Question

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

Answer 1

Answer:

This question is about Corporate Social Responsibility (CSR), which is basically being socially responsible (with the employees, community, environment, etc.) and at the same time trying to maximize the financial value of a company (which is a duty to shareholders).

It might be easier for some companies, e.g. service providers, while much harder for mining companies (and other extracting companies). But it doesn't meant that all companies should try their best to do it.

Some companies even benefit from being socially responsible and increase their income through higher sales, e.g. Ben and Jerry's actually increased their sales of ice cream by focusing on CSR.

Even small businesses can benefit from CSR since it increases customer awareness and loyalty, and that can lead to higher sales. E.g. the public image of local businesses that help to finance certain community services improves and that eventually leads to higher sales.

Customers tend to favor companies that they consider to be socially responsible, and if they have to decide between purchasing from a socially responsible company or from another that isn't, they will generally purchase form the socially responsible one.