Corporate Social

Responsibilities (CSR) and it’s

difference from Business Ethics
Business Ethics is sometimes confused with
corporate and social responsibility or CSR.
Although the two are related, they are not
quite the same. It is important to
understand how they are different from as
well as how they are related to each other.
The Phrase corporate social responsibility refers
to a corporation’s responsibilities or
obligations toward society. CSR as define by
the World Business Council for Sustainable
Development (WBCSD), is “a continuing
commitment by business to behave ethically
and contribute to economic development while
improving the quality of life of the workforce
and their families, the local community, and
society at large.” there is some disagreements
about what those obligations include.
At one extreme is the view of the late
economist Milton Friedman. Friedman,
basing himself on assumptions of private
property and the free market, famously said
that the only social responsibility of business
is to increase it’s profits.
He argued that corporate executive works
for the “owners” of the company, and today
these “owners” are the company
shareholders. As their employee the
executive has a “direct responsibility” to
run the company in accordance with their
desires and in their best interest. Which
generally will be to make as much money as
possible while conforming to the basic rules
of the society.
We can call his view the shareholder
view of corporate social responsibility.
Friedman does not say however that there
are no limits to what executives can do to
make stockholders as much as money as
possible. Executives, he explicitly says.
Must operate within the rules of society
including both the rules of the law and the
rules of ethical custom (Ferrero, et al., 2014;
Mulligan, 1986).
According to Friedman’s shareholder view
of corporate social responsibility, a manager
has no right to give company money to
social causes when doing so will reduce
shareholder’s profit because money does
not belong to the manager but to the
shareholder’s.
 Friedman argues that the exercise of social
responsibility by a corporate executive is;

• Unfair
• Undemocratic
• Unwise
• A violation of trust
• Futile
(Mulligan, 1986).
Although Friedman does not think
managers should use company resources to
benefit others at the expense of
shareholders, he does think that companies
ultimately provide great benefits for society
Friedman has had many critics. Some
objects to his claim that the manager or
executive is the employee of shareholders.
Legally, these critics point out that the
executive is the employee of the corporation
and so that executive is legally required to
serve the interests of the corporation– his to
employer– not of its shareholders
Critics point out that shareholders only own
stock and this gives them a few limited
rights, such as the right to elect the board of
directors, the right to vote on major
company decisions, and the right to
whatever remains after the corporations
goes bankrupt and pays off its creditors.
But shareholders do not have all the other
rights the true owners would have and so
they are not really owners of the
corporation.
A third objection criticizes his claim that the
executive’s core responsibility is to run the
corporation as stockholders want it to be
run. Finally, some have argued against
Friedman’s view that by seeking to
maximize shareholder returns, the
corporation will best serve society.
Sometimes competitive forces fail to steer
companies in a socially and beneficial way
and, instead lead them to act in a socially
harmful manner.