Businesses have twofold effects to the society: positive and adverse. With every benefit that we get, there is a corresponding negative effect. The firm or business has deviated a bit from the profit motive, wealth maximization to humanizing, and social responsibility. What is the socioeconomic view of corporate social responsibility?
Business is a system. It also emulates the IPO model of computers and system theory. The inputs of business come from the society. Factors of production such as land, labor, capital, entrepreneurship, are literally being supplied by the society. When processed, products are sold back to the society. In the socioeconomic view, since the society is the source of inputs and the consumer of outputs, it is reasonable that businesses should give back to the society through altruism and philanthropy. It is the business’ responsibility to take care of the society. While carrying out it’s primary purpose that is to gain more profit, that self-interest will become altruistic in the long run as already theorized by Adam Smith, the advocate of neo-classical economic theory.
Now, corporations have engaged themselves in corporate social responsibility. They help the poor, clean the environment, donate to foundations, etc. Some are related, most are not to the mitigation of the adverse effects that they caused in the society. Businesses should look into how they conduct extension services to people. They should consider the appropriateness of the CSR that they do.
