No, the Sole Social Responsibility of Business Is Not Profits

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The following is an adaptation of an essay I wrote a few years ago as part of my graduate program at Avila University. 

Comparing an article by Milton Friedman written in the 1970s to one by a person in the 2000s seems a stretch, to say the least. The former won a Nobel Prize in Economics and was precise in explaining his ideology, and the attention-grabbing writing of our times doesn't hold up well in comparison, as I see it. And yet, I have to side with Joseph Hart on this one in saying that no, the sole social responsibility of business is not profits.

Friedman argues that corporations are not people, and yet years later we are living with the consequences of the US Supreme Court deciding that corporations are people and entitled to all the same rights. Try putting a corporation in prison for any crimes, though, and you'll see the limits of its personhood.

He then goes on to describe the purpose of a business to be making profit, and considers any use of funds for any purpose other than that to be a misuse of funds. It's hard to understand how he couldn't see the marketing potential of social responsibility. Companies spend billions annually on advertising, and social engagement and responsibility can only serve to burnish the brand. This is no misdirection of funds.

As business journalist Skye Schooley put it:

"As the use of corporate responsibility expands, it is becoming extremely important to have a socially conscious image. Consumers, employees and stakeholders are beginning to prioritize CSR when choosing a brand or company. They are holding corporations accountable for effecting social change with their business beliefs, practices and profits." (Schooley, 2019)

A Bulldog on My T-Shirt

When I was a child I played little league baseball. We were the "Hurdland Bulldogs." On the front of our grey t-shirts was a bulldog design, and on the back the name of our sponsor: MFA Feeds. After all these years — approaching four decades now — I still remember who paid for our shirts. That's good advertising, and it helped the community.

Audible's Bet on Newark

The story of Audible in Newark, NJ is one of my favorites in the realm of corporate social responsibility. Newark makes sense for businesses, despite all appearances, due to competitive office lease rates, easy access to both New York City and the nearby Newark International Airport, and tax incentives from both city and state. Rather than just move in and set up a corporate environment sealed away from the community, Audible has actively sought to engage with the city in positive ways. All paid internships are given to Newark students, employees are actively encouraged to move to the city, and nearly half of the entry-level customer service roles are held by Newark residents. The company even provides money to get employees out of the office to eat, to the benefit of local businesses.

As Aaron Hurst reported, Audible CEO Don Katz has gone from studying companies and cultures to building a culture of "activating caring" within Audible along with the city where the company is based. Katz explains that this work stems from "a core belief that companies can have hearts and souls and missions that transcend financial success." It's a value he now hopes to document and share with other CEOs around the country and world: "If other CEOs grab the model, it would be a tremendous legacy." (Hurst, 2017)

One concrete example is the company's "Lunch Out Wednesdays" program. Anjalee Khemlani described how it works:

"At the start of each Wednesday, Audible's workers reserve a lunch card, with a maximum value of $15. The voucher can be used at almost 20 participating food spots near the office." (Khemlani, 2019)

It's a small thing on paper, but it serves a dual purpose — giving employees a real break from the office, and giving a boost to Newark's downtown recovery.

What Millennials (Actually) Want

As a member of the forgotten middle child of generations (Gen X), I grow a bit weary of all the talk about what Millennials want. More often than not the term is used incorrectly as analogous to teenagers or college students, when in fact many Millennials are in their late 30s and have children. That said, there's been some interesting research on how this generation thinks about where they work and what they do:

  • 75% say they would take a pay cut to work for a responsible company (vs. 55% U.S. average)
  • 83% would be more loyal to a company that helps them contribute to social and environmental issues (vs. 70% U.S. average)
  • 88% say their job is more fulfilling when they are provided opportunities to make a positive impact on social and environmental issues (vs. 74% U.S. average)
  • 76% consider a company's social and environmental commitments when deciding where to work (vs. 58% U.S. average)
  • 64% won't take a job from a company that doesn't have strong CSR practices (vs. 51% U.S. average)

Of course, at the end of the day, nearly everyone has student loans to pay off, and the preference for socially responsible employers loses out to the necessities of life. It's perhaps fair to say, at the same time, that given the opportunity, most people would like to think that their work contributes to the greater good, while also paying their bills and funding their own dreams.

The Bottom Line

Never underestimate the power of enlightened charitability, or of informed avarice. If a company doesn't at least appear to act in the best interests of society, it's risking its profitability.

Sources

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