Clarifying Corporate Social Responsibility

Yesterday, the Wall Street Journal published an article titled “The Case Against Corporate Social Responsibility.” The author, Aneel Karnani, an associate professor at the Ross School of Business, claims that companies weaken their profitablility and diminish their likelihood of long-term success when they take on social responsiblity as well as meeting their bottom line.

The real idea behind corporate social responsibility is quite different than what he attacks. The idea is that corporations (made up of the people who work there, the owners, and their customers–who all happen to be human beings) share more than just a profit motive. After all, the staff, owners, and customers all breathe the same air, and eat what was grown from the same earth and water. Their common social and environmental well-being is sometimes affected by the practices of the very corporations that binds them together. (Think about a polluted river). For this reason, corporations are primary actors in society and must be “good citizens”. 

Being a good citizen doesn’t mean arbitrarily helping old ladies across the street. Being a good corporate citizen means proactively finding alternatives to practices that would otherwise exploit workers and customers, contaminate the environment in which their kids live and play, and by-pass the question of ethics all together in favor of profit. History is littered with examples of companies that have lost long-term profits and customer loyalty because of their irresponsible behavior.

Karnani also argues that the only way to ensure good corporate behavior is through government regulation, as if we need more bureaucracy in our already overly-litigious society.

The article sounds like a plea from someone looking for an excuse to NOT be held accountable for social and environmental misdeeds. It is a return to the narrow-minded perspective that corporations, like men, are islands. Fortunately, employee-owned companies like Recology have the option of being good corporate citizens because the owners, workers, and customers are so tightly linked.

I give Karnani an big thumbs down for the lack of intellectual rigor and short-sightedness of his article. Wall Street Journal readers have also already voted a big, resounding “boo“.

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