social corporate social responsibility as brought forward by proponents of free market is fallacious as the main goal
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The idea of social corporate social responsibility as brought forward by proponents of free market is fallacious as the main goal of business enterprises is to make profits; this is because the interests of business owners and those of the community are different and divergent from each other. For instance, it is widely believed that apart from participating in the normal duty of making profits for the owners, business should also strive to provide employment to the people and participate in conserving the environment. The big challenge lies in whether the business should sacrifice their profits to perform activities that are considered as part of their corporate social responsibility. Should business take a cut in their profit margins in order to employ the jobless people or take part in environmental conservation practises? The answer to this question can be answered by analysing the long run effects of such a move to the business. When a business entity takes a cut in order to participate in corporate social responsibility, the earnings of the owners are reduced, this may have the effect of dampening their interests on the business or they may pressurize the chief executive officer of the business to make more profits for them. In turn, this would have the effect of increasing the prices of the goods and services that the company produces therefore a negative effect to the consumers, which the company was trying by getting involved in corporate social responsibility activities.
Corporate social responsibility among business entities means that the business is getting money from consumers of their products and other stakeholders and spending it on their choice project without necessarily consulting the financiers of the whole project since the decision of the project lies wholly on the chief executive officer and the board of directors.
In some instances, corporate social responsibility is feasible especially where the end results are that the firms generate more revenue in the process. For instance, a business entity may adopt a cost cutting and an environmentally friendly production process, which may have a great impact on its revenue in the long run. Another instance of corporate social responsibility is a hotel business donating food to the less fortunate in society instead of throwing it away (Reinhardt, Robert and Richard, 229).
Financial fraud has been with us for a relatively long period of time where corporates have been tampering with their financial information to lie about their financial position in order to attract investors or to keep investors from investing in other rival firms. This has the effect of making investors lose billion of money when these companies collapse. For instance, Enron, Tyco, Worldcom and Adelphia have been involved in financial scandals involving manipulating of their financial information.
Another form of financial fraud involves employees who are torn between pursuing their own selfish interests or the interests of their clients. For instance, brokers in insurance of money market are usually faced with the dilemma of pursuing their own selfish gains at the expense of the client’s interests although the law requires them to pursue their clients’ interests before their own. This trend is caused by the commission remuneration system that is used to pay brokers based on the volume of business that they transact.
Consumers are also involved in fraud, which cost the United States economy billions of dollars in revenue. The fraud from consumers is spread across almost all sectors of the economy, however the most hit sector is the insurance sector, which is reported to have lost about 10 per cent of the total claims to fraud, this includes claims on items that are not lost or damaged and treatment that is not offered. The clothing sector is another worst hit by fraud with estimates showing that about 16 billion dollars may have been lost in 2002 due to ‘wardrobing’ which is the returning of old clothes.
Another area that consumers are involved in fraud is intellectual theft, which includes music, films, and software piracy where they allow other people access and own copies of the softwares, music or films without paying for them. Although there are no strict standards and morals that are in place for this kind of fraud, it has huge financial implications to the owner of the product in terms of loss of revenue and to the government in terms of lost taxes.
Tax evasion and deception is one of the greatest fraud that consumers are engaged where they omit income and inflate deductions in order to reduce tax deductions, this trend is approximated to cost the US economy more than 300 billion dollars in terms of lost revenue.
Corporate social responsibility has been a hotly debated issue with both the proponents and those against it giving their reasons for their stand. However, the disagreement is only on how CSR should be carried out since some argue it should be carried out as long as it will benefit the organisation while others argue that it should be carried out at all times. Financial fraud is also a prevalent vice among corporate and individuals which want to maximise their own selfish gains at the expense of their clients, this can be in terms of altering financial information, evading tax or engaging in practises that will benefit the entity involved in fraud before the client.Works cited
Reinhardt, Forest L., Robert N. Stavins, and Richard HK Vietor. “Corporate social responsibility through an economic lens.” Review of Environmental Economics and Policy 2.2 (2008): 219-239.