Zhang 1 Beichen Zhang Kristen Foster CO150.

401 17 November 2013 Corporations Should Practice Corporate Social Responsibility (CSR) The college of business in Colorado State University opened a new course called Business Ethics in fall 2013. Any one who enters the college after fall 2013 must take this course. As a new student in here, I joined this class. I learned a term called Corporate Social Responsibility (CSR) in this class. Actually, according to the Corporate Watch, a research group based in San Francisco, California, USA (Wikipedia), the term CSR was created by Bowen, the author of social responsibility of business, in 1953. It is a concept whereby companies integrate social and environment concerns in their business operations and in their interaction with stakeholders on a voluntary basis (EU, Green Paper). When it comes to the issue about CSR, the students points always differ from person to person, and culture to culture. Some students said corporations dont have to take the social responsibility and they only need to responsible for their stakeholders. Other students thought corporations should have the social responsibility as long as the decisions or actions of the corporations have some impacts on the society, such as some listed and transnational corporations. It is true that there are increasingly corporations running in the world. According to the statistics of the US Census Bureau, there were 27,281,452 firms in the US by the 2008. With more and more people getting involved in business, the CSR has appeared frequently in our daily life. Some managers think corporations dont need to take responsibility to the society and the only thing they should do is make money. However, corporations should practice CSR in order

Zhang 2 to get success and develop society. Practicing CSR is not only good for society but also good for the corporations. It would make the society much more harmonious and corporations also can gain benefits from it. The society is like an environment and the corporations are like saplings. As we know, the environment is important to a sapling to become a big tree, which is to say, a good society is good for the development of corporations. Instead of only making money, the managers of companies should take the CSR into consideration. Corporations are a kind of social organization. If corporations are defined an only economic organization for profits, the society would develop toughly, which is to say, corporations are the parts of the society and its decisions and actions would effect the development of society. As a social organization, it should play an important role in taking social responsibility. With the development of global economics, the corporations would become the main subject of the society. Because corporations are made up by a lot of people, which is to say corporations will own a lot of source of society. Take Enron into example, such a big famous company went bankrupt in a month. Enron want to attract more investment so that it did some deceit in the accounting and finance reporting to make the benefits of the corporation looks good, which made Enron went to the failure in the business. The reason why Enron took a risk is making money and the managers in Enron only focused on profits. Based on The Social Impact of Business Failure: Enron, whole economics of America got a serious break. The company went bankrupt; the money of many investors had gone; a lot of people lose their jobs without any pension; some agencies which had the relationship with Enron also encountered some different bad influences. The existing and development of a corporation cant go on without society. Society is the fountainhead of corporate benefits because a good environment and a good policy are significant

Zhang 3 for doing business. A corporation can be treated as a citizen of society and this citizen has specific obligations and responsibilities to the society. All the resource which corporations need to use comes from society, which is to say more developed society is the more resource it would have. Such as the U.S. 1953 Small Business Act and this gives some privileges to the small companies to encourage them growth. However when corporations enjoy a good condition and an opportunity to make profits, they should return to the society by taking social responsibility. The HP Company did well in this aspect based on its CSR reporting. As it said, the company treats it as a citizen in this society. It treats the challenges of society as its own challenge and takes responsibility to solve them. That is why HP can develop quickly. Several years ago, I couldnt see a lot of people using products of HP in China but I find almost all friends around me using HP products now. Besides the good for the development of corporations, the ethics and laws also have some request about practicing CSR to a corporation. Ethics and laws are important cornerstones of maintaining social stability. Corporations as parts in society, they should have responsibility to keep the society sustainable and harmonious. According to Archie B Carrolls article, The Pyramid of Corporation Social Responsibility: Toward the Moral Management of Organizational Stakeholders, CSR has the 4 different levels and two of them are ethical level and laws level. There are many ethics in the society, such as social ethics, business ethics, professional ethics constraints, and so on. If a person doesnt have a good moral character, it is possible to disobey the law. If a corporation doesnt develop good business ethics and professional ethics, it is impossible to abide by laws and regulations. A corporation has many social responsibilities but the most basic and most important responsibility is following the laws. According to the UK Business Law, every listed company

Zhang 4 in UK needs to give a CSR-report of its company each year. Based on US Business Law, when a company want to go public in America, it should provide a true and complete disclosure of its company and any one who holds inside information of company cant do business with others who dont know the inside information. All the obligations and responsibility in the law must be abided by, such as protecting environment, safeguarding the rights and interests of employees and customers and so on. Practicing CSR can help a corporation make profits in the long run. With the development of society and economics, experiences and practices taught us that taking the social responsibility is the correct decision to make profits for a corporation and practicing CSR can make corporations sustainable. Konosuke Matsushita, who is a famous entrepreneur from Japan, had said business and society must work together to prosperity and coexistence, or can not get the real development. He founded the Panasonic in 1918 which has become a lager and modern electronics company in the world. Its electronica products are sold very well in world. A lot of my friends in China or in America all know and like the products of Panasonic. Konosuke Matsushita believed the significance of CSR and made this spirit become the culture of the company. This culture and belief made the Panasonic exist nearly 100 years. Sustainability is a hot topic today. The longer a corporation existed the more money it can get. Although more and more managers are aware of the significance of CSR, there are still some persons who hold the different perspective about practicing CSR. One famous economist called Friedman, who had won The Nobel Prize in Economics, believed corporations should not take the social responsibility and the only responsibility for the company is making money as long as it follows the laws. According to Friedman's Theory of Corporate Social Responsibility, he thought the government should play a main role in undertaking social

Zhang 5 responsibility. Friedman was famous for his Permanent Income Hypothesis. However, I am afraid I cant agree with to his theory about CSR. Corporations are just like people in the society. If a person only focuses on his own benefits without caring others, no one would look up to him. If a corporation only cares making money, no one would show the respect to it even the employees. Whats more, the reason why governments permit corporations to do business is that corporations can bring values and wealth to this society. If only corporations serve for the society, then governments would support them. The final mission of corporations is making values for the society, such as creating jobs, reducing pollutants, handing in taxes and so on. When corporations completed their final mission, the society would return their profits. If corporations do not take social responsibility and only followed blind pursuit of making money, it may result in damage to the interests of the society. In this case, society would not need corporations. The example of Lehman Brothers Holdings Inc. can explain this argument. A big company with a more than 100 years history went bankrupt in the economic crisis of 2008. This company always focuses on maxing interests of the corporation. When the company met with serious troubles, it turned to government ask for help. But the government refused. If Lehman Brothers Holdings Inc. attached importance to CSR and built a good image, then the result might have differences. This big company might survive in this economic crisis. Another theory about CSR is called utilitarian theory. People who hold this idea believed that only those companies that invest CSR can reap the benefits, such as donating for charity, investing in backward areas, and so on. This theory also has a problem. Corporations still focus on self interests and they only do something which they can get benefits from it. However, there are a lot of things we cant judge whether it can give benefits to corporations or not. Sometimes we might not get the benefits from taking social responsibility in the short run but it might

Zhang 6 improve the corporations in the long run. One article called Chinese firms in Myanmar attempt to fix image problem that comes from the Christian Science Monitor describes Chinese firms that started to fix their images in Myanmar because they didnt do well in taking social responsibility. Companies in Myanmar didnt pay attention to protecting the environment at beginning because they thought it would expand their cost. But now they know the importance of their images. They began to fix their images by spending more money. No one will know what will happen in future. The only thing we do know is that practicing CSR is the correct decision that benefits both corporations and society. In conclusion, if a corporation wants to get success in this complex society, it should take the social responsibility seriously. No one knows when the next economic crisis will come. The only thing corporations could do is try their best to make this society more robust. Only if the environment is good, then the saplings would become good. Only if the society is harmonious, then the corporations would become harmonious. Now I understand why our college requires the new students to take the course called Business Ethics. In order to make our business system better, corporations should practice CSR.

Zhang 7 Works Cited Carroll, Archie B. The Pyramid of Corporation Social Responsibility: Toward the Moral Management of Organizational Stakeholders. Business Horizons 34.4 (1991): 39-48. Carson, Thomas. Friedman's Theory of Corporate Social Responsibility. Business & Professional Ethics Journal 12.1 (spring, 1993): 3-32. Web. 19 November 2013 Corporate Watch Wikipedia: The Free Encyclopedia. Wikimedia Foundation, Inc., 9 November 2013. Web. 19 November 2013. Hay, Bruce L. Environmental Protection and the Social Responsibility of Firms: Perspectives from Law, Economics, and Business. Washington, DC: Resources for the Future, 2005. Print. Hewlett-Packard Development Company, L.P. Annual Report. Hewlett-Packard Development Company, 2012. HP 2012 Global Citizenship Summary Report. July 2013. 19 November 2013 <http://h20195.www2.hp.com/V2/GetDocument.aspx?docname=4AA46724ENW&cc=us&lc=en >. Macdonald, Chris. Why do (or don't) companies go green? -- Chris MacDonald. Canadian Business (2013): 1p. Academic Search Premier. Web. 18 November 2013. n. p. Statistics about Business Size (including Small Business) from the U.S. Census Bureau. http://www.census.gov/. U.S. Census Bureau, 2007. Web. 19 November 2013. Schatz, Joseph J. Chinese firms in Myanmar attempt to fix image problem. Christian Science Monitor 12 July 2013: N.PAG. Academic Search Premier. Web. 18 November 2013. Uma V. Sridharan, Lori Dickes, W. Royce Caines, (2002) "The Social Impact of Business Failure: Enron", American Journal of Business, Vol. 17 Iss: 2, pp.11 22

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