Does social responsibility in a business contribute to its profits?

Essay by archingchingCollege, Undergraduate March 2004

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ƒÞNowadays there are lots of companies. Business is an organization that strives for profits for its owners while meeting the needs of its customers and employees and balancing the impact of its actions on other stakeholder. The main aim of it is making profit. On the other hand, they also have some social responsibility. Responsibility is using one's property (both tangible and intangible) in a manner that does not unduly infringe on the freedom of others.

There is a strong positive relationship between levels of social responsibility and ethic. Social responsibility has become increasingly important in order to strengthen firm value. the social responsibility's role, one must first introduce the environment, the successful modern organization and the effect changes have had on these organizations. The role will be defined and then supported by further research into what social responsibility does for the firm, how it is perceived by managers and views on how it affects financial performance.

Finally, the practical implications for managers will be considered, with a look at new accounting practices, which are at the forefront of ethical accounting.

There are many ways in which to describe success. It is maximizing the market value of the firm (Ross et al., 2001: 13). The market value is not only affected by financial profits, but also a firm's social and environmental performance. With that in mind, it should be noted that not all firms look beyond their financial profits and that it has been argued in the past by monetary economist Milton Friedman, that business' sole responsibility is to make a profit and in doing so, they contribute to society (Harrison, 2001: 61). However, there is the counter argument in ethical decision-making, and that is that 'corporations have social responsibilities because they draw upon the infrastructure provided by the...