Last week at the OC Business Alliance CEO Roundtable, we were treated to a very interesting discussion with Chris Harrington, V.P. of Strategy and Business Development: Chief Corporate Responsibility Officer at Toshiba America Information Systems Inc. Quite honestly, I was rather surprised that such a title actually existed. What Chris highlighted throughout his discussion was the essence of corporate responsibility as part of his company strategy. This discussion led me to think about the overall role of corporate responsibility and the two different schools of thought Chris had pointed out: Milton Friedman (“The Social Responsibility of a Business is to Increase its Profits”) and Michael Porter/Mark Kramer (“Shared Values”).
Porter and Kramer reflect a common view that a corporation must invest in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Friedman’s view is very different, advocating that a corporation’s social responsibility is purely to increase returns for its shareholders. In essence, both schools of thought have a level of legitimacy and pose interesting arguments.
So what is corporate social responsibility when we consider it from an illuminating American perspective? We know corporate social responsibility is not a new concept but as of recent, it is gaining momentum- particularly in the United States. The focus on social responsibility has been reinforced by human causes, politics, environmental and green initiatives, social media and the overall move towards transparency and greater visibility demanded upon businesses, especially for very large public corporations.
In my personal view, I take possibly an over-riding position, which is closer to the views of Porter and Kramer since I believe that responsibility lies on both companies and individuals to be good citizens. Being part of a community poses a responsibility on a corporation to be a “big brother” and assist within the community. However, it’s important to remember, at the same time, that a corporation’s primary purpose is to deliver bottom-line results. Given this, it would be fair to assume that expenditure on non-business projects is diametrically opposed to safeguarding the profits of the company. I do not agree in this being an absolute. I believe that a corporation, by having some involvement in its community however that may be, actually interfaces with the people that work at, distribute, manufacture, and/or consume their products. Involvement is a form of giving back and this certainly highlights the persona of the corporation. This in itself attracts buyers as well as people that either would like to work there, or who are already employed and ultimately contributes to the corporation’s well-being over time.
If profits are the only motive, then it is easier to understand Friedman’s position (written in 1970) that opposes any waste of corporate resources – this then places the onus on individuals, should they desire to be part of giving. Some of these same individuals gain from corporate profits and benefit accordingly. It allows eager individuals in their personal capacities to get involved in community projects or specific causes, and are willing to do this primarily in their own time for charitable reasons. This certainly reflects well on the many people who have the passion and the heart to make a difference individually in our society.
In some ways, the above argument is very similar to what we see from a political sense in the “separation of Church and State.” Should there be an involvement? Should one group be able to influence the other, etc? There is little doubt in my mind that every corporation or business has a personality and in many cases a very unique one. The significance of this is seen often on the way that corporate culture assimilates into the internal thought processes of those employed.
In my perspective I see that blend. I strongly consider that every company has an absolute requirement to be part of their own community and give back in a manner that is not for financial gain. The importance of this is seen in the adherence to balancing out a fundamental thirst for profits with the concept of giving. At the same time, it is very difficult for any business to give beyond a reasonable point. A good example of this is giving up both time and financial donations to satisfy the abundance of charities and causes that are supported by employees and families of these employees. The requests for resources and donations include a wide variety of areas such as environmental, educational, religious, cultural and even social. There is a saturation point that can be quickly reached where it is not viable for any business to continue to partake without it impairing the bottom line that must so closely be guarded.
This does not mean that the individuals within a company cannot balance this by also donating to the causes of others. These are the causes that are so often raised in the workplace, and whether they be to help a child sell their Girl Scout cookies, or to help fund a special school play, these can be addressed by individuals who hold a pennant for giving or have an immediate involvement in these causes.
Corporate social responsibility is necessary for us as a society since it is a mass of people who make up these larger conglomerates. There has to be some form of balance between what a corporation can do by giving and sponsoring, with that of its employees who can participate and/or give to these special causes. I know that in my own company, SYSPRO USA, we promote the need to be part of our own community, as well as encouraging individuals to partake as their own initiatives. SYSPRO USA reflects a long history of involvement and achievement and has an open approach both for itself and its staff to be a part of a sustaining ecosystem. It is this understanding of corporate social responsibility that differentiates and gives a “heart” to this business.
In many ways the role of corporate giving gains greater clarity when focused on building infrastructure and doing what is necessary for teaching those in need to be self-sustainable. Obviously there is also a differential between the role of large corporations and small business but the onus for involvement persists.
Business has to always be about focus and profitability but this is not isolated from the ecosystem that is shared with its customers, channels and partners on either a local, regional, or global basis. At the end of the day, people and business interact and the separation is not always clear. Whatever your view, just imagine how sad our world would be without the efforts of others in making our world a better place.
-Joey Benadretti
President, SYSPRO USA
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