The history of corporate social responsibility (CSR), also referred to as corporate citizenship, stems from the idea that companies, like individual persons, should behave in a socially responsible way. This concept includes all their activities and undertakings, especially in their dealings with other companies. Their moral responsibility to society should always be considered in all levels of planning, and during the implementation of those plans, and their normal operations.
While it is hard to put an exact date to it, the history of corporate social responsibility probably began in the eighteenth century. Adam Smith, a renowned Scottish philosopher and economist, wrote in The Wealth of Nations of his support for market interactions that are freely participated in by individuals and organizations, saying that they could serve the needs of society. He further said that people engage in commerce or business out of selfish reasons, or for their personal benefit. This implied that the consumer should be the one to take the role of looking after the welfare of society, and that he should support actions that advance the interest of society.
Another famous personality in the development of corporate social responsibility is Milton Friedman. He was not in favor of the idea of CSR. His belief was that business simply had one responsibility, and this was to increase profits for its shareholders. Friedman was a prominent American economist and a Nobel Prize winner who was once an adviser for President Reagan.
Clearly, businesses exist primarily to make profit. However, proponents of CSR argue that it won’t hurt businesses and companies to develop a corporate conscience. They might have to incur some short-term costs in undertaking socially responsible activities, but it will ultimately be to the company’s advantage. People in general will patronize products that are good for the environment, or that support charity or a noble cause, rather than other products that do no promote any social benefit.
However, the fact remains that any company must make profit, or at least break even, in order to survive. It will go out of business if all it does is to pursue socially responsible endeavors. Ultimately, investors will withdraw support for even the most socially responsible companies or the most ethical corporations, if it continues to make losses. This reality has always been evident throughout the history of corporate social responsibility.
The history of corporate social responsibility continues to evolve up to the present time. The current thinking is that companies cannot persist on ignoring environmental and social issues. Doing so can be detrimental for business. Past experience has taught everyone that it is to both the company’s and the public’s benefit to engage in ethical activities that do not pollute the environment and that promote the welfare of the workers and the community.