From the social backlash of the Industrial Revolution and the American culture of robber barons came the idea of corporate social responsibility, which was developed in the 1960s. The concept of corporate social responsibility (CSR) assumes that businesses have a moral, ethical and philanthropic responsibility to society at large. Arguments for and against CSR are a matter of opinion, as the effectiveness of this practice is still being studied. No conclusive proof supports either viewpoint.
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Precursors to CSR
During the Industrial Revolution, poverty-stricken people in agricultural societies could make money as factory workers. However, the need to produce and the lack of labour laws allowed for workers to be exploited by business owners. In addition, the highly successful business owners of the early 20th century developed the concept of "social Darwinsim," further allowing them to justify oppressing their workers. Factories during this era were fuelled by coal and caused pollution and health problems for those who lived near them.
One argument for CSR states that it's in a business' long-term self-interest. A company's investments in society ultimately make it possible for the business to continue. A socially conscious business may also avoid government intervention.
Pro: Not Causing Harm
Another argument for CSR is based on the concept that not being socially responsible is damaging and unfair. Because damaging behaviour is inherently wrong, the natural course is to right it. Logically, a corporation must produce goods and services that are beneficial to society while making sure that the processes of production also avoid damage, such as pollution. The other assumption associated with this argument is that corporations, unlike individuals, have available resources to devote to socially responsible behaviour, and so they should use the resources to help society.
Con: Competitive Disadvantage
Arguments against CSR tend to focus on numbers and the fact that they don't conclusively prove that CSR is effective for the corporation or society. Some argue that a corporation puts itself at a competitive disadvantage by devoting resources to this behaviour while other companies in its market are not.
Con: Profit as Beneficial
Adam Smith's classic analogy of the invisible hand says that self-interested businesses lead society to its best course. Some argue that companies which act to maximise profit will inevitably do the most good in society. An example of this argument is a fast food chain's decision to offer healthier food choices in hopes of attracting health-conscious consumers and gaining market share. A similar example is automakers manufacturing fuel-efficient cars.
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