To Who Or To What

The question arises to who should corporations be accountable: Two areas of corporate accountability exist:

a) Conventionally

•    Management is professional responsible to the board of directors
•    The directors run the corporation for the shareholders.
•    The shareholders provide the capital to their corporation and for their investment they expect a fair financial return.
•    But through separation of ownership and control shareholders do not run the company.
•    By implication therefore management has the responsibility to ensure that the shareholders receive an adequate return.

b) Broadly and more modern view

Corporations should be accountable to employees, customers, suppliers, the state etc. (i.e. to forces external to it but which are of value to it).

From these external forces, the corporation draws its existence how then can it operate regardless of them. CSR involves decisions – the corporation world is decision oriented and corporations have an impact on society through these decisions. CSR therefore raises the question of rightfulness of decisions and further of which decisions are more right. So social responsibility goes beyond short run profitability, merely meeting minimum legal and market directives does not constitute social responsibility. CSR is very subjective in nature and is influenced by the economic and social system within which it operates. For example benefits from social responsibility do not directly accrue to the firm making he expenditure on social responsibility. CSR is hence a system holding that the corporation should respond to the moral and ethical values of society within which it is licensed and which it serves. A given corporation will draw from and shape the values of the society form which it draws its existence. CSR tries to fuse social values with profit maximization goals.