The importance of social responsibility and ethics is largely subjective. Economist Milton Friedman wrote, in an article for the New York Times Magazine, that the sole purpose behind social responsibility in business is to increase profits. Where there is no potential for profit, philanthropy is comparable to theft from the stakeholders in the corporation. Whole Foods' John Mackey and Cypress Semiconductor's T.J. Rodgers hold different opinions, but both share similar perspectives to Friedman's.
The Benefits of Social Responsibility in Business
Social responsibility is not a requisite in the business world. In fact, many argue that it borders on Marxism or Socialism. An organization like Whole Foods that places social responsibility in their mission statement argues that being socially responsible is beneficial to everyone: shareholders, customers and the community. Their philanthropic efforts are a very effective marketing tool, however. They provide the company with positive exposure, and the nonprofit organizations chosen to receive their donations are targeted based on membership lists that would potentially bring in a large number of customers while supporting their worthwhile causes.
Ethics and Social Responsibility
The principal concept of ethics is to focus on the well-being of others; essentially, any action taken by the corporation should cause no harm. For instance, dumping toxic waste in a body of water that would then have a detrimental effect on those who swim in or drink the water is considered unethical. Social responsibility is different from ethics because the company is actively seeking to positively contribute to the community. Philanthropic efforts that are detrimental to the profitability of the company are not a prudent option.
The Importance of Ethics in Business
Although ethical behavior in business is not always as action-driven as being socially responsible, it is just as important for many reasons. Ethical reasoning is the exercise of intellectual abilities to choose the best course of action that would best serve everyone's interests. Employees who are treated ethically are more motivated to provide higher quality work, and customers who are treated ethically will generally continue to provide the company with their patronage and shareholders will benefit from this with the company's increased profitability.
Benefits of Running a Socially Responsible, Ethical Business
Altruism has nothing to do with running a company in a socially responsible, ethical manner. Essentially, social responsibility and ethics serve to increase profitability for the shareholders of the company by publicizing their philanthropic efforts, increasing productivity through the ethical treatment of employees, and increasing patronage by treating customers in an ethical manner.