“Corporate Social Responsibility” by Aneel Karnani

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Arguments of the Article

Aneel Karnani believes that the need to do well and good rivals the intentions of investors and the rights of the public. For instance, he explains that companies benefited very much by selling fast foods like fries, burgers, sandwiches, and snacks, even though they were unhealthy. However, the need for people to eat healthy foods pushed fast-food restaurants to start preparing salads and whole meals.

He adds that sometimes not all companies benefit from the demand offered by customers because of incompetent managers. Executives usually ignore the need for responsible practices and pay concentrate on protecting the interests of shareholders. Shareholders demand that their employees (managers and executives) should put company profits as the top priority. This practice has led to the development of a habit called green-washing where companies develop and publicise their social corporate responsibilities but do nothing to ensure they succeed.

Karnani suggests that government regulations are the best approaches that can help companies and their communities to benefit without inconveniencing each other. He explains that governments have the power to issue decrees that will regulate the activities of companies and ensure they become responsible regardless of the good intentions of their slogans. However, he doubts whether governments can use their power to influence the operations of companies. First, he believes that not all governments have the resources and competencies to regulate the activities of companies.

Secondly, he argues that companies can use their representatives to influence government regulations, and this will make them ineffective or even benefit them more than society. Thirdly, he explains that government regulations are usually influenced by social evils like corruption that determine the application and effectiveness of regulatory policies.

The author believes that watchdogs and advocates can play important roles in ensuring that companies are responsible for their actions. The article uses The Rainforest Action Network as an example of a watchdog group that fights for environmental conservation by monitoring the activities of American companies. However, the author fears that most civil societies are controlled by people or issues that are not related to their missions. In addition, he doubts whether they can achieve their objectives, especially in developing countries because they do not have adequate funds to finance their activities. He notes that lack of awareness about public issues in these countries makes civil societies ineffective in guiding companies to be responsible for their actions.

Karnani explains that self-control is the best alternative that companies should adopt to ensure their social corporate responsibilities and profit-based objectives benefit the public and shareholders respectively. However, he doubts whether companies can formulate policies that will put first the interest of the public and give less attention to the need to generate profits. In addition, he believes that this practice helps companies to design flexible approaches and adjust to changes that are inevitable in the business world.

On the other hand, he argues that it is not easy for companies to design self-regulation policies that enhance transparency and accountability according to the expectations of the public. Therefore, he suggests that the government should be ready to regulate the self-control initiatives of companies to ensure they meet the standard regulations.

Lastly, this author believes that imposing unacceptable costs is the most effective way of ensuring that companies embrace corporate social responsibility practices. He claims that executives make corporate decisions based on their effects on the profits of their companies. Therefore, they will ignore practices that will have a huge impact on their sales and profits. Karnani concludes that executives will ensure their companies behave responsibly when they realise that failure to do so will attract fines, embarrassment, and regulatory mandates.

Critical Analysis

Aneel Karnani argues that the idea of corporate social responsibility is flawed and thus it is going to be very difficult to address issues that affect the society regarding its wellbeing and the need for companies to generate profits. However, he admits that sometimes companies do well and thus they cannot be demonised. It is necessary to explain that not all companies have paper-based social corporate responsibility policies and thus it is not wise to assume that they are irresponsible.

Secondly, this author believes that influential organisations like the United Nations and the Academy of Management encourage companies to ensure that they do not only focus on generating profits, but also ensuring that they make the world a better place by using production processes that do not expose people and the environment to risks. However, he forgets that these organisations are sometimes controlled by people with different interests.

In addition, the United Nations and other global organisations have other serious challenges that need urgent attention. Issues like civil conflicts and terrorism cannot be given second preference, and this means that the need to ensure companies are responsible for their actions does not override these challenges. Therefore, the issue of corporate social responsibility will never be a win-win situation for companies and the public.

Thirdly, the role of evaluating the effectiveness of the corporate practices of companies cannot be left in the hands of civil societies. Most people believe that civil societies should focus on issues about politics and other rights that affect them directly. Therefore, it is not easy to direct the energies of civil societies to monitor the activities of investors. In addition, activist groups are formed by individuals that have hidden agendas that address the needs of their founders and not the public. Most of them evolve and become political parties, and this means that the interest of the public is used as an excuse to advance personal interests.

Moreover, the author is right about self-regulation as the best alternative of ensuring companies’ corporate social responsibility policies benefit the public and help them to achieve their objectives. However, companies consider corporate events and practices as part-time activities and thus they do not give them the required attention. Governments have the power to ensure companies adopt corporate social responsibility practices that will lead to a win-win situation. However, companies can self-regulate their activities and minimise the government’s influence on them.

Lastly, no investor can spend money to benefit the public, and this means that philanthropists cannot invest in the business and remain in operation for a long period. Therefore, companies will ensure they design corporate social responsibility policies that will benefit them even if this leads to high prices of their goods or services. Corporate issues should originate from the joint efforts by governments, shareholders, managers, employees, and the public to ensure the interests of all groups are considered without violating the rights and objectives of stakeholders. It is impossible to have a successful interaction amongst stakeholders if some of them think that their interests are more urgent and important than those of others.

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Arguments of the Article

Critical Analysis

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