Rob Oostendorp

Mr. Smith

Expository Writing

15 November 2000

Where the Responsibilities of Corporate America Lie

Corporations are the strongholds of American businesses. Every corporation, regardless of its specific field, must either produce a product or provide a service. Many people are interested in how corporations are making the products or conducting the services. If corporations conduct their business in a responsible manner they are flagged as being socially responsible. Corporations can be socially responsible in many ways, among which are indulging in philanthropy, tackling specific ethics issues, or being environmentally aware. Corporate America has the ability to do more than it has in the past with the issue of social responsibility and the ability to grow within their responsibilities. 
	It is essential that American corporations be socially responsible. Corporations have only two choices; to benefit society or to ruin it. Only society can decide what corporations are being socially responsible and what corporations are not. There are many criteria for being socially responsible. It is very difficult to define what responsibilities a corporation has because of our complex economic markets, each with their own definitions of social responsibility. 
Michael Novak, in his essay, Is The Good Corporation Dead, decided he could look at the American markets as a whole and come up with seven general responsibilities that corporations have to our society. First, a corporation has the responsibility, "to satisfy with goods and services of real value." (192). Although vague, Novak wants corporations to know that it is their duty to make quality products that will standup against their competitors. A second corporate responsibility is "to make a reasonable return on the funds entrusted to the Business Corporation by its investors" (193). This idea goes back to the belief that the corporation is ultimately that of the stockholders. It is assumed that this is in second place because without the first responsibility being met, it would not be possible to make a return on the investors’ capital. Third, a corporation has the responsibility "to create new wealth" (193). Novak estimates that one third of all Americans get salary from Non-Profit organizations, and these non-profit organizations, in a sense, get their money from corporations. Forth, a corporation has the responsibility "to create new jobs."(193). To do this, the corporation must expand and grow resulting in the creation of jobs that were not there before (193). The old adage is "It is better to teach a man how to fish than to give him a fish. In the same way, it is better to provide all willing citizens with jobs rather than with government grants that keep them permanently dependent and in the condition of serfs”(193). Fifth, a corporation has the responsibility "to defeat envy through generating upward mobility and putting empirical ground under the conviction that hard work and talent are fairly rewarded" (194). The harder employees work, the more beneficial it is for the corporation resulting in improved compensation for the workers. Sixth, a corporation has the responsibility "to promote invention, ingenuity and in general 'progress in the arts and useful sciences' (Article I, Section 8, U.S. Constitution)" (194).  In order for our country to be up to date with technology we must be inventing and reinventing constantly. Finally, a corporation has the responsibility "to diversify the interests of the Republic" (195). This capitalistic belief defines how corporations are to diversify so that the economy can flourish. Not every corporation can make semiconductors, if this were true, who would make the motherboards? The semiconductors would be useless without the motherboard socket to insert them! Therefore we must diversify in order for not only our economy to flourish, but for our dynamic society to work efficiently and effectively.	
	Michael Novak also brought social responsibilities to another level publishing seven Christian social responsibilities. First, a corporation has the Christian responsibility to "establish within the culture of the firm a sense of community and respect for the dignity of persons" (195).  This contributes to the belief that God made man. And because man is a creature of God he must be respected. Another Christian responsibility a corporation has is to "promote the political soil of liberty" (196). Because free business corporations are only allowed to operate freely in a minority of the countries, it creates a responsibility for those corporations to promote their liberties (196). Third, a corporation has the Christian responsibility to bring forth and "exemplify a respect for Law" (196). Furthermore, a corporation has the Christian responsibility to "win the allegiance of the majority" (196). Winning allegiance means that the corporation will follow what the majority of society wants. This responsibility will usually only be used if society doesn’t like what the corporation is doing. In this case the corporation would have the Christian responsibility to follow what society expresses. Fifth, a corporation has the Christian responsibility to "overcome the principal of envy" (197). Stated many times in the Bible, we mustn’t envy, this is taken straight from the Old Testament text. Also, a corporation has the Christian responsibility to "communicate often and fully with their investors, shareholders, pensioners, customers, and employees" (197). Corporations shouldn’t hide what is happening behind closed doors, they have the responsibility to be honest and tell the truth. And finally, a corporation has the Christian responsibility to "contribute to making the surrounding society its own habitat, a better place" (197). Corporations must contribute to a better society. With the criteria Michael Novak uses it now makes it easier to review corporations and specific issues of social responsibility. 
	In the past, specific corporations have done a lot for society, and their generosity has been publicized because of their actions. Historically, Ford Motors is a perfect example. They have accomplished much in improving the inner city. “Many people thought downtown Detroit could not be saved, but blue-chip industrial and financial corporations, led by Ford Motors Co., have begun to turn the tide with the Renaissance Center, a $350 million hotel-office-retail complex” (Bradshaw 100). Since the ending of the Industrial Revolution, and the beginning of true corporate America, where corporations conduct the majority of business in America, many successful corporations, like Ford, have turned around and benefited society. 
Others believe that socially responsible corporate behavior is scarce because it is illogical on the part of the corporation and “Given the traditional economic assumptions of unrestricted competition and a goal of profit maximization, ‘corporate initiatives’ are clear and simple and the very idea of corporate ‘responsiveness’ is meaningless – corporate behavior will always be based on adapting available means to a profitable end” (Sora 4). Because a business is always based on profit it is impossible to look at a corporation as being socially responsible without the belief that the corporation is searching for the goose with the golden egg. The notion of profitable social responsibility is not true responsibility, but it is an acquirement of profit through extraordinary measures of attempting to please the population as a whole (Sora 4). 
	One way that corporations are benefiting profitably from society through responsible actions is philanthropy. Philanthropy is the practice of giving large contributions to charities. The Internal Revenue Service allows corporations to deduct up to 5% of their net income before Federal Income Tax in charitable contributions. “Were all companies to donate their full 5 percent, according to the New York Times almost $9 billion would be generated to help address this nation’s contemporary social agenda instead if the current 1.5 billion” (Bradshaw 148).
	Some corporations are already practicing philanthropy and doing their part. “A growing number of companies match their employees charitable donations whether or not the charity is on a strategic list. Many companies offer grants to causes which employees – or better yet, teams of employees – volunteer” (Herman 105). Other companies’ board of director decides how their contributions will be distributed.  Corporations that have been publicized for their repetitive charitable donating, “Cummins Engine Company and Dayton Hudson Corporation give 5 percent of pretax profits to charity” (Bradshaw 100).
	Although some corporations are practicing philanthropy, they are able to do so much more! “The national average for corporate charity is typically below 1 percent” (Bradshaw 148). With the 5 percent allowed, one can only imagine the possibilities of social improvements that could be achieved. With the national average being below 1 percent, corporations use very strategic measurements to choose their charities. These charities will almost always return either direct or indirect profits to the corporation. This idea is known as strategic Philanthropy. 
	Strategic Philanthropy is not a new idea, but is being used today more than ever. “Say goodbye to the days when corporations blithely wrote checks to many causes” (Herman 104). “Say hello instead to the new world of ‘strategic giving’, the fancy phrase that corporate-giving gurus use to describe how every dollar or product they give must mesh with the company’s markets or employees” (Herman 104).
	Strategic philanthropy is good for our society because it encourages corporations to participate in philanthropy which benefits our society and then comes back to benefit the corporation. “Take The American Express Foundation. It will give away 23.2 million this year, mostly to historic preservation, arts and education programs that tie in with its financial services or travel and tourism businesses”(Herman 105). “Johnson and Johnson sends drugs to a disaster area, (so) more doctors grow familiar with those products”(Herman 105). Strategic philanthropy is a benefit to our society, regardless if the corporations are using it to their advantage. 
	Another key element to social responsibility is ethical practices within corporations. Corporations have a responsibility to their customers, shareholders, and stakeholders to compete under an ethical environment. “Business ethics are a rational and secular evaluation of human virtue and action grounded on the notions of ‘well-being’ and ‘happiness’” (Sison). Managers make ethical decisions from three different perspectives: From the perspective of himself or herself as an individual, from the perspective of the company, and from the perspective of the nation, or society (Harvey 20). “It is not the case that there exists corporate ethics on the one side and an individual ethics on the other” (Harvey 244). Ethics exercised in the workplace and in the home are usually very similar. 
Corporations are trying to do their part by being ethically responsible by setting up programs within the corporations to enforce responsible ethics. However, corporations are failing miserably on this issue. “Dollars & Sense reports the cost of white collar crime as at least $100 billion every year” (Estes 191). Also, management is obviously not doing their part because otherwise programs wouldn’t need to be setup to enforce ethical responsibility. Management fails in labor relations, a subcategory of ethical responsibility. If management were not failing, strikes and picketing would be obsolete (Berg 268). Another attribute to ethical responsibility, which management is failing, is bribery. Bribery is the largest white-collar crime. Estes described four reasons for why bribery continues. Bribery continues to obtain new business or maintain existing corporate activities. Another reason is to avoid or minimize the payments of taxes. Also, bribery can prevent interference with legal corporate activities. Finally, bribery can get around matters at lower level government (47). “Lockhead Corporation paid officials and political organizations in Japan some $22 million over 5 ½ years in order to obtain lucrative contracts” (Estes 46).
	Continuing with a look at social responsibility, environmental issues are closely looked at by society when reacting to a corporation’s social responsibility. Corporations have a very close relationship with environmental protection. Corporate America has been trying to get a good handle on environmental protection by setting up and enforcing  all of the environmental regulations. 
However, United States does not have good environmental protection. Comparing United States to European countries, “In Germany and Scandinavia where both companies and consumers are very attuned to environmental concerns, innovation is not uncommon” (Porter 362). A reason the United States isn’t attuned to environmental protection is because “in a recent survey of U.S. business schools the World Resources Institute found that ‘only 16 percent of school [integrate the] environment into core or departmental requirements, thus only a few MBA’s truly receive environment-business training’” (Hoffman 1). 
An example of how American corporations have previously failed lies in a story about a company called Hooker Chemical. Located near the Niagara Falls, Hooker Chemical was disposing toxic wastes into an old dry channel (Hoffman 120). The canal was originally used to connect the upper and lower Niagara River. They then sold the land to the local Board of Education. By 1981 more than 400 families had left this area previously called love canal, taking the illnesses and suffering with them (121).
The American people should be worried about environmental protection. “The Congressional Research Service says that 75 percent of all people in the United States live in proximity to a chemical plant”(Hoffman 125). “The U.S. Centers for Disease Control states, ‘ the love canal situation is just the tip of the ice-berg. There are thousands of these dumps all over the country.’ The Environmental Protection Agency thinks it can locate thirty to fifty thousand” (Hoffman 122). 
Conflicts exist between our society and our possible achievement of perfect social responsibility. Corporate America cannot do any better than it has on the topic of social responsibility because of the necessity to maximize profits. “When the performance standard effectively tells the manager ‘do what you have to do to maximize the bottom line,’ when it leaves our community out of the equation, we have good reason to be concerned” (Hoffman 125).
However, corporate America can improve on the topic of social responsibility. Many corporations are afraid to improve their own social responsibility because of the myth that it is expensive. A study of 29 companies showed that out of 181 activities only one activity resulted in an increase of expense (Porter 356).
To give America hope, companies have taken the lead in the corporate revolution in social responsibility. “General Motors plans to remove heavily polluting cars from the road. Johnson and Johnson, Mac Donald’s, Nations Bank, The Prudential Insurance Company of America, Time Warner, and Duke University promote the use of recycled paper” (Porter 37). Some corporations have benefited society in the past. However, financially, ethically, and environmentally, the majority of corporations are not doing as much for society as they are able. 

Work Cited
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