Corporate Social Responsibility: Comparison of Two Theories

Laisez-Faire Means Honesty and Integrity

According to Wheelan and Hunger (2010), there are opposing ideas of where corporate social responsibility lies: to the interests of the stakeholders or to the interests of society. Milton Freidman posited that corporations must ultimately be interested in obtaining as much profit as possible for the stakeholders of the company. In doing this, they are taking the best measures they can to ensure they are benefiting society. Society benefits optimally when the central interests of corporations are driven by maximizing profit. Worrying about the betterment of society depletes resources the corporation can use towards other means, such as providing a lower costing product. Social interests decrease profits, thereby decreasing corporate prosperity and growth, which in the long run means higher costing items and less job availability, which has an aggregate affect upon the national economy.

According to Wheelan and Hunger (2010), this does not mean that corporations have the right to do whatever they want whenever they want. Laisez-faire describes a condition where the government does not regulate corporations, and corporate fraud run rife. In turn, corporations engage in an open market, and must have integrity and honesty. The market is open and honest with little regulation, and firms are also open and honest in terms of how it is spending its profits. Wheelan and Hunger cited General Mills as a case where this rule was violated by the executive of General Mills. General Mills used profits to fund charitable efforts, but did not disclose these expenditures to their shareholders. In order for laisez-faire to work, corporations must divulge where they are spending corporate dollars honestly.

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