Definition Corporate Responsibility. Description.
Corporate Responsibility is an expression used to describe
what some see as a company’s obligation to be sensitive to the needs of all
of its stakeholders or even to society as a whole in its business operations.
The term is associated with those people that argue that:
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Corporations care little for the welfare of workers, and
given the opportunity will move production to sweatshops in less well regulated
countries.
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Unchecked, companies will squander scarce resources.
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Companies do not pay the full costs of their impact. For
example the costs of cleaning pollution often fall on society in general.
As a result profits of corporations are enhanced at the expense of social
or ecological welfare.
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Regulation is the best way to ensure that companies remain
socially responsible.
Supporters of a more Market-based Approach argue that:
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Free markets and capitalism have been at the centre of economic
and social development over the past two hundred years and that improvements
in health, longevity or infant mortality (for example) have only been possible
because economies (driven by free enterprise) have progressed.
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In order to attract quality workers, it is necessary for
companies to offer better pay and conditions which leads to an overall rise
in standards and to wealth creation.
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Investment in less developed countries contributes to the
welfare of those societies, notwithstanding that these countries have fewer
protections in place for workers.
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Failure to invest in these countries decreases the opportunity
to increase social welfare.
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Free markets contribute to the effective management of scarce
resources. The prices of many commodities have fallen in recent years. This
contradicts the notion of scarcity, and may be attributed to improvements
in technology leading to the more efficient use of resources.
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There may indeed be occasions when externalities, such as
the costs of pollution are not built into normal market prices in a free
market. In these circumstances, regulatory intervention is possible to redress
the balance, to ensure that costs and benefits are correctly aligned.
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Whilst regulation is necessary in certain circumstances,
over regulation creates barriers to entry into a market. These barriers
increase the opportunities for excess profits, to the delight of the market
participants, but do little to serve the interests of society as a whole.
The concept is strongly related to other concepts such as
Corporate Sustainability,
Corporate Transparency,
Corporate Accountability,
and Corporate Governance.
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Compare also:
Shareholder Value Perspective
| Stakeholder Value
Perspective |
Triple Bottom Line
| Stakeholder Mapping
| Stakeholder Analysis
| Public Relations
| Non-Governmental
Organization | Whistle
Blower | Globalization
|
|
|
