Corporate Social Responsibility
JOSEPH G. GIBSON
University of Maryland University College
AMBA 610 /9243
Dr. George Nixon
In the wake of today’s globalization, most companies have become amazingly aware of the social and environmental aspects of producing internationally. The fact that companies today have to be profitable does not negate that they also have to be good corporate citizens. Due to pressure from consumers, communities, governments and society in general, companies have adopted the concept of social responsibility through codes of conduct that is expected to be enforced to ensure socially responsible business practices. This I think is a noble ...view middle of the document...
Base on the United Nations Convention on the rights of a child and the international Labor organization, Ikea tries to comply with these two by maintaining a clear focus on the best interest of the child. Through its special code of conduct called the Ikea Way, it monitors compliance through unannounced visits at suppliers and subcontractors especially in South Asia. Failure to comply with Ikea’s code of conduct, all business transactions can be terminated with the suppliers (Bartlett, Dessain, & Sjoman, 2006).
Ikea did not get to this point overnight. Through court cases and fines, the company has learned from its experiences and put stringent measures in place to avoid any of the same from happening. Two cases in point were the formaldehyde emissions problem in Denmark and Germany and the child labor case in Pakistan. In both of these cases, Ikea suffered fines and the loss of revenues; but measures were put in place to avoid this from happening in the future to the best of the company’s abilities.
I do not believe that these initiatives are all profit driven but rather to empower communities and local governments and to have suppliers take responsibility for their environments. But not everyone holds this view; we will now take a look at two of the most notable writers on this subject matter, whether for or against it. We will try to see some similarities and differences of Milton Friedman and R. Richard Freeman’s views on corporate social responsibility and compare to Ikea’s.
Friedman believes that the only social responsibility of a business is to “use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game” (Jennings, 2009, p.74). Friedman did not believe in the notion that business is not concerned primarily with profit making but that they are also concern with promoting desirable social ends. Also that business has some kind of social conscience and takes seriously its social responsibilities including providing employment, eliminating discrimination, avoiding pollution and even child labor. Moreover, he also claimed that, companies that did adopt responsible social attitudes would be faced with more binding constraints than companies that did not, rendering them less competitive (Jennings, 2009, p.75).
These views were expressed in the 70s, I believe that was then, time has change; in today’s business world, any organization that ignores environmental and social issues can suffer consequences for its business. Companies that intentionally or unintentionally pollute their local communities risk poisoning their customers. To just ignore existing state and local school systems risks depleting the pool of qualified workers. Abusing workers risks higher turnover and training costs, not to mention greater difficulty in attracting the most qualified candidates for the job, Endorsing the idea of child labor can also result in hefty fines.