Profit maximization is the only corporate social responsibility of a business

 Introduction

The only role of business should be profit maximization because that is the main reason why businesses are established. The social responsibility of businesses have become a topic of discussions from different professionals, scholars, and fields of life. Scholars and practitioners have long emphasized the importance of business in society as a major concern. Since the 1960s, advocates of corporate social responsibility (CSR) have raised pragmatic notions that businesses who choose to pursue such a route should endeavor to limit its regulations, improve their overall reputations, and adopt approaches for recruitment and retention of employees [Davis, 1960; Whetten et al., 2002; Wren, 1979]. However, other scholars have highlighted that the social responsibility of businesses should be to maximize profit. In accordance with the stakeholder theory as developed by Freeman (1984), corporations have a responsibility to their shareholders and other interest groups, but their major responsibility is to ensure the sustainability of the business through continuous profit maximization and business growth. As such, this essay is designed to expand the understanding that the only social responsibility of business is to maximize profit.

The invincible hand: The majority of business settings are dominated by investors (shareholders). However, they are not always part of the decision-making process. Decisions are made primarily by the management, but the shareholders do influence the decisions of the management to a great extent [Winn, 1995]. They are commonly referred to as "the invisible hand" that stirs the business process. They determine what is to be done as well as how it should be done, while the management only stands to execute their decisions. Considering that they funded the business single-handedly on their own without the help of the public, scholars have deemed it appropriate that they reap the full benefits of the business. Thus, managers that focus primarily on satisfying the shareholders are continually retained, while those that don’t meet this target face the possibility of losing their position. This is very much in line with Friedman's [1970] ideology, which contends that the only social responsibility of business is to make a profit while also meeting the needs of its stakeholders. However, it is still important to consider the stakeholders that have given the shareholders the opportunity to establish such businesses. Thus, management's actions in terms of decision-making and execution should be designed to satisfy the interests of both stakeholders and shareholders.

The government should do it. One might be forced to ask questions as to "if the corporations are to be held responsible for the social welfare of the public, what will then become the responsibility of the government?" It is important to note that businesses don’t operate on free land. They bear the responsibility of paying staff and maintaining the system, and they also pay part of their earnings as taxes to the government. Thus, it would be considered unfair if the businesses were to shoulder all these responsibilities and still be forced into parking under the responsibility of the government. The basic responsibility of government is to provide for its people, and such responsibilities should not be transferred to corporations under any circumstances. The government should utilize the revenue generated in the form of taxes from these corporations and perform their duties. Charging the corporations to do so entails forcing them into double responsibility, with a resulting negative effect on their chances to ensure sustainability in the business process. If these corporations are forced to cease operations, the government must recognize the negative consequences for both its economy and the livelihoods of its citizens. Staffs will be laid off and without jobs to care for their families, the government won’t generate any tax from them, and their exports will definitely decline; such a situation will have a catastrophic effect on the sustainability of the nation as a whole. Therefore, the only social responsibility of corporations should be to maximize profit as they will be able to enhance revenue generation in the country and guarantee the overall sustainability of the country as a whole [Davis 1960; Whetten et al. 2002; Wren 1979]. In some cases, meeting the needs of all communities can be difficult for the government; thus, these corporations still need to assist the government at such levels.

Corporations have many pressures. As an entity, corporations already have vast responsibilities. This ranges from payment of employees' salaries to payment of tax, maintenance of machinery, innovation and research, marketing costs, production costs, transportation costs, and other associated business expenses as well as overhead. All these costs are covered by the profits that corporations make. Thus, without profit, corporations stand no chance of existing [Pava and Krauz 1996; Porter and Linde 1995]. Profit is the main factor that determines the overall sustainability of any given business. Even if the company is gifted with the best quality of individuals in terms of management and execution, such a company stands no chance of being sustainable without the necessary funds to power such corporate decisions. Therefore, corporations have no other social responsibility besides maximizing profit, as this is the only way to ensure they handle all these social responsibilities and ensure sustainability in the business process. If the only role of business is to "make profit," one could still argue that such profits should be used to take good care of the stakeholders. Businesses would not exist if consumers did not make purchases, communities did not provide land for business establishments, and employees did not produce goods and services. As such, it can still be argued that these corporations should support stakeholders at all costs (both financially and non-financially).

Corporations lack the necessary expertise. A number of authors [Holliday, 2001; Holliday et al., 2002; Schmidheiny, 1992; World Business Council for Sustainable Development, 2002] in the field of corporate social responsibility have highlighted one major element that seems to be overlooked. This is to say that in order for social responsibility to be truly carried out, one needs to have the expertise. For instance, the government conducts censuses, has representatives for different constituencies, and has vast commissions that help transform their policies into action. By so doing, the government has all the expertise necessary to care for the social welfare of the people, as they understand the people better (in terms of their needs) and know where they live. Corporations, on the other hand, lack this expertise. The fact that a company exists in a given environment doesn’t by any means imply that it knows the people or understands their needs. In some cases, these companies can be foreign-owned, and their management might have never lived in these areas. Therefore, pushing them to carry out social responsibility might be a risky game. In some cases, these corporations (or their management) might be violating existing norms and values all in the name of helping the society in which they live. As experienced in numerous cases, this might end up resulting in a negative image for the company or a form of "corporate social crisis." This further strengthens the argument raised in paragraph three, where it was noted that the primary role of government is to care for its people, while the only social role of companies is to maximize profit. On a different view, the government normally makes these statistics publicly available, so there should be no reason why corporations should rely on a lack of expertise as an excuse. They ought to source for this information and incorporate it into their decision-making process.

Corporations might impose their values on the people. As highlighted in the fifth paragraph above, there are cases where foreign corporations maintain an existence in the local markets with their foreign views. Such corporations might not know anything about the social norms and values of the people they live with, or their ideas about these people might have dwindled. Therefore, any act to work with them might end up violating such existing values. This raises the main argument in this paragraph, which goes to state that corporations might end up imposing their own views on the people while performing these social responsibilities—and this is a good reason why the only social responsibility of corporations should be to maximize profit. Based on the concept presented here, a number of authors [Morsing 2003; Walley and Whitehead 1994] have argued that corporations' only social responsibility should be to maximize profit. In the process of taking care of the people, corporations might adopt the process of assimilation, which will force society to sign some level of agreement (mentally or psychologically) with these corporations and force them into adopting their own corporate norms. At the end of the day, existing values might be lost. For example, a corrupt organization that uses any means possible to achieve its corporate goal may end up developing corruption to the point where it becomes a social norm. Learning to live with a community is very easy because their ways of life are reflected in their daily activities. On that note, companies should learn to live with them and help them stay in line with their established values and cultural norms.

Conclusion

In conclusion, the above paragraphs have further expanded on already existing discussions on why the only social responsibility of businesses should be to maximize profit. While it is expected of any good corporation to help improve the lives of people living in the area where it operates, one should not overlook the fact that the management of these corporations does not make all existing decisions because their decisions are primarily influenced by the needs and demands of shareholders; the government is better positioned to handle the social welfare of the people; corporations already face numerous pressures, and adding more may harm them; Considering all these issues and limitations, it is in the best interest of the shareholders to focus on maximizing profit. This is because it is only through such efforts that they will be able to ensure the sustainability of the business in the future, have returns on their investments, and create the right room for continued inflow of revenue into the pockets of the shareholders. In the end, all (both shareholders and stakeholders) will win.

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