Introduction
Corporate social responsibility is a term that has gained significant prominence in the past two decades. For a long time, it was held that the only purpose companies were created is to generate profits. While this is true, people began to realize that corporations also have an obligation to the society as prescribed by law.
According to Carroll (1999), the first real definition of corporate social responsibility was provided by Howard Bowen in 1953. Bowen described social corporate responsibility as the obligations of corporations to act in such a manner that is desirable with regards to societal values and objectives.
This definition has undergone various changes and has been refined by various economists to set out a more concise statement on what CSR is about. Carroll (1999) defined corporate social responsibility as a voluntary obligation which a corporation has to the society other than that set by contract or by law.
Joseph Stiglitz: Opinions on Corporate Social Responsibility
Various arguments have been brought up about the topic of corporate social responsibility. Most of the arguments raised are mainly due to differences in definition about Corporate Social Responsibility and the nature of businesses (Hussain, 1999).
Various economists have different views about CSR and understanding these views may pave the way forward in forging a comprehensive standard to guide Corporate Social Responsibility. Joseph Stiglitz is a Nobel Laureate and an influential American economist.
He has written several books on different economic issues and has also served as a policy maker in the Clinton administration (Friedman, 2002). From his various writings and policies, it can be shown that Stiglitz is one of modern proponents on Corporate Social Responsibility.
In his book Making Globalization Work, Stiglitz looks at the problems brought about by globalization and holds the view that globalization victimizes several countries as well as individual citizens. He argues that globalization has led to loss of jobs, unfair competition and an increase in drug cost for serious illnesses such as AIDS (Stiglitz, 2008).
Companies make deals with governments (especially developing countries) such that they can operate with minimum intervention and with little regards to the society in which they operate. In this book he also notes that the environment is one of the most precious resource people have and that governments and corporations have an obligation to reduce the effects of global warming (Stiglitz, 2008).
He notes that pollution, unfair subsidies and tariffs have led to the destabilization of the global economy. He proposes that to solve this problem, more transparent institutions should be created (Stiglitz, 2008). These views basically propose that both governments and institutions should embrace corporate social responsibility if societal problems are to be solved.
In an interview held in 2010 by tikkun Magazine, Stiglitz offers his direct opinion on corporate social responsibility. In the interview, Joseph Stiglitz asserts that the only way to create a fair society is through collective action between the various stakeholders in the economy (Lerner, 2010).
Global poverty, health and environmental degradation can all be mitigated through proper government policies and through voluntary participation of the various stakeholders in the global economy. During the interview, Stiglitz also affirmed his support for the current government policy requiring that all large corporations should get a corporate charter that is renewable every five years.
The Environmental and Social Responsibility Amendment requires that a charter be given to those corporations that have a good past with corporate social responsibility as per a jury of average citizens (Lerner, 2010). He however has reservations on the applicability of the Act as he notes that the definition of corporate social responsibility is diverse and different individuals have different comprehension on its meaning.
He notes that some companies embrace going green but readily offer loans to cigarette companies whose very existence is a form of social irresponsibility (Lerner, 2010). He further adds that there should be precise sets of standards that set the expectations of corporate social responsibility.
From his interviews and books it can be noted that Joseph Stiglitz supports corporate social responsibility but has several worries on the interpretation and application of CSR in companies. He proposes that collective participation is required in order to solve societal problems both at the local and the global scene.
On the issue of Corporate Social Responsibility, he argues that all companies have an obligation to the society and should thus try to act in the best interest of the society.
However due to differences in interpretation and misunderstanding as to what really constitutes Corporate Social Responsibility, it is necessary for the government to set up a given set of standards that would serve as the guidelines for companies to meet the said obligations (Lerner, 2010).
Stiglitz also notes that this government intervention should not be rigid as standards change over time and thus the government should constantly review the standards set for corporate social responsibility.
Conclusion
Joseph Stiglitz has had a very illustrious career both in policy making and as an economist. He is particularly known for his criticisms on the management of the International Monetary Fund, free market economist and the failures of globalization.
Most of his criticisms are based on the fact that most international institutions do not practice corporate social responsibility and are only there to make profit with disregards to the community they are supposed to serve. His views has granted him several prominent position in the government and has also seen him attain top position within the World Bank, at one time serving as the senior vice president.
His work on these subjects has also granted him several prize and award recognition the most notable being the 2001 Nobel Prize in economics. He teaches at various universities in the world and also has been noted to be one of the most referred economists in the world.
Stiglitz also began the Initiative for Policy Dialogue, a corporation dedicated to promoting global development through proper policy making and sound business practices such as CSR.
While many economist do not readily agree as to what constitutes as Corporate Social Responsibility, the consensus is that every corporation has an obligation to the society it serves. Joseph Stiglitz has campaigned vigorously for global development both in his writing, work as a policy maker and activist for change.
Looking at his various achievements, it can be easily shown that people have noticed the need for change and that his beliefs have granted him various advantages. Corporate Social Responsibility is not just a fad but a real development that has slowly gained influenced in the business field.
Reference
Carroll, A. (1999). Corporate Social Responsibility. Business and Society, 28(3), 268 – 295
Friedman, B. (2002). Globalization: Stiglitz’s Case. New York Review of Books, 49(13), 26.
Hussain, S. (1999). The Ethics of ‘Going Green’” The Corporate Social Responsibility Debate. Business Strategy and the Environment, 8, 203-210.
Lerner, M. (2010). Economics for a Global Community – A Conversation with Joseph Stiglitz. Tikkun, 25(5), 12-16.
Stiglitz, J. (2008). Making Globalization Work – The 2006 Geary Lecture. The Economy and Social Review, 39(3), 171-190.