Ideal Role of Companies in Society

The perspective on the ideal role of firms in a society differs from country to country. Taking the EU’s perspective, CSR is beyond legal regulations and is a way of conducting business in a socially responsible and environment-friendly manner.[i] On the contrary, the UK’s government emphasises that the context in which businesses operate is subsidiary, but cannot be underestimated. However, Hopkins (2007) states that multinational enterprises (MNE) inherit more influence and power than the UN and can thus have a huge impact on social issues and prevention of wars.[ii]

Firstly, firms inherit the role of generating profits for all stakeholders involved. Secondly, businesses have to acknowledge that ethical leadership is required. CSR is the best way of doing it. During the last decades a shift in CSR was visible. From “seeming good, not to be good” it turned nowadays to a fundamental way of conducting business.[iii] Companies realise their potential of influencing stakeholders and want to use their own expertise to thrive change globally and regionally.

A good example is TESLA Motors who gave free access to its patents of electric driven cars throughout the world. Smart and altruistic ideas of market leaders put forward the UNGP, thus innovation is key. Such examples teach the public and the business world that CSR is not only about environmental issues, but a much broader field.

Trump’s decision to withdraw from the Paris Climate Agreement signified that the U.S. will not take the lead in combatting climate change.[iv] Producing one-fifth of global emissions, it is on the rest of the world to meet the two degree limit. Companies are aware of their forefront position to ensure climate change and sustainability. Their advocacy for social change can convince states.[v] In the long-term run, CSR has a positive impact on the company´s market worth and attracts suppliers, investors, media, employees and last but not least consumers. Operating in different areas leads to an increased access to information which makes it easier for the company to foresee changes and adapt adequately.

Having a positive CSR portfolio increases the motivation of employees and dedication to work which is in line with the newest trend in seeing employees in companies as most important.[vi] Furthermore, in the digital age informed consumers can assess if a CSR action has a right intention, whereas a CSR strategy only for reputational purposes will be revealed. Business leaders have to unfold their full potential of creativity and the creativity of its employees. If companies see CSR as a playground for innovation, the full potential of companies and their employees can be used to alleviate poverty and enhance human rights, thus changing the world.

However, the ideal role of companies lies not in conflict and peace resolutions because they might take advantage of the poverty and desperation of people instead of genuinely supporting the reconciliation process, they might lack the skills to conduct peace negotiations and not be able to cope with difficulties which might come up.

In regard to countries of origin and countries of transaction the discussion of “regionalism” appears which is also a counter-argument used against the application human rights: Can international standards be globally applied or should it be taken into account that there are regional differences? Domestic law standards are not applicablenand the firm has its own responsibility to comply with ethical standards. The context is different, the government might be intrusive, corrupt, suppressing civil society and the media. The political situation may change rapidly and the country of transaction may become a hostile environment. CSR efforts are usually not prioritised since economic growth to alleviate poverty and to meet basic needs stand in the foreground.

[i] Becker, Karin, 27.06.2017, Copenhagen Business School, in her introduction to international CSR

[ii] Hopkins, Michael, 2007, Corporate Social Responsibility and International Development, preface

[iii] Forbes,, called upon 29.07.2017

[iv] NY Times,, called upon 29.07.2017

[v] TCB Blogs,, called upon 30.07.2017

[vi] TCB Blogs,, called upon 29.07.2017

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