So if a corporation spends money on good causes, is it ethical? Learning Objectives. corporate social responsibility is irrelevant: Companies that simply do everything they can to boost profits will end up increasing social welfare. Public Support for business. Weakened International Balance of Payments is an argument against Social Responsibility of Business. Corporations should focus on earning a profit for their shareholders and leave the social issues to others. Image: Arguments in favor of Social responsibilities of Business. Although, Corporation Social Responsibility can come across as an idealistic idea, especially as it is voluntary process and lack regulation and therefore subjected to abuse of power by decision making companies in the social domain, it actually produces favourable results if applied positively. Which of the following is an argument against corporate social responsibility? CSR adds value because it allows companies to reflect the needs and concerns of their various stakeholder groups. D) Profitability and growth go hand-in-hand with responsible treatment of employees, A. Most arguments both for and against CSR are based on how a company’s attempts to be socially responsible affect its bottom line. Which of the following is an argument against corporate social responsibility? d. there are no financial benefits of social or environmental initiatives. If you have any queries regarding Social Responsibilities of Business and Business Ethics CBSE Class 11 Business Studies MCQs Multiple Choice Questions with Answers, drop a comment below and we will … The Friedman doctrine, also called shareholder theory or stockholder theory, is a normative theory of business ethics advanced by economist Milton Friedman which holds that a firm's sole responsibility is to its shareholders. 1. Business enterprises are sub systems of the larger society. Common arguments against corporate social responsibility argue that: A) CSR detracts from the fundamental economic role of businesses. B. Skeptics often claim that businesses should focus on profits and let the government or nonprofit organizations deal with social and environmental issues. Avi-Yonah, Corporate Social Responsibility and Strategic Tax Behavior, in TAX AND CORPORATE GOVERNANCE 183 (Wolfgang Schon ed., 2008); and Reuven S.¨ Avi-Yonah, Taxation, Corporate Social Responsibility, and the Business Enterprise, (University. C. Improves business value and reputation. Corporate Social Responsibility, which is often called CSR, is a business term that refers to the actions a for-profit business takes to improve the lives of people within a community. Moral Justification. Arguments For & Against Corporate Social Responsibility. Creates an imbalance between corporate power and its economic responsibility. To fulfill their economic objectives, they will have to draw from the various resources which the society has got. 19/2009, 2009). In a more logical fashion, Keith Davis has advanced many good points in favor of corporate social responsibility. These initiatives can not only benefit the community and the environment, but they can also turn out to be a smart business move. Violation of Profit Maximisation: As per this argument, business enterprises claim that our objective is profit maximisation. Requires skills businesses may lack B. Viability of Business: A business corporation exists only because it performs certain valuable services to the society. C) there is no positive relationship between CSR and shareholder returns. Someone will ask me about Milton Friedman's famous quote: "There is one and only one social responsibility of business -- to increase its profits." Answer: ... Answer: Arguments against social responsibility. Profit maximization is the ultimate goal: Business units are accused of having profit maximization as their goal. The unfortunate reality is that most companies see CSR as public relations and marketing. A. Contrast the views in favor of and opposing corporate social responsibility. This shareholder primacy approach views shareholders as the economic engine of the organization and the only group to which the firm is socially responsible. 1. which of the following is an argument for increased social responsibilities? Options (a), (b), (d) and (e) are all arguments for Social Responsibility of Business. 7 Arguments for and against social responsibility for business organizations. Moral Responsibility. c. there is no positive relationship between CSR and shareholder returns. Creates an imbalance between corporate power and its economic responsibility C. Improves business value and reputation D. Milton Friedman Was Wrong About Corporate Social Responsibility. 4) Socially responsible businesses tend to have less-secure long-run profits. Read article about Arguments For and Against Social Responsibility! Arguments against social responsibility. C) Empirical studies have not yet demonstrated a definitive relationship between corporate social responsibility and profitability. Chapter 5: Management's Social and Ethical Responsibilities 111 124. Requires skills businesses may lack. D. A majority of stockholders are against it. Arguments for and against Corporate Social Responsibility. These programs are unique, are expanding in scope and scale, and provide businesses as well as local and global community members with a whole host of advantages. The Fraud of Corporate Social Responsibility (CSR) There is a mistaken belief that being ‘ethical’ means being ‘good’ or ‘nice’. Common arguments against corporate social responsibility argue that: Select one: a. CSR detracts from the fundamental economic role of businesses. b. business is not equipped to handle social activities. b. CSR does not achieve a triple bottom line. CSR is an argument of economic self-interest for businesses. It means the duty of an organization towards society in order to prove itself responsible about its actions and their effects on environment, community and external stakeholders. Arguments Against Corporate Social Responsibility. Corporate social responsibility makes it clear that it is certainly unethical for these corporations to be making profits at the expense of the environment and other aspects of the human life. The final major argument against corporate social responsibility in its various forms is that the best way for most corporations to be socially responsible is to contribute to the community by doing what they do best: excelling in economic terms. Corporate social responsibility (CSR) in the middle area of responsibility is the most difficult to coordinate for many large corporations, but has gained considerable importance – precisely because it is in this area that the most damage can occur. CSR is an argument of moral reasoning that reflects the relationship between a company and the society within which it operates. This article was published in the “Academy of Management Journal” in June 1973. Long run survival of the organization and the public both. D) there are no financial benefits of social or environmental initiatives. b) as an economic institution, business lacks the ability to pursue social goals. c. business already has enough power--it should not be given more. Corporate social responsibilities today also help provide for a number of different programs that help transform the world for the better. Pyramid of Corporate Social Responsibility successfully combines the purposes of the firm, including the economic purpose of the firm as advocated by Friedman (1970), as well as philanthropic responsibilities of a firm, arising from Corporate Citizenship highlighted in Real Entity Theory (Dodd, 1932). T or F: The invisible-hand argument against broadening corporate responsibility says that business's appetite for profit should be controlled by the hand of the government True T or F: Milton Friedman argues that business has a responsibility to provide employment, refrain from polluting, and eliminate discrimination, even when it's not profitable to do so This applies not only to the environment and society, but also to a company’s own employees, stakeholders, and reputation. This statement refers to the assertion made by Milton Friedman (1970) who obviously not in favor of CSR engagement. Key Takeaways Key Points. of Michigan Law School Comparative Research in Law & Politi-cal Economy, Research Paper No. Skill: AACSB: Ethics 5) One argument against businesses championing social responsibility issues is that businesses already have too much power. Hence from above discussion, we can infer that option (c) is correct. Milton Friedman claimed that free markets, rather than companies, should decide what is best for the world. Since business operates in a world of poverty and hunger, the economic efficiency of business is a matter of priority and should be the sole mission of business. There is, however, empirical evidence that this is not the case. 06/12/2013 08:57 am ET Updated Aug 12, 2013 It happens very often when I speak about sustainability and corporate responsibility, and it happened again last week. Answer: FALSE Diff: 3 Page Ref: 95 Topic: What Is Social Responsibility? Define corporate social responsibility. Rationale for the business organizations to fulfill certain social responsibilities is listed here under. If corporate social responsibility is detrimental to business, as suggested by Friedman, then shareholders will tend to avoid investing in companies that act socially responsible. Corporate Social Responsibility The term “corporate social responsibility” came in to common use in the early 1970s. B) CSR does not achieve a triple bottom line. The common arguments that are in favor of Corporate Social Responsibility (CSR) are: Public image of the company. We hope the given NCERT MCQ Questions for Class 11 Business Studies Chapter 6 Social Responsibilities of Business and Business Ethics with Answers Pdf free download will help you. B) Social responsibility is not mandated by law, which means that it has to be done by will, not by compulsion. Learn More → Modern consumers have a healthy awareness of the role corporations play in enacting social and political change. By doing so, the firm is more likely to create greater value and, as a result, retain the loyalty of those stakeholders. As a result, social issues are used as advertising campaigns. Answer: TRUE Diff: 3 Page Ref: 95 Corporate social responsibility makes it clear that corporations should therefore find better ways to handle their waste disposal. His line of arguments are given below: 1. All of the following are arguments commonly made against corporate social responsibility except a. social problems should be addressed first by the free-market economic system, and then, if necessary, by government. Business can reduce its cost and raise profits and then only it can meet its social responsibility. Common arguments that go against CSR are: Ambiguity in business policies. All of the following are arguments against corporate social responsibility except the argument that a) because managers are not elected, they are not directly accountable to the people. 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