Corporate social responsibility refers to a commitment by an organization to promote the well-being of a community by carrying out discretionary business practices as well as contributing its corporate resources (Kotler & Lee, p. 3). The term corporate social responsibility was founded in the 1970’s when companys started considering their actions to society. Therefore they gave back to the society in an attempt to avert criticisms and also meet their legal obligations such as environmental laws. However over time the society has increasingly gained more information and power over corporations hence increased their demand on corporations to meet society’s needs and expectations (Kreitner, p. 124).
Any corporation has an obligation to other societal groups apart from stockholders and the obligation goes beyond meeting the requirement of laws and union contractual agreements. This means that corporations need to change from focusing on profit making as their only objective and as a result include financial, environmental as well as social responsibility in their main strategies of business. Any business has other stakeholders apart from the investors who include: the customers, employees, suppliers, community and the environment. Therefore a business has an obligation to meet the expectations of these groups because they contribute to the overall success of the company just as the investors do. Customers contribute to the success of corporation by providing market for the corporation’s goods and services. Hence without them then the business will not sell and as a result will not make sales and profit (Mackey, para. 2).
Employees on their part provide manpower that makes production possible, hence no goods and services will be available if they do not supply. Vendors are also stakeholders in that whatever is produced in the company has been supplied by someone, therefore they also contribute to the success of an entity. The environment is also another important stakeholder, because the resources that are used in the company come from the environment. Lastly there is the community around which the company operates. Being that each of these groups make a significant contribution to the success of a company in achieving its profit objective, the company has an obligation to ensure there wellbeing. These stakeholders have a right to claim these obligations to be met, particularly because any business has a contribution to the social problems be it inflation, unemployment or pollution. Therefore businesses should share out whatever they obtained from these stakeholders as they do with investors to ensure their survival (Mackey, para.2).
Rethinking the social responsibility of business means that, management of businesses should put the well being of the customer first, because in doing so they will end up satisfying the profit objective to investors. Customer here means other stakeholders apart from investors. This thought can be applied in the following ways: the company can provide services that employees need at subsidized rates such as medical insurance. To the customers it can provide quality services at a fair price. To the suppliers it can it can provide services that enable supplying to done with ease. To the environment it can start projects that slow degradation such as tree planting. Lastly to the society it can use its resources to meet the society’s needs such as building schools (Mackey, para.3-10).
In conclusion, it is clear that every corporation has an obligation to ensure the wellbeing of its stakeholders, particularly this ensures its future well being. Therefore every company should plan to meet these needs as it plans for the investors’ needs. However social responsibility activities should not only be a means to profit but a commitment to meet stakeholders’ needs.