The document is a critical essay submitted by Jackson Joy to Dr. Ralph Bathurst exploring the concept of corporate social responsibility. The essay discusses some of the issues and false notions surrounding CSR, including that it can raise costs and impair corporate performance. It also argues that CSR can undermine the free market system and erode economic freedom. While some businesses have adopted CSR, the essay concludes that a corporation's primary responsibility is to its shareholders, and that social causes should not be supported at the expense of profitability.

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MASSEY UNIVERSITY
Honesty Declaration
School of Management (Albany)
Lecturer’s Name
Dr Ralph Bathurst
Paper Name
Organisations and Management
Paper Number
152.700
Honesty Declaration
• I/we declare that this is an original assignment and is entirely my/our own work.
• Where I/we have made use of the ideas of other writers, I/we have acknowledged (referenced) the source
in every instance.
• Where I/we have used any diagrams or visuals produced by others, I/we have acknowledged (referenced)
the source in every instance.
• This assignment has been prepared exclusively by me/us for this paper and has not been and will
not be submitted as assessed work in any other academic paper.
• I /we have read the Code of Student Conduct on the Massey University web site
http://calendar.massey.ac.nz/2007/statutes/dr.htm, clause (f), wherein it states [Students shall] “act with
honesty and integrity in submitting material or imparting information to the university”. Assessment &
Examination Regulations clause (7) clarifies further that “dishonesty” is a breach of the Code of Student
Conduct and will be dealt with accordingly.
Family Name Given Name(s) ID number Student Signature Date
JOY JACKSON 13088772 16-09-2013
Group Name or number
For Office Only
Marker’s Name: Mark:…………………………….
Marker’s Signature: Date:……………………………..
Date Assignment due
16-09-2013

2. 152.700 Organisations and Management
Semester 02, 2013
Assignment 3
Critical Essay
Lecturer: Dr. Ralph Bathurst
Due Date: 16 September 2013
Submitted Date: 16 September 2013
Word Count: 1665
Student Name: Jackson Joy
Student ID: 13088772
Email Address: joyjackson1988@yahoo.in
Address: 38B Manuka Road
Glenfield, Auckland-0629
Ph: 027 953 6058

3. JOY Jackson 13088772 Assignment 3 Critical Essay
Critical Essay Assignment topic
Explore the notion of Corporate Social Responsibility and discuss some of the
contestations of this phenomenon in contemporary organisations.
Purpose of the study
Business is considered as the wealth-creating establishment of the society with its
primary social role being producing goods and services that satisfy the daily needs
of the people. Business also creates job opportunities and generates investment
returns to the people including the ones preparing for retirement. Thus, they turn
out to be demanding and valuable social role. Corporate social responsibility
(CSR), also known as corporate citizenship is a kind of corporate self-regulation
combined into a business model. The CSR policy behaves as a self-regulating and
a built-in mechanism by which a business observes and assures its complaisance
with the ethic standard, spirit of law and the international norms. The term CSR or
“corporate social responsibility” came into use in the late 1960s and 1970s after a
lot of multinational organisations coined the term stakeholder, which means those
impacted by the organisational activities. Freeman (1984) claims that CSR is used
to describe the corporate owners beyond shareholders which include the
employees, environment, consumers, stakeholders, communities and other
members of the public sphere. Proponents argue that the organisations tend to
make long term profits while operating with this perspective but the critics like
McWilliams and Siegel (2000) demonstrated in their journal article that the CSR
has a neutral impact on the financial outcomes of the organisation. Some even
suggest that is just a window-dressing and an attempt to anticipate the role of the
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4. JOY Jackson 13088772 Assignment 3 Critical Essay
governments as a watchdog over powerful companies. Henderson (2001, p. 171)
claimed and illustrated the way in which CSR deviated from the traditional value-
setting of the corporate. The purpose of this study is to highlight some of the
issues concerning with the social responsibilities of the business and the false
notions of CSR.
Discussion
Professor Barry (1999) pointed out that, in general the business operates with
respect to a set of code that imparts respect on sanctity of contract, property and
the rule of law along with ethical standards like honesty and fair dealing. He
mentioned that imposing of additional sets of social responsibilities would be
costly as well as burdensome for the business, the shareholders and eventually the
society. Still there arises a need for business to treat the customers, employees and
suppliers well, so that they become environmentally responsible and keen to the
values and interests of communities in which the business operates. According to
Henderson (2001), the so called sustainable development and social justice are
neither free from controversy nor well defined. The doctrines of CSR are often
associated with many issues and distorted events; in particular, it is said to offer a
deceptive account of the aftermath of globalization. The adoption of CSR by
business, with the support of the government would undermine the market
economy and reduce the community well-being. Thus it can turn out to be real
potential harm. In order to prevent the weakening of the vital role of CSR (wealth
creation), it is necessary to rigorously define and understand the social roles and
responsibilities of the business. Some of the wrong notions adopted by the
supporters of CSR will be discussed below.
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5. JOY Jackson 13088772 Assignment 3 Critical Essay
It is believed that the CSR assumes a role in creating the world a better place and
thus they need to demonstrate corporate citizenship and eventually sustainable
development. Their supporters mistakenly presume that this notion of sustainable
development is universally agreed and well defined (Henderson, 2001). CSR
tends to impair the performance of the corporation, with effect to both short-term
and long-term, cost and revenue as it involves the voluntary adoption by business.
This effect is mostly neglected by the supporters. Another wrong notion as
interpreted by the advocates of CSR is that it believed to maintain and increase the
company profit, and if not adopted would bring loss to the reputation of the
company in the society. If this is true then it means that profitability depends on
the so called society expectations which mean that most of the people expect that
the company has to embrace the concept of sustainable development which in-fact
is doubtful. The greatest potential harm by such a concept is when attempts are
made by the business or the government in the name of CSR to regulate the whole
world. Imposing such universal standards knowing that the circumstances vary
across countries, restrict the scope of the beneficial trade and investment flow
(Schwartz and Gibbs, 1999).
The Triple bottom line
The triple bottom line is which includes three aspects namely people, planet and
profit that needs to be practiced along with each and every move a corporation
makes. People refer to the beneficial and fair practices of business towards labour
and community where the corporation conducts the business. Planet relates to
sustainable environmental strategies. Profit is the so called economic value
produced by the organisation after including the cost of capital tied up and also
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6. JOY Jackson 13088772 Assignment 3 Critical Essay
after reducing the cost of inputs. Thus it is different from the traditional definition
of profit (Elkington, 2004).
Even though the notion about the triple bottom line is universally being accepted
and gaining ground, there is likely to be varied differences in the way in which it
is being interpreted and also since this approach is new and experimental, the
different organisations are facing many problems and circumstances. The basic
idea about the triple bottom line can be either interpreted metaphorically and
loosely or more strictly (Lal, 2000). Lal (2000) also claims that, on a loose type of
interpretation, an organisation clearly acknowledges an obligation to meet the
certain goals that have been already identified as ‘environmental’, ‘economic’ or
‘social’ and eventually transforms them into commitments or targets that need to
be met. Some large companies like Shell and Dow chemical have made
commitments to keenly translate triple bottom line into a set of corporate
objectives into the newly expanded system of reporting and accounting
(Sustainability Report, 1998, p. 50). However, how far the other organisations
may join for a similar undertaking is quite unclear and this has therefore opened
up a new era of business for the management consultants.
Cost and risk
One of the highly probable effects of CSR is to raise the cost of doing business
and to impair the performance of the firm. The adoption of wider goals makes it
more difficult and complex task to manage the organisation. ‘Implementing the
triple bottom line’ and 'Stakeholder could both prove to be costly exercises. Apart
from this, those institution with more restrictive operation rules and adopting self-
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7. JOY Jackson 13088772 Assignment 3 Critical Essay
chosen social and environment standards that are more demanding than those that
are required, will eventually push up the costs and thereby reduce the revenue and
point towards lower-yielding investments. The proponents of CSR argue that
failing in adopting it may be fatal or damaging for the organisation’s stand and
reputation and taking the route of CSR would prove to be balancing a paying
proposition (Henderson, 2001, p. 64). Even if this is considered to be true, the
antagonistic effects on performance still remain and this makes the people in
general worse off, even if the firm’s profitability is increased or maintained.
Both the 'social' and the 'environmental' goals which constitute the CSR bear with
them dangers of many kinds .One among such a danger is the tendency to identify
better performance with the attainment of 'higher' standards defined relating to the
physical indicators. A leading instance in terms of ‘environment’ is the quest of
'eco-efficiency' (OECD Report, 1997, p. 9)
Eroding the economic freedom
In relation to the terms and conditions of the employment along with the policies
of human recourses, CSR has utmost potentiality to harm the organisation by
inducing the adoption of irrelevant policies and standards. Whether the code and
regulations be enforced by the public authorities or by the big firm itself, it
eventually reduces the economic freedom and seizes the people’s opportunities
(Henderson, 2000). The unions and the larger firms in an industry together
negotiate the minimum wages and then extend it to small companies in the same
industry. This imposes an entry barrier for small start-up businesses (The
Economist, 29 July, 2000). A major and fundamental concern is that such a
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8. JOY Jackson 13088772 Assignment 3 Critical Essay
system is anti-liberal, because it violates the principle of freedom of contract
including the principle that allows people to freely enter into non-forcible
arrangements and bargains for mutual gain. It is not just the regulations by the
government that can produce such effects but also the ones by business and the
trade unions. The same effect is created at enterprise level, through policies that
are designed in the name of CSR, to enforce 'fair employment', 'equal
opportunity', ‘diversity’, ''social justice' or ‘human rights’.
All the managers down the line, in the quest of such goals, are made accountable
to the firm’s specialised instructions on hiring, promotion, selecting and
dismissals and the chartered terms and conditions of employment along with the
freedom of contract is bound to be slashed. The fact remains that the policies in
this area that are considered to be a part of CSR may worsen enterprise
performance and also erode economic freedom and thereby reduce the welfare by
narrowing the scope of markets (Henderson and Robertson, 1999).
Conclusion
The entire study critiquing the CSR hinges on one’s view about the corporation. Is
the corporation responsible to its shareholders to generate a profit? Should the
corporation get engaged in activities that do not maximize the shareholder wealth?
The organisation should not go out of their way to benefit the stakeholder interests
if it does not increase the shareholder wealth. It is understood that an organisation
cannot meet all the needs of the stakeholders and still remain profitable. This
concept includes a high cost and incorporates high end risks to the firm. The
shareholders may personally donate money for the benefit of the society but their
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9. JOY Jackson 13088772 Assignment 3 Critical Essay
investment in the firm should not be used to support unprofitable causes. Even
though some organisations have included CSR into their business model, still
there exist many organisations that do not incorporate CSR as they look into the
darker side of it.
References
Barry, N. (1999). Anglo-American capitalism and the ethics of business. New
Zealand Business Roundtable, Wellington.
Edward, F. R. (1984). Strategic Management: a stakeholder approach. Boston:
Pitman, 46.
Elkington, J. (2004). Enter the triple bottom line. The triple bottom line: Does it
all add up, 1–16.
Henderson, D. (2000). Anti-Liberalism 2000: the Rise of New Millennium
Collectivism. Institute of Economic Affairs.
Henderson, D. (2001). Misguided virtue: False Notions of Corporate Social
Responsibility. IEA Hobart Paper, (142).
Henderson, D., & Robertson, D. (1999). The MAI affair: A story and its lessons.
Royal Institute of International Affairs, International Economic
Programme.
Lal, D. (2000). The new cultural imperialism: The Greens and economic
development. Liberty Institute, Delhi.
McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and
financial performance: correlation or misspecification?. Strategic
management journal, 21(5), 603–609.
Organisation for Economic Cooperation and Development, Guiding the
Transition to Sustainable Development: A Critical Role for the OECD,
Report of the High-Level Advisory Group on the Environment, Paris,
OECD, 1997.
Schwartz, P., & Gibb, B. (1999). When good companies do bad things:
responsibility and risk in an age of globalization. New York: John Wiley.
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10. JOY Jackson 13088772 Assignment 3 Critical Essay
investment in the firm should not be used to support unprofitable causes. Even
though some organisations have included CSR into their business model, still
there exist many organisations that do not incorporate CSR as they look into the
darker side of it.
References
Barry, N. (1999). Anglo-American capitalism and the ethics of business. New
Zealand Business Roundtable, Wellington.
Edward, F. R. (1984). Strategic Management: a stakeholder approach. Boston:
Pitman, 46.
Elkington, J. (2004). Enter the triple bottom line. The triple bottom line: Does it
all add up, 1–16.
Henderson, D. (2000). Anti-Liberalism 2000: the Rise of New Millennium
Collectivism. Institute of Economic Affairs.
Henderson, D. (2001). Misguided virtue: False Notions of Corporate Social
Responsibility. IEA Hobart Paper, (142).
Henderson, D., & Robertson, D. (1999). The MAI affair: A story and its lessons.
Royal Institute of International Affairs, International Economic
Programme.
Lal, D. (2000). The new cultural imperialism: The Greens and economic
development. Liberty Institute, Delhi.
McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and
financial performance: correlation or misspecification?. Strategic
management journal, 21(5), 603–609.
Organisation for Economic Cooperation and Development, Guiding the
Transition to Sustainable Development: A Critical Role for the OECD,
Report of the High-Level Advisory Group on the Environment, Paris,
OECD, 1997.
Schwartz, P., & Gibb, B. (1999). When good companies do bad things:
responsibility and risk in an age of globalization. New York: John Wiley.
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