the business does not gain from it in any way. The corporate executives spend the employer’s money to practice the virtuous deeds for the society. On the other hand, the corporate social responsibilities practiced by the corporations are to enable the achievement of competitive advantage. According to Porter and Kramer’s article, corporate responsibility is more than the cost accrued to its practice. The companies achieve success through the practice of corporate responsibility. In addition, the corporations that engage in this activity are always willing unlike the other businesses that make losses from it.
Both articles promote the fulfillment of the responsibilities. Milton’s article argues that the corporate executives owe a responsibility to their employers. They should ensure the employers’ desires are fulfilled. The corporate executive cannot owe a responsibility to the society since he is an employee of the business. These responsibilities should focus on improving the business. Porter and Kramer’s article also promotes the fulfillment of the corporate social responsibilities. This article encourages the organizations to practice maximum corporate social responsibility in order to gain competitive advantage. In this case, the organizations are responsible for the practice of the social responsibility to the society. Therefore, both articles encourage the practice of social responsibility in order to gain different advantages. Milton’s article certifies that a corporate executive can practice social responsibility and the social responsibility according to his capacity as a businessperson. Therefore, both articles encourage the practice of the social responsibility. In the case of the corporations, it is referred to as the corporate social responsibility.
In both articles, the practice of the social responsibilities by the businesses is to ensure the success of the business in the end. The corporate social responsibilities are practiced by the corporations to enable the gain of competitive advantage. The corporations that practice maximum corporate social responsibility enjoy the advantage of being competitive apart from being recognized. On the other hand, the businesses that practice responsibility do so with the aim of maximizing profits. The corporate executives focus on satisfying their employer’s desires of profit maximization. If they fail to respond to this desire, the business suffers a loss. If the corporate executive decides to practice social responsibility, the business will lose since the profits of the business will have to be reduced in order to ensure this. On the other hand, the corporations that do not practice corporate social responsibility lose on the advantage of gaining competitive advantage. Therefore, in order to ensure this, they have to practice the corporate social responsibilities.
Both articles argue that the political principles of compliance must be fulfilled. In Milton’s article, he argues that individuals should satisfy the general social interests. This is whether it applies in the church or to the public. The author argues that it is best for individuals to contribute to the society. Therefore, if people take social responsibility seriously, the political principles in relation to it will be followed. The author believes that a business has only one social responsibility. This responsibility is the use of the resources in ways that increase profits. On the other hand, Porter and Kramer’s article also argue that the corporations should involve themselves in the corporate social responsibility activity. Though it is optional, it is crucial to the corporations in order for the society to benefit from them just as they benefit through the gaining of competitive advantage.
My take on this is that all businesses and corporations should practice social responsibility. This is because it causes a benefit to their business activities and therefore, it is only ethical for them to practice social responsibility to the society. The aim of profit maximization is a self-centered act that does not consider the society. In addition, corporate social responsibility act results to advantages in the end. The business gains recognition, which in turn enables it to experience competitive advantage. In the end, the business maximizes its profits just as Milton argues. Therefore, I agree with Porter and Kramer’s article since it ensures the fulfillment of the corporate social responsibility and in the end, the business also benefits from this. This is unlike Milton’s article that only centers on profit maximization.
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