Once upon a time in the late-20th century, big business noticed that they were losing productivity due to employee health, accidents on the job, and personal issues. Once corporations began responding to employees' needs, greater requests were then demanded, such as helping society as a whole. Then, in the 1950s, there were the births of very large corporations, such as General Motors, Chrysler, U.S. Steel, Amoco, and Firestone. At the same time, America faced very difficult issues of poverty, unemployment, and pollution.
Pre-1950, there were some organizations that provided charitable work and donations, but the idea of social responsibility was not truly formed. In this lesson, you will learn about where and when the idea of social responsibility originated. Social responsibility is the use of a business's resources to help solve social problems and achieve social goals. Companies need to look outside of their primary stakeholders and feel a responsibility to society, as well. Let's take a journey back in time to see how the idea of social responsibility developed.
Historic Social Responsibility
Ancient history - Even in the earliest days of commerce, owners felt that it was very important to take care of stakeholders. For example, back in the Middle Ages, lords were concerned about exploitation of resources, such as forests and animals, for business profits. The idea of social responsibility began in the United States. Colonial America found prosperous merchants donating to schools, orphanages, poorhouses, and churches.
Early-19th century history showed how unhappy workers (children included) with poor living conditions and health would result in poor productivity. They were followed by entrepreneurs, such as John D. Rockefeller and Andrew Carnegie, who made fortunes during the late 1800s and evolved into philanthropists, or business owners who help others through the donation of time and money.
Modern Social Responsibility
20th century - The 20th century ushered in a different view of business. Society felt as though corporations needed to be held accountable for society's problems and help with the solutions. Business owners were viewed as having numerous responsibilities, such as:
- Acting as trustees to protect stakeholders
- Balancing the needs of all stakeholders
- Introducing the service principle, which is that the owners' purposes were to service society through the creation of profitable businesses.
Robert Wood of Sears is an example of a business leader who subscribed to the principles. His views continue even today.
Between 1900 and the 1960s, society started to doubt big business and wonder if they would offer any sort of responsibility towards improving and helping society as a whole. In America, between the 1960s and 1970s, most people felt that companies were only concerned with profits and did not care about society, whether it was ignoring social issues or contaminating the environment with production.
The first mention of CSR, or corporate social responsibility, was in the 1960s. This is where people want businesses to stop causing problems, such as environmental polluting and contamination, and start solving problems, such as protecting resources and ending poverty. After all, without the support of society, those businesses would not have customers, sales, or profits.
1970s and 1980s - In 1971, the Committee for Economic Development published a report explaining the need for social responsibility. The report further detailed the three areas of corporate social responsibility, which focused on economic performance, sensitivity to social values and priorities, and the improvement of the social environment. In the 1980s, there was growing consent that companies had a duty to balance economic profit with social duties. Still, many companies ignored this thought and concentrated only on profits.
Current day - Corporate social responsibility has now been embraced globally, and companies find it hard to survive without supporting society's needs. There are currently no official codes or rules regarding social responsibilities. Most companies publish their work through sustainability reports. Microsoft, Google, and Disney lead the rankings of the most socially-responsible companies due to their dedication to charities and protection of the environment.
Social responsibility is the use of a business's resources to help solve social problems and achieve social goals. The origins of social responsibility begin in ancient times with the understanding of the need for commerce to protect their resources. Early ideas of social responsibility emerged during colonial times when merchants donated to poorhouses, schools, and orphanages. After the Industrial Revolution, society started to expect businesses to invest, support, and provide help.
The first mention of corporate social responsibility appeared in the 1950s and slowly grew more important as customers wanted to support companies that gave back to society. The thought still exists today as companies, such as Microsoft, Google, and Disney, all have award-winning socially responsible programs.
After you finish watching the video, it should be easier for you to:
- Understand the meaning of social responsibility
- Analyze the historic context of social responsibility
- Examine the social responsibilities of modern businesses
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