Business Law: Corporate Responsability

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Is Corporate Social Responsibility beneficial towards Businesses? DCAA Law Firm – Question #14

Abuhoff, Ryan
Alvarez, Jessica
Caldera, Nataly
Di Stefano, Valentina


Corporate social responsibility originated in the eighteenth century when Scottish moral philosopher and pioneer of political economics Adam Smith expressed that the needs and desires of society could best be met by the free interaction of individuals and organizations in the marketplace. Then the Wealth of Nations further noted that, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard for their own interest. Milton Friedman, Nobel Memorial Prize in Economics recipient, replied by stating in a 1970’s The New York Times Magazine article, that “the one and only social responsibility of business, is to increase profits for shareholders. ” As a result these efforts laid the foundations of CORPORATE SOCIAL RESPONSIBILITY. So what exactly is corporate social responsibility? According to The Legal Environment of Business by Cross and Miller text book, corporate social responsibility is the idea that those who run corporations can and should act ethically and be accountable to society for their actions . But there have been many legal cases that challenge corporate social responsibility. Therefore, the ongoing debate of CORPORATE SOCIAL RESPONSIBILITY raises the question as to whether CORPORATE SOCIAL RESPONSIBILITY is actually beneficial toward businesses or not. Through the debate over both perspectives from corporations, CORPORATE SOCIAL RESPONSIBILITY’s impact in the business world will be examined in the spectrum of its ethical, financial, legal, and philanthropic standings, redesigned to meet new purposes in the 21st Century corporate setting. Many might agree that there is a fine line between ethics and corporate social responsibility, due to the fact that these two could be confused. An ethically correct corporation does not necessarily have to be socially responsible, while a seemingly social responsible corporation is not always abiding by the rules of ethics. Let’s begin by defining ethics. Ethics can be defined as the study of what constitutes right or wrong behavior . In the business world, ethical behavior depends on the individuals that run corporations or any other type of business entity. There have been huge cases like the Enron, Tyco International, WorldCom, Adelphia, and Peregrine Systems, which have scandalized the corporate atmosphere and uncovered corporate officers abusing their power and privileges. Moreover, these cases also reveal how officers were manipulating information for their own interest rather than that of the company, employees, and society. Nevertheless, such cases brought attention to ethics, and how officers of a corporation, and employees of a company should act for the maximization of wealth of shareholders. Nowadays, every business school is teaching young aspiring business students to develop good ethical standards. Were the officers of these companies being ethical when they decided to pursue their own interest above all others? Obviously, the United States will refuse to such accusation, since many of their officers were sentenced to life in prison. These officers were breaking rules, not simply legal rules, but also acting wrongly and acting unethically towards the business and its competitors, these are rules of society that can ruin a corporation regardless of how communities service oriented they might be. Different people will have different opinions on where the ethical to unethical line is crossed, and this includes, what is real or fake in reference to the actions and “for show” of corporations. On the same token, we have examples from the Enron scandal whose wrong acts are the starting causes of the recession we have been experiencing for the past few years. . As a result of this particular example,...
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