Social responsibility is not, in itself, a guarantee of profits.
Rather than ONLY asking ‘what does the customer want today?Profit maximisation as a strategy has been historically poor in actually delivering profit. Few businesses will thrive as little islands of prosperity alone in a sea of deprivation.This is why, through history, businesses have often supported education.Had US companies had more of a care to the environmental impact of the vehicles they might have survived in better shape. The fact is that businesses only do well so long as they provide things that people want. The argument that says that the role of the executive is to maximise profits regardless of the consequences depends upon a view of business as standing apart from society. Businesses will do well in a healthy society, with a thriving economy and a robust natural environment.Those that see opportunities to make their products serve their customers well and benefit society will generally do well if they execute effectively. These are life support systems for the business, they are not unnecessary distractions.The best CEOs describe this task in terms of getting the right people and looking after them, finding the best products that meet customer needs in new ways, and doing so in a way that governments, their employees and customers feel good about in terms of the impact on society. If, as Karnani implies, there were no choice, it wouldn’t matter.That is not the only way to make short term profits, of course. But the fact that you find successful companies today that are committed to social responsibility, and you find successful companies today that couldn’t care less – apparently – shows that there is a choice about how profits are made.Ironically, Karnani quotes auto makers as an example where business interest and social welfare have been aligned.“Auto makers have profited from responding to consumer demand for more fuel-efficient vehicles, a plus for the environment”. Auto makers in the US for years fended off legislation to improve energy efficiency standards, and were supported in so doing because of customer indifference to fuel efficiency during a time of cheap oil.And when Hurricane Katrina ripped through New Orleans, Wal-Mart hould have sat on its hands and nursed its profits, not mobilised its logistical network to the benefit of the country on the basis that it had a better position to do so than did the federal government.Such a position is to deny that companies are a part of society, and that therefore they have no role as corporate citizens.