Can business balance profits and corporate social responsibility?

Until a few years back, the objective of business was essentially to make profits. According to David Hawkins, formally most businesses followed the capitalist economic model for doing business whose main objective was to make profit with little regard or concern for the society. But today, business has entered into a new domain called corporate social responsibility (CSR) or business ethics where businesses are required to be ethical and responsible towards the society and the environment in which they operate. CSR and ethics in business has become an increasingly important topic in our society today. Many companies now recognize the importance of corporate social responsibility, but are still concerned about how businesses can balance the objective of making profits with that of being socially responsible to society.

Economists argue that enterprises already contribute to society through taxes paid of profits made and through people supported by the wages they receive for work performed. The most popular argument against CSR is that of the economist Milton Friedman who insists that businesses have only one social responsibility which is to make profit for their shareholders. Supporters of Friedman argue that if private enterprises start pursuing objectives like, fighting poverty and prevention of disease and make this their primary objective; they are no longer operating under the logic that dictates private enterprise. They argue that such objectives should be pursued by non-profit organisations and governments.

On the other hand there are those who believe business is not just about making profits but also about being responsible to the society. Sommerville (2004) argues that “the task of a corporate manager is to balance the interest of all the different groups who have a ‘stake’ in the company” (p.138). Tench and Yeomans (2006) and Harrison (2000) state that though companies are not a state or country they are part of the society in which they operate and as such must consider their impact on it. Those who advocate that businesses be socially responsible believe that businesses can balance the objective of making profit and being socially responsible. Wilcox et al (2003), say corporate citizenship enhances a company’s reputation and its ability to market goods and services adding that surveys show that more people buy products according to a company’s reputation. Tench and Yeomans (2006) gave the example of John Burke, who demonstrated that companies with a reputation for ethics and social responsibility grew at a rate of 11.3% annually from 1959 to 1990 while the growth rates for similar companies without the same ethical approach was 6.2%, showing how companies can balance the CSR agenda with that of making profits.

Bjohn adds that corporate ethics leads to a more stable organisation and will improve the bottom line and drive higher profits.

Many businesses now are being forced by pressure groups, government and legislation to adopt positive measures to ensure their activities are environmentally responsible. So considering all these, business today is not just about making profits anymore.

In my view, the main objective of a business is to make money because that is the reason it was established in the first place but not at the expense of society and so should be ethical and responsible in the way they carryout their activities. What do you think?

Is business just about making profits?

In this socially and environmentally aware age, it is hard to think businesses are out just to make profits with the amount of companies and organisations who talk about and practice corporate social responsibility today. Yet there are still conflicting views about whether business is essentially about making profits and whether their profit motive does not clash with their corporate social responsibility agenda. What do you think? This is essentially what the debate on this blog is all about. please feel free to give your own opinion. comments and suggestions are most welcomed.

Hi Meagan,
I agree with you that public relations is increasingly taking on marketing roles but i do not agree with you that marketing is not increasingly taking on public relations role. It is clear from marketing activities like: internal marketing, crisis marketing and relationship marketing that marketing is increasingly taking on public relations roles. That is why Hutton hinted that marketing is "redefining" itself as public relations. My argument here therefore is that, since both disciplines are now taking up the roles of each other then there is a possibility of a future mergence of the two disciplines to form an entirely new discipline which will cater for both public relations and marketing functions.
Whether they will eventually merge or not is something which only the future will tell.

Hi Alena,
I want to believe the reason marketing and public relations are growing apart in Ukraine now is that the two disciplines have not fully matured there so each is trying to demonstrate its unique identity. In societies like UK and USA where public relations and marketing have reached full maturity and are developing further, the two disciplines find themselves encroaching into one another. I guess when public relations and marketing in Ukraine and other societies where the two disciplines are still maturing reach full maturity and start developing further, the two disciplines will find themselves getting closer than going apart.

Hi Bijal, in answer to your question about whether one will lead to the extinction of the other I would say No. I am looking at a trend whereby the two disciplines may merge to form a new discipline altogether that will combine both the functions of public relations and marketing. The new discipline will definitely not be called public relations or marketing. It will have an entirely new name but what that new name will be i do not know for now.

The Impact of the Mergence of Public relations and Marketing on the Public Relations Industry

The future mergence of public relations and marketing, heralded now by the emergence of concepts like Integrated marketing Communications (IMC), Marketing Public Relations (MPR) and Marketing Communications (MC) will definitely have an impact on the public relations industry.
First of all Public relations practitioners will be required to be skilled in both marketing and public relations functions, thus their task will be more challenging.
Secondly, as rightly pointed out by Ann Onweme in her comments, they will certainly be less jobs both for public relations practitioners all well as marketers , not just in Africa but all over the world. This is because they will be just one department which will now be responsible for carrying out both public relations and marketing functions thus requiring less people to do the work that was previously done by many people.
Thirdly I believe there will also be a problem of which discipline dominates in the mergence. whether it will be marketing or public relations.
Though the nature of the mergence of both disciplines and the name it may eventually be called cannot be determined for now, I forsee a mergence whereby marketing may tend to dominate over public relations. This is because marketing is still being considered as the driving force behind companies and organisations. Marketing is being considerd as the department that brings in money into a company or organisation. You can measure marketing's output but you cannot measure that of public relations. For this reason, the marketing department is still being allocated the largest budget within organisations. Also some marketing scholars believe public relations tools, tactics and techniques can be readily adapted and used by marketers. Yet again another problem which mays make it difficult for public relations to dominate is the fact that the public relations discipline does not have a specific name that defines its functions. Many companies and organisations practice some sort of public relations but it is not called public relations, it may be called, marketing, customer relations or human resources.
Commenting on Integrated marketing communications (IMC), De pelsmacker et al, point out to a similar problem when they observe that public relations departments are reluctant to integrate because they often consider IMC as the encroachment of advertising people on public relations professionals and a form of marketing imperialism.
I therefore believe a mergence of public relations and marketing would have a more negative impact than a positive one on the public relations industry.
In this light, public relations professionals and academics need to work hard to tighten the loopholes which are existing in public relations now in order to measure up with marketing in event of a future mergence with marketing.

Issues on the Gradual Mergence of Public Relations and Marketing

In response Shang Li Lia's comment, the major difference between public relations and marketing today is that, marketing deals with making profitable exchanges with customers for their organisations. The marketer provides goods or services to consumers while consumers give them money in exchange for the goods or services provided, while public relations deals mainly with the reputation building of an organisation by creating a mutual understanding between the organisation and its many stakeholders, both consumers and non-consumers.
I am not saying that the two disciplines have already merged, my main argument here is that there are indications that these two disciplines may merge sometime in the future, say like 10 years from now. And what are the indicators?
The actvities of marketing today shows that marketing does not only aim at creating exchanges with consumers, it also aims at buillding relationships with the non-consumer publics.James Hutton has pointed out that the reason for this has less to do with marketing trying to dominate public relations, that marketing today is just progressing naturally toward relationships and non-customer publics. In my previous write up, I also made mention of the fact that you now have marketers who now perform functions which were thought of previously as belonging to the public relations disciplines such as 'internal marketing', which is more a less internal communications in public relations and 'crisis marketing' which is about crisis communication in public relations. On the other hand you also have public relations practitioners who carry out some marketing functions as well. Also with the emergence of concepts like marketing public relations and integrated marketing communications it becomes increasingly difficult to seperate marketing from public relations.
Philip Kitchen and Ionna Papasolomou comment on this integration of marketing and public relations by saying that, there is an increasing number of articles in which public relations and marketing communication practices are recognised as increasingly integrated and converging concepts. They add that, there is a growing tendency for public relations and marketing to be seen as converging disciplines in both professional and academic circles.
I believe a lot of companies and organisations would capitalise on this mergence because it will help them cut down on expenditure. They would rather run just one department with fewer workers who have the ability to perform both public relations functions and marketing functions than run two seperate departments with different workers for each department because it will be much more costly.
Also in regards to Africa, and specifically in Cameroon I will say, I believe the mergence is very possible and would be very much welcome in contrast to Michael's opinion that it can never work. This is because, in most companies aand organisations in Africa and even in Cameroon, there is no seperate department for public relations. The public relations practitioner reports either to the marketing manager or human resource manager. This could be due to the fact that public relations in Africa is not well developed or that the organisations are trying to cut down on costs. So I strongly believe they would welcome this trend because, in a way it is already in line with what some companies and organisations there are practising.