Self-interest and social responsibility
In 1970, US economist and Nobel Prize winner Milton Friedman said in an article in the New York Times Magazine that "the only social responsibility of companies is to increase their profit", because, as Mr Friedman put it, "The business of business is business". According to Mr Friedman, a profitable company is also a socially responsible company, because it creates employment that is taxed and from which society therefore benefits greatly.
Mr Friedman’s point of view has been under heavy criticism and characterised as immoral and cynical. But today, I will venture to assert that Mr Friedman is right that "the business of business is business". However, I will also claim that companies’ acceptance of corporate social responsibility (CSR) does not necessarily conflict with Mr Friedman’s recommendation. The explanation for this apparent paradox is that, today, "the business of business is a different kind of business". Since the early 1970s, the business environments of many companies have changed decisively, meaning that a rising number of companies are increasingly forced to include CSR initiatives in their overall business strategies.
Changed business environment
The process of globalisation has resulted in significant changes for many companies. First, structural changes such as technological developments, deregulation, trade liberalisation and so on have resulted in companies becoming more international, whereby they gain greater geographical influence. As the reach of companies has grown, particularly the companies operating in third-world countries are increasingly called to account for economic inequality between rich and poor countries, environmental protection and compliance with human rights conventions.
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