Corporate Social Responsibility: Profit-Oriented Or Socially Responsible?

Profit-Oriented or Socially Responsible? 2 Corporate Social Responsibility (CSR) plays a crucial role in organizations and societies. Traditionally, CSR is a management concept that has been implemented by most of the listed companies around the world. CSR is implemented by companies to be responsible for the company’s consequences on the environment and social welfare in their business operations and interactions with their stakeholders (Unido, n.d). In the other words, CSR is a program that benefits both society and business that do not provide immediate financial benefit to the company but environmental change and positive social (Investopedia,

From Milton Friedman’s view, maximizing profit is the only focus of any business corporation, so long as it does not violate the state’s laws and the fundamental rules of society. Most firms are disposed to agree the above statement, thinking that business as a whole should not perform social responsibility at a cost of shareholders ('Shareholder value or social responsibility?', 2007). However, the case of ‘Brent Spar’ revealed the failure of corporate social responsibilities, showed that complying with the legislative requirements is insufficient from the view of the

Trying to ignore the social responsibilities might stain an organization’s image and reputation. Thus, performing social responsibility is not simply a choice; it is a need of any corporation. In the twenty-first century, businesses are in the bottlenecks where globalization, science and technology advancement and integrated knowledge are taking place in today’s society (Chan, n.d.). To gain a foothold in this economy, image and reputation play an important role to differentiate a company from one another. With good reputation, it helps firms to create competitive advantage in the business environment. Thus, instead of focus on short-term profit maximizing or costs saving, firms should be stakeholder-oriented. A firm which is stakeholder-oriented focuses on the need of their stakeholder such as employees, customers, society and others who have a direct economic link to the firm (Habil, n.d.). Businesses that are socially responsible will avoid actions that may cause detrimental to stakeholders. They have greater concern on stakeholder well –being. A firm that decided to ignore the social issues may results in a loss of strategic opportunities ('Shareholder value or social responsiblity?', 2007). Involved in CSR activities are proven to create good image and reputation for a company. In the long run, it helps a company to increase shareholders’ value and achieve sustainable business