Business Social Responsibility :: Social Responsibility Essays

According to Riahi (2009), organisations (FirstGroup plc etc) can in fact be deemed as social units deliberately constructed to seek specific goal. In such respect, pass on resonating catalytic for pro and pessimistic dialogue Milton Friedman argued within a 1970 young York Times magazine article that the only social responsibility of furrow, is to increase its profits. The corporation, he wrote in his book, Capitalism & Freedom, is an instrument of the stockholders who own it, if the corporation makes a contribution, it prevents the separate stockholders from himself deciding how he should dispose of his funds. (M. Porter, M. Kramer, 2003). Accordingly to their view, companies such as FirstGroup plc and Emerlad Energy plc would be undeniably misusing the resources entrusted to them as they engage in corporate social responsibility. In utter contrast, Heilbroner, on the other hand, betokens stockholders as no longer a significant source of venture capital, merely a peaceful hol der of certificate of varying degrees of risk & potential return, with little knowledge of the real performance of his corporation. Surely the other stakeholders deserve some return? (N. Smith, 1990) further underpinning businesses and its proprietors to comply with societal values & take an active role on society as this is in line with the long term interest of business ( P Griseri, N. Seppola, 2009) for e.g. whether it could be suggested as FirstGroups 1.8 million community contribution, particularly, training of the local indigenous population can in some factor be deemed as a rather integral part of the companys strategical CSR focal objective of the firms differentiation strategy. In addition, studies linking strategic investment to CSR (in particular, the resourced travelling bagd view) have previously suggested that specialised skills or capabilities related to investment in CSR can lead to firm specific competitive advantages ( J. Frynas,2009) findings suggest firms with socially responsible practices have higher valuation and lower risk as investment in improving responsible employee relations, environmental policies, and product strategies contributes easily to reducing firms cost of equity (Ghoul et al 2010). The capital market equilibrium prototype of Merton (1987, p. 500) implies that increasing the relative size of a firms investor base will result in lower cost of capital and higher market value for the firm. In a similar vein, Heinkel et al. (2001) develop an equilibrium model that implies that when fewer investors hold the stock of a firm, the opportunities for risk diversification are reduced and hence the firms cost of capital will be higher.