Profit or Corporate Social Responsibility

Subject: Business Ethics
Pages: 5
Words: 1125
Reading time:
4 min
Study level: Bachelor

The main crux of the article “The Case against Corporate Social Responsibility” is Karnani’s view that when it comes to a choice between profit or acting for the benefit of the general public, competent CEOs would always choose profit. Karnani presents the notion that since corporations are primarily profit-driven entities, the manifestation of corporate social responsibility within their operational framework is merely the by-product of enhancing present-day operations. Any action that is in relation to what the public perceives as CSR is merely coincidental, with the company still pursuing profit above all else(Karnani, 2010).

For instance, Karnani presents the example that corporations have been focusing on more environmentally sustainable methods of operation through more efficient manufacturing processes that waste less energy and resources. While from the standpoint of the general public, such an action by a corporate is due to its commitment to corporate social responsibility. In reality, the change in operations is merely due to the corporation’s goal of maximising profit through a reduction in expenses by limiting the wasteful processes that were previously utilised.

Karnani emphasises that the idea of corporate social responsibility is basically irrelevant since competent CEOs that are in charge of the company’s operations will not alter operations without a sufficient enough reason that is normally rooted in the act of increasing profits for the company. In fact, Karnani even goes so far as to state that the only point in time when corporate social responsibility can be implemented is when it is in synch with the desire of the company to appeal to its consumers (Karnani, 2010).

Manifestations of this can be seen in the sale of health food products, fuel-efficient cars, energy-saving devices and other products that are manifestations of environmentally sustainable practices and the “green movement”. Karnani explains that the subsequent creation and sale of such products is not due to the desire of companies to be more responsible regarding their methods of production or the environmental impact of their products, rather, these items were simply made to fill the demand generated by consumers. If the demand did not exist in the first place, then it is unlikely that companies would actually develop and sell such products. From such a perspective, CSR (Corporate Social Responsibility) as demanded by the general public is seemingly nothing more than a manifestation of practices that are superficially in line with beneficial effects for the general public, in reality, it is nothing more than a response to changes in the types of products demanded by customers (Karnani, 2010).

Thus, thinking of CSR as an internal means of corporate self-regulation is highly flawed since, at the end of the day, corporations will always pursue profit rather than practices that would benefit the general public at the expense of the company’s shareholders. As such, Karnani argues that only external means of control can sufficiently sway the method by which a company operates. This can manifest itself through government regulation or through consumer demand for products from corporations that only utilise ethical and sustainable practices when it comes to their means of operations. One of the manifestations of such a practice can be seen in the various labels, stickers, and emblems that are often placed on the products of corporations that indicate their use of ethical practices. Do note though, that even in such cases, the logic of Karnani prevails since most of the organisations that approve a corporation’s use of such labels of sustainability are themselves funded by these same corporations which call into question the legitimacy of the claims placed on their products.

Critically Evaluating the Arguments

Admittedly, Karnani does make several valid points in this article involving CSR and the way in which corporations operate. At the end of the day, corporations are profit-driven entities and will seek to maximise the amount of profit they make through any means possible. The current manifestation of CSR as it is known can be considered as a development that was done in order to create a better public image for corporations. The fact is that customers are more likely to patronise the products of the company that they associate as operating within their best interests as compared to a company that customers think is adversely affecting their community.

This is one of the reasons why corporations spend millions of dollars in developing an appropriate public image through a variety of “greenwashing” campaigns that showcase the company’s supposed adherence to environmentally sustainable practices and ethical methods of operation. The best way of maximising the evaluation of Karnani’s arguments is to ask the question: “if the general public did not mind whether corporations acted in their best interests, so long as the products produced by them were cheap and affordable, would CSR even exist today?” When presented with such a question, it is likely that the answer would be “no” since, as a profit-driven entity, corporations focus only on increasing profit.

CSR thus acts as a means of increasing profit by creating product patronage and is not necessarily an inherent aspect of corporate operations. On the other hand, it should be noted that Karnani fails to take into consideration how companies often implement CSR, not due to the need to develop a positive consumer image or even to adhere to government regulations; rather, it is at times implemented in order to preserve the continued existence of the business. One clear example of this can be seen in the various processes associated with the fishery industry and their self-imposed limitations. It can be seen that various fishing companies often regulate the season in which they catch fish and the type of nets they use in order to catch them (ex: nets with large holes for smaller fish to escape).

While they would normally be able to maximise their profit by fishing throughout the year and using fine mesh nets to get as many fish as possible, such activities would diminish the supply of fish to such an extent that it would no longer become a sustainable form of business. Implementing methods of self-regulation thus become a necessity in order for a business to continue to operate properly. From this example, it can be seen that some corporations are not practising operations similar to CSR out of the desire to benefit the general public; rather, they do this to survive and have future profit. It is based on this that when examining the arguments of Karnani, it can be stated that he makes a great deal of sense when it comes to his statement that regardless of public opinion, corporations will always act in their best interests. As such, CSR can be considered as a manifestation of corporate interests that merely coincides with the desires of the general public.

Reference List

Karnani, A. (2010). The case against Corporate Social Responsibility. Wall Street Journal – Eastern Edition. pp. R1-R4. Web.