BUS3001: Social Responsibility Essay - University of Northampton

This essay critically examines Milton Friedman's assertion that a business's primary social responsibility is to increase its profits. It delves into the ethical frameworks of social responsibility, emphasizing how organizations and individuals should act for the betterment of society. The essay analyzes contrasting theories, including Friedman's perspective, stakeholder theory, and business ethics theory, to provide a comprehensive view of the subject. The essay uses Barker and Stonehouse as an extended example, highlighting their commitment to sustainability and ethical practices. It explores the impact of CSR activities on brand image, profitability, and overall business performance, providing insights into how social responsibility can be a strategic advantage. The essay also discusses the importance of ethics, business ethics, and skill audits within an organization to enhance employee competence.

SOCIAL RESPONSIBILITY

EXECUTIVE SUMMARY
Social responsibility is basically the ethical framework which suggests that an organization,
entity, or the individual has some obligations to act for the advantage and benefit of the society
and entire community. Study evaluate effectiveness of CSR activities to raise company’s profit.
It describes that CSR activities help business in raising brand image which supports in raising
profitability of company.

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Social responsibility is predominately the means and ethical framework where
organizations or an individual have the obligations for working towards the interest of
stakeholders and thus perform ethically. Social responsibility reflects that where organization
performs its functions in ethical manner or not. The main aim of this report is to discuss the
contrasting views of research that whether social responsibility of business is to increase their
profit or not.
This report gives a brief overview of the statement “Social responsibility of the business
is to increase its profit”
MAIN BODY
LO1
As per the view of Moratis and Cochius (2017), Social responsibility predominately
suggests that the businesses should act and perform in manner which is highly beneficial for
society in addition to increasing and maximizing the value of shareholders. It has become highly
important as well as essential for the investors as well as the consumers who generally seeks the
investments which are not highly profitable and thus contributes for welfare of entire society as
well as environment. In short, social responsibility is mainly duty of each and every individual
for performing and acting towards the interest of society and to have a thorough balance between
economy as well as ecosystem. Many researchers claim that social responsibility is basically the
most imperative as well as profitable way through which organizations can increase their overall
profits. The organizations mainly views the social responsibility as the only means through
which they can increase their profits.
According to Harrison and et.al.,(2019), The organization whether big or small have the
major objective of increasing the profit in addition to satisfying the customers. Nowadays, even
a small barber shop starts the shop with the aim to diversifying and making as much money as
possible. Thus, organizations now have become highly profit oriented where they are focused
towards exploring the different ways for increasing their sales and raising the revenue ratio.
Within present climate of the opinion along with widespread aversion to the capitalism, profits
have become the soul of each and every corporation and this is one of the bets way to generate
goodwill within market as by-product of the social responsibility. Social responsibility of the
business is mainly to maximize their revenue and profit in one or the other way and thus is the

most comprehensive way through which an organization can gain a large market share and
achieve the competitive advantage.
As illustrated by Sroka and Szántó (2018), The Social responsibility in organizations
have lost the rigour and is mainly directed for providing a great market share to the business. As
businesses are not basically the moral persons thus they cannot have the responsibilities and are
not bound to carry out these responsibilities in the way suggested by others. These business
mainly have the notion that how to generate more and more profit and what strategy could be
applied which will help them in gaining competitive advantage in terms of sales, profit, revenue,
return on investment etc. As the organizations have large number of shareholders associated with
them who invests their money in the organization with a belief that they will get a good return on
investment thus these organizations becomes bound by these investors and their main objective
becomes maximizing profit and increasing the revenue ratio.
It has been found that profit and revenue forms the major core strength of any
organization which distinguishes small and large organizations There is a broad line between
small and large organizations which makes them different from each other which is the amount
of revenue generated by them and their turnover. Thus, in order to gain a reputation in market
and to increase the market capitalism, it becomes highly essential to have a great turnover and
raise the profit ratio. The social responsibility for these businesses is to find ways and work
towards the interest of society just for increasing profit and capture a great market share.
Working towards the welfare of society will eventually increase the profit ratio of these
businesses and will help them to gain an edge over their competitors.
As per the view of Leipziger (2017), Social responsibility is basically working towards
the interest of society and entire community and thus to remain responsibility for the actions.
Social responsibility is not merely a means of maximizing the profit but is the only way through
which an organization can increase its image and reputation among customers and make their
contribution for welfare of the society. Managers generally have the moral responsibility for
acting towards the best interest of shareholders and increase their trust and confidence on the
organization. Social responsibility mainly addresses that the organization should engage in the
activities which will increase social welfare and should continuously perform their functions in
the ethical manner. While rendering their services, organization have the prime motive of
enlarging the customer base not by fooling them but with ethically and morally generating a trust

among them for their organization. Morality generally sets rules as well as obligations as to how
organizations should be governed and what ways the organization should adopt in order to work
towards the welfare of society and entire community. Corporate executive have direct
responsibility towards their employers as well as shareholders thus it is sole responsibility of the
manager of every organization to conform with basic rules as well as regulations of society.
Social responsibility in not all about maximizing and raising the revenue as well as profit ratio
but it is to remain responsible for the one's own actions and thus working towards the interest of
the stakeholders.
Example 1
For example- being a small organization, Barker and Stonehouse performs its functions
in an ethical manner and thus works towards the interest of stakeholders. Barker and Stonehouse
has committed to make use of recycled material and renewable resources for producing furniture
and thus contributes towards sustainability.
Example 2
Besides this another example is offering the sustainable products to the customers like it
uses older furnitures for making new furnitures and reuses it (Cortina, 2017). Barker and
Stonehouse provides the sustainable and innovative products to customer for solving their
problems.
Example 3
Third example is that Barker and Stonehouse contributes towards environmental
sustainability by optimizing its process and supply chain like it uses double strollers for
transporting its furnitures so that bulk item is transported in few rounds due to which rounds for
transportation is reduced and this decreases overall carbon emission.
Example 4
Fourth example is that this company fulfills the customer expectations by designing
various innovative products like folding furnitures.

Illustration 1: Social responsibility
(Source: Social responsibility, 2019 )
LO2
Friedman theory
This is the highly used as well as well-known theory of the social responsibilities within
organization and states that the organization generally have no social responsibility towards
public as well as society but it is mainly responsible for its shareholders and has direct
responsibility for employers. Milton Friedman argued that shareholders are the major economic
engine of organization and and is the entity to which firm is generally responsible.
Example 1
In this context, the main goal of Barker and Stonehouse is to increase and maximize the
returns to their shareholders.
Example 2
Barker and Stonehouse is mainly oriented to work towards its shareholders and
continuously assesses the marketing environment in order to provide greater returns to their
shareholders.
Freeman theory
This theory mainly states the relation between business as well as its stakeholders.
According to this theory firm should develop products as well as services which creates a value
for every stakeholder ranging from customers to employees. It provide emphasis on stakeholders
rather than shareholders.

Example 3
For example- Barker and Stonehouse comes up innovative idea of foldable dining table in
order to solve the problem of less space by various customers. This product helped company to
create value for all stakeholders like for customers by providing solution to problem of limited
space and employees by offering great challenging work.
According to Dawson (2018), another one of the most imperative as well as widely
known theory which reflect social responsibility of businesses to high extent is business ethics
theory. This theory is mainly based on the premise that the organizations have moral as well as
social obligations towards the society and is mainly based on three interrelated grounds. First one
is changing as well as emerging social perspective and social responsiveness to specific social
problems. Second addresses that internal ethical values are highly normative and relates to
human rights, social justice. Third is the corporate citizenship means corporation as the better
citizen within society. Thus this is the most remarkable theory of social responsibility which
seems to be highly comprehensive and thus shows that each and every organization have some
responsibilities and ethics which they are required to adhere. The theory of the business ethics
mainly views social responsibility more as philanthropic as well as ethical responsibilities
instead of legal as well as economic responsibilities. For example- Barker and Stonehouse have
the prime objective to continuously innovate the products which will provide solution to all the
problems of customers rather than just maximizing the profit.
As illustrated by Grayson and Hodges (2017), When an organization is highly involved in
social responsibility and thus contributes to the environment as well as works for the welfare of
entire community then this not only helps them to increase the brand reputation but also assists in
their positive growth and development. For example- when organization produces the innovative
products which provides a complete solution to the emerging problems of people then this
eventually increases the brand recognition as well as brand awareness of organization and thus
eventually leads to better financial performance. Therefore, social responsibility eventually
increases the profit of company when the organization works towards the welfare of society and
thus performs ethically. Social responsibility is not all about maximizing the profit and revenue
ratio but it is mainly complying to the rules as well as regulations of the society and becoming
socially responsible by making a huge contribution towards environment. Besides this, as
employees forms the integral part of any organization thus protecting the moral rights of

employees is one of the major social responsibility of the management. Proving the equal wages,
eliminating discrimination, cross-cultural differences, maintaining diversity within organization
is what helps the company to achieve competitive advantage and build a great reputation and
goodwill within the minds and hearts of people. Thus, maintaining the ethical and socially
responsible environment within organization helps to decrease the turnover rate and thus assists
in retaining the employees for extended period of time.
LO3
Ethics are basically the moral principles which guides as well as governs behaviour of the
person and deals with good practices. Business ethics basically is study of the business policies
as well as practices and are moral rules which provide right direction to organization and helps in
decision-making.
Audit skill is predoinately the process which is used for identifying skills gaps within
organization. The major outcome is the training for bridging skill gaps. Skill audit mainly helps
Barker and Stonehouse to increase the skills as well as knowledge of their employees and make
them competent. For example- through skill audit, management of Barker and Stonehouse finds
that employees in HR department are not able to effectively attract candidates and lacks the
recruitment skills. Thus company will provide effective training to personnels regarding
recruitment.
Not only does the employees forms a major link between the brand reputation and profit
maximization but shareholders are the another most important assets for organization. Investors
and shareholder mainly invest their money with a belief that organization will remain transparent
to them and will provide a great return on investment. Thus, maintaining a transparency with
shareholders and revealing the financial and other information of organization reflects that
organization works towards their interest. Due to this transparency, organization build a great
image within the minds of other investors and in market and thus this increase their overall profit
and market capitalism. Therefore, social responsibility and profit maximization shares a great
relation when organization performs their functions and operations in ethical manner. Barker and
Stonehouse are highly accountable and transparent towards their shareholders and this is the
main reason why they are financially stable despite having small business. Due to their ethical
mode of conducting business, the investors of Barker and Stonehouse has increased from last
few years and have provided them the opportunity to diversify their business.

According to Cortina (2017), Most of the researchers argues that when the company
helps the entire society by making a great contribution towards sustainability like reducing
environmental pollution, adheres to environmental policies then a sense of trust and loyalty is
generated among people of society for that organization, and they tend to become highly oriented
towards that organization. This at the end leads to increase in sale of products and services of the
organization and thus increases their profit margin. This also increases their share in market and
hence helps them to gain the competitive advantage. Therefore, instead of making social
responsibility as prime objective for increasing profit margin when organization uses social
responsibility for the aim to work ethically and towards the welfare of society then it
automatically increases the profit and revenue of organization. Social responsibility plays an
important role within organization and helps to diversify in the wider geographies.
CONCLUSION
It has been summarized that social responsibility plays a major role within organization
and thus helps the organization to take their brand message to wider audience. Some of the
researcher believes that the social responsibility of the business is just to increase their profit
while some argues that being socially responsible means to remain accountable to stakeholders
and working towards their interest. Social responsibility of organizations is not only to maximize
their profit and revenue ratio but to comply to the moral ethics and legislation of society. By
contributing towards the environment and working for welfare of society, an organization is able
to build a great reputation within hearts and minds of people and this eventually helps them to
increase their profit.

REFERENCES
Books & Journals
Cortina, A., 2017. Corporate social responsibility and business ethics. In Corporate Citizenship,
Contractarianism and Ethical Theory (pp. 79-88). Routledge.
Dawson, D., 2018. Organisational virtue, moral attentiveness, and the perceived role of ethics
and social responsibility in business: The case of UK HR practitioners. Journal of
Business Ethics.148(4). pp.765-781.
Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make
corporate social responsibility work for your business. Routledge.
Harrison, D.E and et.al.,2019. Corporate social responsibility and business ethics:
conceptualization, scale development and validation. Journal of Product & Brand
Management.
Leipziger, D., 2017. The corporate responsibility code book. Routledge.
Moratis, L. and Cochius, T., 2017. ISO 26000: The business guide to the new standard on social
responsibility. Routledge.
Sroka, W. and Szántó, R., 2018. Corporate Social Responsibility and Business Ethics in
Controversial Sectors: Analysis of Research Results. Journal of Entrepreneurship,
Management and Innovation.14(3). pp.111-126.
Online
Social responsibility. 2019. [Online] Available through:
<https://www.investopedia.com/terms/s/socialresponsibility.asp>