Is it possible for companies both to maximize financial value and be socially responsible? 

Expert Answers

An illustration of the letter 'A' in a speech bubbles

Companies can maximize their profits and be socially responsible at the same time. Consumers today are conscious about the products and services they buy and their impact on the environment. Therefore, consumers are more inclined to associate themselves with companies that are socially responsible. For this reason, companies can use corporate social responsibility (CSR) to increase awareness of their brands. In the short-term, a company may lose its financial value by investing in CSR; however, there is a high likelihood that it will benefit in the long-run due to better engagement with customers and increased brand recognition. It is noteworthy that companies are not obligated to be socially responsible. However, an effective CSR strategy can increase a company's financial value.

Approved by eNotes Editorial
An illustration of the letter 'A' in a speech bubbles

It is possible for at least some companies to do this.  However, it is not possible for all companies, depending on one's view of what is "socially responsible."

For example, a shoe company like Nike could probably not do both of these things.  It would be impossible for Nike to manufacture shoes in the US (socially responsible because it creates American jobs) while still keeping prices low enough to maximize financial value.

But other companies might manage both.  For example, a maker of household appliances might be able to maximize financial value even as it makes its appliances more energy efficient, which would be socially responsible.

The answer, then, depends on what products a given company sells and how one defines social responsibility.

Approved by eNotes Editorial
An illustration of the letter 'A' in a speech bubbles

Is it possible for companies both to maximize financial value and be socially responsible? Explain.

One of the most difficult concepts for any consumer or even any corporation to sincerely adopt is a long-term outlook and one based on continual profitability over that long term.  If one is to actually adhere to this outlook, social responsibility and profit go hand in hand.  But in the shorter run, it is extremely difficult to justify higher costs at the outset that will offset later costs.

Take power lines as an example.  It has been shown time and time again that burying power lines is significantly cheaper in the long run, also more environmentally friendly and even more visually appealing.  but the up-front cost is prohibitive so utility companies in the US have avoided doing so in all but the most highly-pressured situations.  The costs of repair after ice or snow storms or hurricanes, etc., are exorbitant but often subsidized by taxpayer monies, etc.

So long term profitability is available to socially responsible companies and individuals but that outlook is hard to find and sustain when shareholder pressure is almost always on the current and short-term bottom line.

See eNotes Ad-Free

Start your 48-hour free trial to get access to more than 30,000 additional guides and more than 350,000 Homework Help questions answered by our experts.

Get 48 Hours Free Access
Last Updated on