Ethical Perspectives on Social Responsibility


Social responsibility is a management model that requires organizations to adopt socially responsible behaviors by abstaining from socially harmful actions, or contributing to socially beneficial activities (Hopkins, 2012). This philosophy departs from the idea that most companies do business to maximize profits (only). The International Organization for Standardization (ISO) says social responsibility is a key requirement for sustaining organizational activities (Hopkins, 2012). This model exists as a trade-off between economic and social goals. Social responsibility exists in different forms. However, social, cultural, and environmental responsibilities define common types of social responsibilities. Comprehensively, social responsibility has a positive impact on organizational development, as it encompasses the contributions of different stakeholders, to improve organizational performance.

This paper analyzes the views of three social responsibility scholars – Friedman (1970), Drucker (1981), and Cohen (2009). Friedman (1970) and Drucker (1981) are classic management experts in social responsibility. Managers have used their views in business management practice. Through their contributions to this field, this paper evaluates how their philosophies differ and converge. Similarly, this paper compares how both views align and differ with the social responsibility views of Cohen (2009). Later, this paper explains how the three views support and contradict environmental management philosophies (the “green” environment concept). To have a proper conception of the arguments advanced in this paper, the structure of this paper first evaluates the views of the three scholars, individually. The study also compares and contrasts their views by explaining how they support/contradict the environmental management philosophy. The last section of this paper summarizes its findings.

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Views of Drucker (1981) on Social Responsibility

As highlighted above, Drucker (1981) contributed to social responsibility development. Mainly, he defined the role and influence of different organizational stakeholders in this framework. For example, he said employees were important resources for organizations (Toubiana & Yair, 2012). Therefore, managers had to make sure they ranked employee welfare goals, as they did their profit maximization goals. Drucker (1981) argued that all businesses should work from a moral vision, which reflects what they stand for. Drucker (1981) also believed that business integrity was the greatest test for managers – how they treat other people. He did not believe business ethics had “gray” areas – businesses were either ethical or unethical (Beebe, 2012). From this definition, he greatly emphasized the need for business managers to uphold high standards of integrity. For example, he said, “They may forgive a man a great deal: incompetence, ignorance, insecurity, or bad manners. But they will not forgive his lack of integrity” (Beebe, 2012, p. 20). The above statement underscores why it is important to develop a business character. Drucker (1981) believed this requirement was important for businesses to show predictability, dependability, and consistency to their customers. Fernandez (2009) says this requirement was similarly crucial for businesses to balance their organizational goals and employee welfare needs.

Drucker (1981) differed with other social responsibility scholars by introducing unique corollaries to the social responsibility model. For example, he said governments have a limited responsibility to solve social problems (Cohen, 2009). Similarly, he emphasized the role of corporate missions in guiding organizational activities. This philosophy informs his emphasis for profit maximization, before all other organizational responsibilities. Drucker (1981) also said that social responsibility had an unlimited liability clause because companies needed to accept responsibility for the short-term and long-term impacts of their actions (the high cost of social responsibility is one concern that arises from this principle). Drucker (1981) also believed that social responsibility had unique ethical principles. For example, he said Confucian principles and the principle of “do no harm” applied to social responsibility (Cohen, 2009). Lastly, Drucker (1981) said companies could enjoy several competitive advantages by adopting social responsibility. This view emerges from the understanding that social responsibility was a marketing tool. Therefore, it led to improved employee productivity, sales, and bottom-line performance.

Views of Milton Friedman (1970) on Social Responsibility

Friedman (1970) contributed to the social responsibility model by defining the role of organizations to their stockholders. He believed that many people could not engage in business if they thought the sole purpose of a business was “social responsibility.” Therefore, he developed a famous quote, “There is one social responsibility of a business – to increase its profits” (Friedman, 1970, p. 1). This statement contradicts the principle of social responsibility, as highlighted by Drucker (1981), because it opposes company involvement in social responsibilities that do not make a profit. This idea stems from the view that involving companies in social responsibility distracts them from their main purpose – profit maximization. Friedman (1970) believed this distraction could lead to totalitarianism. These views define the principles of the stockholder theory (Gallagher, 2005).

Views of William Cohen (2009) on Social Responsibility

Cohen (2009) draws most of his views about social responsibility from his teacher, Drucker (1981). Therefore, his views, and those of Drucker (1981), are similar. Nonetheless, Cohen (2009) said that all companies have a social responsibility to their workers, shareholders, and the society, as a whole. Part of a company’s managerial commitment was to make sure employee welfare was a priority in organizational activities. Particularly, Cohen (2009) believed corporate leaders had to lead this task. Cohen (2009) also believed that a business’s responsibility to its shareholders was to make a profit, as the underlying pillar for all other corporate responsibilities. This view was the only tenet of his philosophy that aligned with the profit maximization view of Friedman (1970). However, unlike Friedman (1970), Cohen (2009) and Drucker (1981) believed that profit maximization goals could blend with social responsibility goals. For example, Cohen (2009) said companies could easily maximize their profits and, at the same time, be socially responsible. For instance, he said the leadership of Sears Company experienced a sharp increase in its sales figures, after adopting socially responsible practices (Cohen, 2009). The company donated some of its profits to charity organizations, thereby helping the society and expanding the organization’s customer pool as well.

Which View Aligns With the Quest For a “Green” Environment?

Companies that adopt a “green” environment model aim to promote a culture of environmental responsibility. Environmental responsibility thrives on the principle that “less is more.” Stated differently, fewer emissions, less energy consumption, and less waste is good for the environment. Many organizations subscribe to this philosophy because it promotes environmental sustainability. In fact, many organizations pursue the quest for a “green” environment, as part of their social responsibilities. However, based on the differing perspectives of social responsibility (outlined in this paper), some views contradict the quest for environmental sustainability. For example, the social responsibility view of Friedman (1970) contradicts the concept of environmental sustainability. As mentioned in this paper, he says the only social responsibility (for businesses) is profit maximization (Friedman, 1970).

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Most “green” practices do not increase profits. In fact, often, adopting the “green” model, in organizational practices, decreases profitability. For example, increased fuel consumption leads to more productivity and more profits in the manufacturing industry. However, increased fuel consumption leads to more emissions, and more waste. The environmental sustainability concept seeks to change this outcome by inculcating a culture of environmental sensitivity in organizational activities. Therefore, it promotes a culture of less fuel consumption, less wastage, and fewer emissions (based on the above example). Coincidentally, often, such changes lead to low productivity and decreased profits for organizations. Therefore, the environmental sustainability model contradicts the view of Friedman (1970).

Comparatively, the views of Cohen (2009) and Drucker (1981) support “green” initiatives because they acknowledge the synchrony between profit maximization and sustainability goals. Therefore, although both scholars support the profit maximization model, they acknowledge that company managers can still increase their profits, while being sensitive to the environment. Furthermore, unlike Friedman (1970), Cohen (2009) says economic progress is only part of an organization’s goals. Drucker (1981) also supports this view because he adopts a holistic understanding of social responsibility, by caring for people and the society. Adopting “green” initiatives is one way of doing so because a “green” philosophy caters to the environmental needs that support human societies.

Comparatively, Friedman (1970) does not care much about environmental needs, so long as companies make a profit from their activities. In fact, the only condition that Friedman (1970) attributes to his model is the need to differentiate profit maximization from anticompetitive practices and fraud. Environmental concerns are the least of his priorities. However, Cohen (2009) and Drucker (1981) believe that profitable organizations cannot exist in “sick” societies, which disregard the environment, or the people who depend on them. Overall, as opposed to adopting a narrow focus of social responsibility, Drucker (1981) and Cohen (2009) adopt a holistic perspective of social responsibility that encompasses sustainability needs. Thus, their views align with the quest to promote a “green” society.

Conclusion

This paper investigates three views about social responsibility – the views of Friedman (1970), Cohen (2009), and Drucker (1981). Cohen (2009) and Drucker (1981) share similar views about social responsibility. Both scholars believe that most businesses should work from a moral vision, which communicates their preferred image. Both scholars also believe that business integrity is the greatest test for managers. It is not surprising that their views are similar because Cohen (2009) developed his views from the work of Drucker (1981) (his teacher). Their views support a holistic approach to social responsibility by encompassing societal needs in organizational processes. This holistic understanding of social responsibility makes it more appealing for organizations that strive to adopt “green” organizational practices. Indeed, the “green” model is sensitive to societal and environmental needs (as outlined by Cohen (2009) and Drucker, 1981). However, Friedman (1970) adopts a narrow social responsibility view (of profit maximization). He leaves no room for social or environmental responsibilities. In fact, his model clashes with the social responsibility model because he believes organizations are not responsible for societal welfare. Instead, he believes “people” should shoulder this responsibility (and not corporations). This view shows the clash between his social responsibility concept and those of Drucker (1981) and Cohen (2009).

References

Beebe, G. D. (2012). Character Formation. Leadership Excellence, 29(6), 20-21.

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Cohen, W. (2009). What Drucker taught us About Social Responsibility. Leader to Leader, 2009(51), 29-34.

Drucker, P. (1981). What is Business Ethics? The Public Interest, 63(1), 18-36.

Fernandez, S. (2009). Peter Drucker’s leap to faith: Examining the origin of his purpose-driven life and its impact on his views of management. Journal of Management History, 15(4), 404 – 419.

Friedman, M. (1970). The Social responsibility of a Business is to Increase its profits. Web.

Gallagher, S. (2005). A strategic response to Friedman’s critique of business ethics. Journal of Business Strategy, 26(6), 55 – 60.

Hopkins, M. (2012). Corporate Social Responsibility and International Development: Is Business the Solution? London, UK: Routledge.

Toubiana, M., & Yair, G. (2012). The salvation of meaning in Peter Drucker’s oeuvre. Journal of Management History, 18(2), 178 – 199.

Ethical Perspectives on Social Responsibility
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