Regulating Business Vs. Self-Regulation Term Paper

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contract between society and business are, in fact, changing in substantial and important ways. Business is being asked to assume broader responsibilities to society than ever before, and to serve a wider range of human values...In as much as business exists to serve society, its future will depend on the quality of management's response to the changing expectations of the public."-from an editorial in Business Week Magazine

Discuss the social contract between society and business, and the arguments for and against corporate social responsibility. What is the purpose of a business? In your discussion be sure to focus on how Milton Friedman, Charles Handy, and Kramer/Porter differ in their answers to that question. Explain why Corporate Social Responsibility is a useful perspective and strategy for a corporate leader and manager to evaluate changes in social expectation and the resulting potential effects on the business (current & potential) by the changed expectations.

The classical concept of corporate social responsibility and ethics, as articulated by Milton Friedman, was that the sole responsibility of the firm was to generate profits for its shareholders. Any other activities were viewed as unethical by Friedman, including an agenda to do good in the world, versus make a profit. If the businessman wants to act in other ways which he deems ethical, he should do so on his own time, not while advancing the interests of the firm. There is nothing about a CEO that makes him or her an expert on macroeconomic policy, much less ethics, although Friedman concedes that a firm may unintentionally do good as part of its self-interest (Friedman 234).

Charles Handy, however, would note that Friedman has a rather narrow view of the firm's ability to determine what is profitable. Solely focusing on profits and bolstering shareholder price results in an excessively short-term focus which is ultimately hurtful to the business as well as long-term shareholders. Porter and Kramer argue that ultimately a healthy society benefits the company, and by fostering education, environmental sustainability, and other social goods the company ultimately benefits (Porter & Kramer 83). "No business can solve all of society's problems," but it does behoove the business to pick specific causes that further its agenda and which can benefit both society and itself (Porter & Kramer 85). Creating a corporate social agenda requires ranking of specific priorities. Porker & Kramer's framework is thus much less black-and-white than Friedman's, which tends to take an all-or-nothing approach regarding ethics. Porter & Kramer point out that some companies such as Whole Foods have framed their entire value proposition around CSR. "By providing jobs, investing capital, purchasing goods, and doing business every day, corporations have a profound and positive influence on society" but businesses still cannot shirk or ignore the long-term consequences of their actions (Porter & Kramer 91).

Q2. "Every single social and global issue of our day is a business opportunity in disguise" Peter Drucker

****Issues management involves understanding a multitude of external social and public issues, businesses' changing social role, stakeholders' evolving expectations, and the complex interplay of business/government relations.

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Explain how an interactive relationship with stakeholders facilitates issue management. Does an appreciation by business leaders/manager that the business needs to be viewed by advertising, and consumer advocates altered stakeholder expectation of business' product and services? How does an ethical foundation facilitate collaborate relationships?

As observed by Porter & Kramer, no business can take on all social issues (Porter & Kramer 85). However, based upon its business model and projected long-term needs it can still have a positive impact upon society. Having an interactive relationship with stakeholders is a critical component of effective environmental scanning as this allows the organization to pinpoint the most crucial concerns of customers and investors. An appreciation of advertising means the business has an awareness of how it is perceived in terms of the image it presents to the public, which is a critical component of building brand awareness. Once again, the example used by Porter & Kramer of Whole Foods is useful, given that Whole Foods' activism in terms of supporting local and organic farmers is linked to its business model of offering healthy products. It uses this fact in its marketing as well as in terms of the actual products and value proposition it offers.

There is also a political dimension to sustainability: businesses can capitalize upon their focus upon this area to solicit financial backing from government to develop green technology. Collaboration with nonprofits can also be useful to generate goodwill, such as when organizations offer help after a disaster or to indigent communities (such as when restaurants and grocery stores donate food that is still good but which they can no longer sell to food banks). Many sustainability initiatives also coincide with a business' need to reduce waste, such as McDonald's shift to more sustainable packaging in the form of wrapping its burgers in paper vs. serving them in Styrofoam (Porter & Kramer 82). Some of these ideas do not necessarily conflict with Friedman's acknowledgement that self-interest may coincide with the public good but the emphasis of Porter & Kramer upon the need to at least evaluate ethical considerations when making decisions vs. solely considering them after-the-fact or as happy accidents to self-interested actions is a departure from Friedman.

Q3. While attending Harvard Business School, Jeffery Skilling, future CEO of Enron, was asked what he would do if his company were producing a product that might cause harm-or even death- to the customers that used it. His reply was "I'd keep making and selling the product. My job as a businessman is to be a profit center and to maximize return to the shareholders. It's the governments' job to step in if a product is dangerous."

*****Which raise the question- what exactly is the role of government in our economic system? What is the purpose of government regulations? How has globalization affected a company's relationship….....

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