Social Responsibility: A Path to Enhanced Business Profitability

This essay explores the critical relationship between corporate social responsibility (CSR) and business profitability. It begins by defining CSR as ethical business practices contributing to economic, social, and environmental development. The essay argues that while profit maximization is a primary goal, businesses must operate sustainably to enhance brand image, gain a competitive edge, and ensure long-term survival. It examines the social responsibilities of businesses towards shareholders, consumers, and society, emphasizing how ethical behavior, quality products, and sustainable resource use can attract customers and increase profits. The essay then delves into various theories of CSR, including the Economic Model and the Socioeconomic Model, highlighting the importance of considering stakeholders beyond shareholders. It also discusses the Triple Bottom Line approach, which emphasizes social and environmental impact alongside financial performance. The essay presents arguments for and against social responsibility, addressing concerns about financial investment and potential impacts on consumer purchasing power. Ultimately, the essay concludes that socially responsible behavior is essential for business success, fostering a positive brand image, employee motivation, and long-term profitability.

AS1 ESSAY

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY ..................................................................................................................................1
CONCLUSION................................................................................................................................5
REFFERENCES..............................................................................................................................6

INTRODUCTION
Social Responsibility of the business is termed as actions and decisions taken by the
business in order to conduct its business activities in a ethical form, thereby contributing towards
economic, social and environment develop and thereby creating a positive impact on the society
at a large. As the major motive of all the business organisation is to earn profit but in addition to
this it should conduct its business activities in a sustainable manner (Asif and et.al., 2013). This
essay will focus on the topic that social responsibility of the business is to earn profits. It will
focus on the various theories in context to the topic and provides justification for the same.
MAIN BODY
As all the business organisations exist in order to provide goods and services to the
customer that meet their demands and requirements and therefore to earn maximum profit for the
company. Therefore Social Responsibility of the business refers to the obligations of the business
organisations as to take proper actions and decisions which are effective in terms of objectives of
the company and are valuable to the society. When the business organisations conducts business
in a ethical responsible manner it enhances brand image of the company and therefore targets
larger number of customers towards the offerings of the company. Moreover it will also aid an
competitive advantage to the firm which will ensure survival of the business for a long time
period.
Business organisations have social responsibility towards the different groups and
sections of the society such as companies have social responsibility towards the shareholders of
the business by providing them safety on their investment, as well as provides them with
adequate information and therefore make a good and a profitable decision to have a good return
on investment (Grayson and Hodges, 2017). Business organisations have social responsibility
towards consumers so as to provide goods and services at a reasonable price and provide correct
and ethical information about the products. When the business enterprise provides adequate
information and quality products, it enhances goodwill of the company and therefore helps in
attracting larger customer base and therefore fulfils the social responsibility of the business I.e to
earn higher profitability for the company. In addition to this business organisations have social
responsibility towards the society as a way of enhancing the standard of living of the individuals
within the society. For example when the company uses the natural resources in a sustainable
1

manner, thereby ensuring proper utilisation of resources this will help in the economic
development of the society and therefore promotes the business as socially responsible. This will
assist the company in attracting larger number of customers and thereby helps in earning
maximum profits. These are the social responsibility of the business which needs to be
conducted in a proper manner and therefore meets the aims and objectives of the company
(Flammer, 2013).
As the social obligation of the business is to sustainably maximise long term profits for
the shareholders, in such case manager will focus on providing quality services to the customer
so as to meet its profit objectives. It is also believed that when the company conducts the
business in a socially responsible manner it may lead to increase its profits in a sustainable
manner. It can be explained with the help of the following example such as when the business
organisations provides the customer with ethical information about the product information and
doesn't lead them against the quality of the products, it will gain customer loyalty and trust
towards the company and will result in increasing profit margins for the company. This way
respective company can attain maximum profitability and meets the social responsibility of the
business. Moreover it can also be determined that when the large business organisation creates
employment opportunities for the individuals, this enhances the brand image of the company and
helps in the economic development of the country (Balmer and et.al., 2011.).
In context to these there are various theories related to the corporate social
responsibilities of the business which is discussed as – As CSR is concerned with the
determination of the policies and programmes which is aimed at benefiting towards the interest
of different stakeholders of the organisation. Theory related to the Corporate Social
Responsibility is -
Economic Model of Corporate Social Responsibility or the Shareholders theory of
Corporate Governance.
This is an a proper theory of CSR which suggests that the main purpose or the motive of
the business organisations is to generate more and more profits and conducts business activities
in a way that promotes the interest of the owners or the shareholders of the business. This model
of CSR also argues that while providing social responsibility of the business beyond profit
making it contradicts the principle of free market economic system. This also determines that
society will also get benefit from the success of the business organisation as when the company
2

will attain more and more of profits it will provide maximum benefits to the business and
improves the living standard of the individuals within the society.
Socio economic Model of Corporate Social Responsibility or the Stakeholder Theory of
Corporate Governance.
This model or theory of CSR states that business organisation doesn't have the
responsibilities or obligations towards the shareholders or the investors of the business. It also
have responsibilities towards the stakeholders of the business such as suppliers, employees,
customers and community. This theory of CSR states that business activities has a impact on the
society and this requites them to take effective decision so as to conduct its business activities in
a proper manner and therefore benefits the individuals within the society which ultimately help
them in realising profits for the company (Baumann-Pauly and et.al., 2013).
Tripple Bottom Line- It is an another effective approach towards corporate social responsibility
which ensures that it is not the responsibility of the business to only make the profits but also
provides sustainable benefits to the individuals at a larger extent. In general terms it can be
realised that bottom line results of the organisation are not evaluated in terms of economic terms
it also analyses company effects and contribution towards the society and in context to respect to
the environmental conditions. This theory of corporate social responsibility states that business
organisation should not only focuses on increasing profit of the company but should provide
socio economic benefits to its stakeholders and thereby helps in attaining maximum revenue for
the company.
These are the theories which states that the business organisation main motive is not to enhance
profit margins , for this they should also conduct the business in socially responsible manner and
benefits the individuals by offering them with quality products and services and thereby
providing them with various employment opportunities so as to eradicate poverty from the
country and thereby improves the living standard of the the individuals within the society.
In addition to this, there are various arguments towards the needs of social responsibility
as when the company conducts the business in a socially responsible manner it helps in the
betterment of the business and helps in understanding the problems and issues of the society.
Moreover it also helps the business organisation to enhance their public image and gain
competitive advantage over its rival companies. When the company offers products and services
to the individuals within the society as per the needs and requirements of the customers, it
3

provides maximum satisfaction to the customer and thereby allows the business to attract larger
number of customers and earns maximum profits as comparison to its rival companies. In
context to this there are various arguments that are supporting social responsibility of the
business. As the primary goal of the business is to earn more profits and which helps the
business to properly sustain and expand their business operations. This allow business to fulfil
their social responsibility by maximising profits and reducing cost for the company. Moreover
some of the individuals within the society believes that when the business organisation fulfils
the social responsibility of the business it requires huge financial investment for the company
and indirect assist the managers within the company to increase the cost their products and
services and and affects the consumer purchasing power, therefore this makes difficult for them
to purchase the high quality products (Crane, Matten and Spence, 2019). Some of the individuals
also argue that even for the larger companies, Cost of CSR can be obstacle as when the business
organisation fully concentrates on benefiting the society it may lead to difficulty in concentrating
towards attaining and maximising profit margins for the country.
Therefore it has been analysed that there are various arguments and the needs of the
corporate social responsible behaviour of the organisation. As Friedman states that if the
business organisation doesn't fulfil the social responsibility of the business it will led the
company to face more difficulties and constraints and will make them less competitive.
Therefore it becomes necessary for the business to fulfil the obligations towards the business
and attains their main objective of the company i.e. to earn maximum profitability for the
company and ensures existence of the business for the long time period. In general terms it can
be analysed that theories to CSR should majorly focuses on increasing the profit of the
company, thereby providing maximum benefits to the stakeholder and shareholders within the
within the business organisation (Jo and Harjoto, 2011).
It has also been realised that when the company conducts the business operations in a
systematic manner its builds its brand image in the market and enhances motivation and boost
morale of the employees to perform the task in a effective manner and assist the employees to
work with great efficiency and thereby enhances the productivity of the organisation. This in turn
helps the managers within the organisation to increase their profits and sustain in the market for a
long time period. Moreover it can be concluded that in order to sustain and survive in this
competitive world, it is necessary for the organisations to behave in ethical and socially
4

responsible manner so to enhance morale of the workforce to work in efficient manner, thereby
creating positive impacts on the society and moreover helps the company to enhance maximum
revenues (Korschun, Bhattacharya and Swain, 2014).
It can be explained with the help of the following example that if the business
organisations provides employment opportunities to the individuals within the society it will
indirectly help them towards developing the economic condition of the country and therefore
allows the individual to increase their standard of living. In addition to this it can be analysed
that the business organisations with the main aim of maximising profits should also concentrate
on benefiting the individuals within the society by behaving in a ethical manner and thus
contributes towards the growth and success of the business organisation at a larger extent (Deng,
Kang and Low, 2013).
Moreover from the above explanation it has been analysed that in order to grow and
develop their business company should offer CSR benefits to the individuals within the society
and therefore which will directly aim at earning maximum profit for the company. This will
indirectly fulfil the organisational as well as the objectives of the society and helps in the
betterment of both.
CONCLUSION
It has been analysed from the above discussion that it is the duty of the manger within
the organisation to behave in a socio responsible manner and thereby uses the resources of the
society in a sustainable manner and benefits the individuals within the society. This will help the
organisation to earn maximum profits and revenue for the company and ensures long term
existence of the firm for a long time period. It has also been concluded that the main motive of
the organisation is to earn profit and for this company should provide maximum quality products
and services to the company which indirectly helps the organisation in attaining maximum
profits.
5

REFFERENCES
Books and Journals
Asif and et.al., 2013. An integrated management systems approach to corporate social
responsibility. Journal of cleaner production. 56. pp.7-17.
Balmer and et.al., 2011. Corporate social responsibility: a corporate marketing perspective.
European journal of marketing.
Baumann-Pauly and et.al., 2013. Organizing corporate social responsibility in small and large
firms: Size matters. Journal of business ethics. 115(4). pp.693-705.
Crane, A., Matten, D. and Spence, L. eds., 2019. Corporate social responsibility: Readings and
cases in a global context. Routledge.
Deng, X., Kang, J.K. and Low, B.S., 2013. Corporate social responsibility and stakeholder value
maximization: Evidence from mergers. Journal of financial Economics. 110(1). pp.87-
109.
Flammer, C., 2013. Corporate social responsibility and shareholder reaction: The environmental
awareness of investors. Academy of Management Journal. 56(3). pp.758-781.
Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make
corporate social responsibility work for your business. Routledge.
Jo, H. and Harjoto, M.A., 2011. Corporate governance and firm value: The impact of corporate
social responsibility. Journal of business ethics. 103(3). pp.351-383.
Korschun, D., Bhattacharya, C.B. and Swain, S.D., 2014. Corporate social responsibility,
customer orientation, and the job performance of frontline employees. Journal of
Marketing. 78(3). pp.20-37.
Peloza, J. and Shang, J., 2011. How can corporate social responsibility activities create value for
stakeholders? A systematic review. Journal of the academy of Marketing Science. 39(1).
pp.117-135.
Wang and et.al., 2016. Corporate social responsibility: An overview and new research directions:
Thematic issue on corporate social responsibility.
6