The CSR buzzword
Nick Weido | Wednesday, August 25, 2010
In an article published by the Wall Street Journal, Dr. Aneel G. Karnani, an associate professor of strategy at the University of Michigan Ross School of Business contends that: “[the] idea that companies have a duty to address social ills is not just flawed, it also makes it more likely that we’ll ignore the real solutions to these problems.
“Very simply, in cases where private profits and public interests are aligned, the idea of corporate social responsibility is irrelevant: Companies that simply do everything they can to boost profits will end up increasing social welfare. In circumstances in which profits and social welfare are in direct opposition, an appeal to corporate social responsibility (CSR) will almost always be ineffective, because executives are unlikely to act voluntarily in the public interest and against shareholder interests.
“Irrelevant or ineffective, take your pick. But it’s worse than that. The danger is that a focus on social responsibility will delay or discourage more-effective measures to enhance social welfare in those cases where profits and the public good are at odds. As society looks to companies to address these problems, the real solutions may be ignored.”
Dr. Kamani makes a very seductive point, but if his thesis is indeed accurate, then where does the Mendoza College of Business at Notre Dame fit into this equation? Is the school that has been aggressively marketing its “Ask More of Business” campaign flawed in its thinking, and in fact causing more harm than good by postulating we use business as a means to solve the world’s most pressing social problems? Could we in fact be doing more “good” by pressing profits in instances where profits and social responsibility align rather than trumpeting social responsibility as a necessary corporate duty?
Is CSR just a faddish buzzword to make business feel good about itself and garner positive publicity that may ultimately enhance the bottom line, or is it something that we should incentivize in our public policy and force business to take a hit in order and arbitrarily spend shareholder money on potentially zero return on investment ventures?