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Social responsibility offers the possibility for differing opinions. Some see this issue as so crucial they insist investment portfolios of the companies who are part of that portfolio meet certain criteria. At the extreme, others argue (persuasively) that the only social responsibility a business has is to maximize profits for the benefit of the stockholders or owners of the business.
The latter view was given credence by a celebrated Nobel Prize winner in Economics, Milton Friedman, from the University of Chicago. Using his viewpoint, one can argue that business managers do not possess any kind of special talent justifying diversion of successful business profits to any cause in the community, no matter how worthy or popular.
The exception to this view is when a sole proprietor/entrepreneur decides to support a charity of choice. Here, the manager is the owner and the decision to support a particular cause is fully personal.
All this ignores what is key to a successful business: to provide high-quality goods or services that meet the needs of customers at a fair price. It just so happens this key to success is also a great definition of a business being socially responsible.
Achieving business success means critical questions have been adequately addressed:
1. Do we know who are likely to be customers? What level of quality and subsequent service do they expect? Can we meet those customer expectations in a competitive manner and at an acceptable price?
2. Are employees fairly compensated for their skills and dedication? Do we give them timely and helpful feedback on their job performance? Are employment policies up-to-date and followed in a consistent manner?
3. Do we value vendors/suppliers and potential vendors? Are their billings paid promptly?
4. Is transparency real when it comes to communicating with major creditors and investors?
Business social responsibility can actually be reduced to sound and progressive management practices. These basics hold up regardless of expectations for community involvement.
In recent years, a new twist entered into this discussion. Let’s call it “cause-based marketing.” The ethical issue is whether a decision to spend business dollars to support a charitable cause is based on a true desire to help the charity, or is it really a ploy to get the business’s name and products in a marketing campaign that benefits from being identified with the charitable cause?
This latter activity is an interesting middle ground. Managers don’t have to apologize for using business resources to support a charity, yet the charity benefits as the “marketing partner” of the business. When you see a symphony concert “underwritten” by a business, for example, are not both the business and the symphony benefiting? And isn’t the business involved in both a dynamic marketing effort while practicing socially responsible business?
Roger Doerr is a retired professor emeritus of business and economics at Hastings College where he taught for 44 years.
He was two-time President of the Nebraska Economics and Business Association.
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