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A critique of corporate social responsibility in light of classical economics

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  • Saurabh Ahluwalia

    (University of New Mexico)

Abstract

Classical economics maintains that managers of corporations are agents of the shareholders. The managers should make decisions in accordance with the wishes of the shareholders. For a corporation, it is typically assumed that shareholders want to maximize their wealth, and hence profit maximization is considered the goal of a corporation. On the other hand, the proponents of corporate social responsibility (CSR) maintain that corporations have a responsibility to all stakeholders beyond the shareholders. Corporations should make decisions while taking into account the effects of those decisions on different stakeholders. This commentary explores the concepts of market orientation and stakeholder orientation. Based on the writings of classical economists such as Adam Smith, Theodore Levitt, and Milton Friedman, I analyze how blind adherence to CSR runs counter to the foundations of classical economics. The effect of CSR on the liberal economics system and structure of corporations in terms of property rights, individual freedom, separation of government and business, and accountability is explored to support Gaski’s (AMS Review, 2022) position on these issues.

Suggested Citation

  • Saurabh Ahluwalia, 2022. "A critique of corporate social responsibility in light of classical economics," AMS Review, Springer;Academy of Marketing Science, vol. 12(1), pages 25-29, June.
    • Handle: RePEc:spr:amsrev:v:12:y:2022:i:1:d:10.1007_s13162-022-00224-4
    DOI: 10.1007/s13162-022-00224-4
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    References listed on IDEAS

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    1. Carroll, Archie B., 1991. "The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders," Business Horizons, Elsevier, vol. 34(4), pages 39-48.
    2. Youn Kue Na & Sungmin Kang & Hye Yeon Jeong, 2019. "The Effect of Market Orientation on Performance of Sharing Economy Business: Focusing on Marketing Innovation and Sustainable Competitive Advantage," Sustainability, MDPI, vol. 11(3), pages 1-19, January.
    3. Park, Eunil & Kim, Ki Joon & Kwon, Sang Jib, 2017. "Corporate social responsibility as a determinant of consumer loyalty: An examination of ethical standard, satisfaction, and trust," Journal of Business Research, Elsevier, vol. 76(C), pages 8-13.
    4. John F. Gaski, 2022. "Toward social responsibility, not the social responsibility semblance: marketing does not need a conscience," AMS Review, Springer;Academy of Marketing Science, vol. 12(1), pages 7-24, June.
    5. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: Strategic Implications," Journal of Management Studies, Wiley Blackwell, vol. 43(1), pages 1-18, January.
    6. Campbell, Katherine & Helleloid, Duane, 2016. "Starbucks: Social responsibility and tax avoidance," Journal of Accounting Education, Elsevier, vol. 37(C), pages 38-60.
    7. Freeman, R. Edward & Liedtka, Jeanne, 1991. "Corporate social responsibility: A critical approach," Business Horizons, Elsevier, vol. 34(4), pages 92-98.
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    Cited by:

    1. Stefanie Wannow & Martin Haupt & Martin Ohlwein, 2024. "Is brand activism an emotional affair? The role of moral emotions in consumer responses to brand activism," Journal of Brand Management, Palgrave Macmillan, vol. 31(2), pages 168-192, March.
    2. John F. Gaski, 2023. "Replies to comments on “Toward social responsibility,” also incorporating a focus on ESG," AMS Review, Springer;Academy of Marketing Science, vol. 13(1), pages 5-11, June.
    3. J. Joseph Cronin, 2022. "Marketing’s new myopia: Expanding the social responsibilities of marketing managers," AMS Review, Springer;Academy of Marketing Science, vol. 12(1), pages 30-37, June.
    4. O. C. Ferrell, 2022. "Perspectives on socially responsible marketing: the chasm widens," AMS Review, Springer;Academy of Marketing Science, vol. 12(1), pages 1-6, June.

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