In the “invisible Hand” argument in Broadening Corporate Responsibilities, Adam Smith claimed that when each of us acts to promote our own best interest, we are led by an “invisible hand” to promote the general good. Like minded thinkers like Friedman agree. They point out that corporations are created precisely with utility in mind. If businesses are permitted to seek self-interest, their activities will inevitably yield the greatest good for the greatest number and thus Broadening Corporate Responsibilities.
This will therefore invite corporations to base their social activities on anything other than profit making into politicizes business’s unique economic function. Businesses should not be invited to fight injustice, poverty or pollution, to broaden competition or to help reduce prices or increase accessibility to products, expect in so far as these activities are a natural outgrowth of Broadening Corporate Responsibilities and improved corporate efficiency. Business Training in Kenya has more articles.
This does not mean that corporation should not be held accountable for their actions. But they should not be held morally responsible for non-economic matters. To do so would distort the economic mission of business in society and undermine the foundations of the free enterprise system and hence puncture the process of Broadening Corporate Responsibilities.
Perhaps within a very restricted area of economic exchange, where passes to the exchange are roughly equal, each pursuing self interest can result in the greatest good for the greatest number of people and therefore Broadening Corporate Responsibilities. When economic exchanges involve giant corporations, the concept of the “invisible hand” stretches credibility when orchestrating the common good.
Hand of Government in Broadening Corporate Responsibilities
The other argument against Broadening Corporate Responsibilities is the “Hand of Government” argument. Some scholars agree that business’s social role is purely economic and that corporations should not be considered moral agents. But they reject the assumption that Smith’s “indivisible hand” will have the effect of “moralizing corporate activities”. Left to their own self-serving devices, they warn, modern corporations will enrich themselves while impoverishing society and thus not enhance Broadening Corporate Responsibilities.
They will pollute, allow inequalities, deceive consumers, strive to eliminate other corporations and keep prices high through oligopolistic practices. They will also use their abundant resources to pressure legislators into enacting legislation that is favorable to them but not necessarily to the rest of the people. They will do these things, the argument continues, because being economic institutions, they are profit motivated. However, what is profitable is not necessarily socially useful or desirable, and what is socially useful and desirable is not always profitable. This therefore goes against Broadening Corporate Responsibilities.
The corporation’s natural and insatiable appetite for profit can be controlled through government regulation. The strong hand of government, through a system of laws and incentives can and should bring corporations to heel.
Critics, however, respond that the “hand of government” view is dangerously naïve. It can prescribe behavior only for broad, cross-sectional issues, such as bribery, price fixing, unfair competition and the like it should, however, be a credible custodian of morality. Other critics argue that in Broadening Corporate Responsibilities, it will be seriously Police Corporation because that would amount to the government biting the hand that feeds it.
The “Inept Custodian” argument is another against Broadening Corporate Responsibilities. Some who argue against Broadening Corporate Responsibilities say that corporate executives lack the moral and social expertise to make decisions other than economic decisions. To charge them with non-economic responsibilities would be to put the social welfare in the hands of inept custodians.
Materialization of Society in Broadening Corporate Responsibilities
The “Materialization of Society” argument related to the “inept custodian” argument in Broadening Corporate Responsibilities is one that expenses fear that, permitted to stay outside strictly economic matters, corporate officials will impose their materialistic values on all of society. Thus rather than “moralizing” corporate activities, Broadening Corporate Responsibilities will “materialize” society.
Harvard professor Theodore Levitt argues that businesses pursuing social goals other than profit making will turn them into an equivalent of medieval church. For a while the corporation transform issued in the problem, at bottom its outlook will always remain materialistic. What we have is the frightening spectacle of a powerful economic functional group whose future and perception are shaped in a tight materialistic context of money and things but which imposes its narrow ideas about a broad spectrum of unrelated noneconomic subjects or the mass of man and society in Broadening Corporate Responsibilities.
Conclusion on Broadening Corporate Responsibilities
Other scholars argue that society has entrusted to business large amounts of society’s resources and business is expected to manage these resources as a wise trustee of society. As trustee of society’s resources, it serves the interests of all claimants on the organization, rather than only those of owners or consumers or labor in Broadening Corporate Responsibilities.