The Social Responsibility of Business is Social Responsibility
Jamsetji Tata Photo by Battakiran (WordPress)
Just after discussing Tata’s pricing strategy in class, I came across this blog post, which highlights how founder Jamsetji Tata positioned social equity at the core of his company. Affordable pricing is just one of the ethical efforts the company makes for its professed “Fourth Stakeholder”, society; others include charitable donations and the establishment of philanthropic foundations.
I was interested in how Tata’s success—both financially and in terms of branding— dispels Milton Friedman’s proposal that the social responsibility of businesses is only to increase profits. Friedman might have indicated that the fact that even “the most senior Tata managers don’t live in sprawling and multiple mansions… but in modest apartments and homes” is an example of how ‘taxes’ are imposed on these employees as their wages are reduced for the consumers’ and society’s benefit.
However, his argument was based on the assumption that the employees and shareholders’ end goal is profit… that a business exists only to make profit.
But if these are ‘taxes’ that these employees agreed to upon entering the company whilst understanding the company’s founding principles, is it still as undemocratic as Friedman suggests?
If the environment in which these employees exist measures its value in humanity rather than profit, are they still losing out?
If the overarching concept is social responsibility, what is the meaning of profit?
Just as a democratic society pays taxes for services they value more than money, such as education and healthcare, whilst accepting that the government can provide such services more efficiently than individuals— employees too can enter into an agreement with the business to use their ‘tax dollars’ on ideas that hold more significance for them.
Thus, I see Tata as proof that while the function of a business can be maximized profits, its value and purpose can be anything else… and if that purpose is ethical business, as is Tata’s, then the social responsibility of a business is simply… well, social responsibility…?
Casey, Peter. “Tata success story is based on humanity, philanthropy and ethics.” The Economic Times. n.p., 5 Sept. 2014. Web.