It is wrong for managers to pit the interests of a company’s shareholders against the interests of other stakeholders such as employees, customers, and community, and to think of successful management as making skilful trade-offs between the two. Thus write John Alexander and S. Venkataraman in ‘The Music of Business: Corporate social responsibility and the transformative approach’ (www.pqp.in).
They remind that a good manager is one who thinks of fiduciary responsibility not just in terms of maximising profits for shareholders only, but as one who can take care of the interests of various stakeholders, including the development of the community and environment. “This implies that sometimes managers must be prepared to turn down profitable offers and lose money in the short run when such offers fail to pass responsibility tests.”
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What causes anguish to the authors is the malaise of viewing ‘corporate responsibility’ from a profit perspective. “For some time now, many managers and executives have cultivated the habit of asking, ‘What is the cash value of CSR?’ ‘To what degree can CSR engagement contribute to the bottom line of my business? So much so, some leading management thinkers have been encouraging companies to engage in what is called the ‘strategic CSR.’”
Such an approach, as the authors caution, is the result of an instrumentalist mindset which assumes that what is fundamental to a business organisation is profit maximisation, and ethics and responsible behaviour is instrumentally useful inasmuch as it contributes to this goal. They, therefore, urge companies to grow out of this instrumentalist mindset and embrace ‘the transformative approach.’
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