The Instrumental Perspective of CSR

Based upon Friedman's famous argument that "a corporation is an artificial person and in this sense may have artificial responsibilities, but 'business' as a whole cannot be said to have responsibilities, even in this vague sense" (Friedman 1970, p. 500), the instrumental view of CSR argues that efficient competition would result in ultimate benefits for society. Therefore, firms should ensure the long-term maximisation of their value and of their social welfare, and this would result in sustained organisational competitiveness and enhanced shareholder wealth.

However, business firms face a conflicting dilemma, especially when taking business decisions with outcomes which could either harm or benefit different stakeholders.

The Paradox of CSR

Crane and Matten (2010) outline the conflicting paradox that CSR poses for business firms (see figure 1.3), whereby managers need to balance their ethical values while ensuring profits are made. It is this paradox which makes CSR simultaneously a difficult activity to manage, but one of the most rewarding as well.

Figure 1.3

One of the enduring debates within CSR is that between the Friedman theory (1993) on profit being the sole business purpose, and that of Freeman's stakeholder theory.

Activity 1.4

Watch the following short video where Freeman discusses this debate and reaches a conclusion. Take notes while you watch the video so that you are ready to take part in a Blackboard Collaborate discussion. Your associate academic will tell you when the discussion will take place.