The Challenges and Disadvantages of Social Responsibility

Sunday, March 31st, 2013

Normally in my blog post I promote and talk up the good things about social responsibility. Today I want to shift a little, and talk about some challenges and disadvantages that go along with being Socially Responsible.

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Cost- Efforts such as event sponsorship, charitable donations, product donations and commitment to voluntary environmental standards all cost money that a company is unlikely to make back in the short term. This means less money for stockholders and less money to invest back into the company for future growth.

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Fairness- Companies can select any charity or organization out of a long list of socially needed foundations. The board members or head of the social responsibility campaign make the ultimate decision and often times let their bias and opinions affect their judgment of what is best for the company.

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Unintended Consequences- Social responsibility can have unintended and unanticipated consequences for businesses. When a business’ exercises social responsibility that conflicts with government efforts to do the same thing, it confuses members of the public by offering a new, and perhaps temporary, option for solving a specific social problem. This can cause taxpayers to resent their government for supplying a service that a private business also pays for.

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Enhanced Scrutiny- A company that undertakes a socially responsible course falls under increased scrutiny from critics, customers and competitors. If a company regularly supports a local charity but withdraws its sponsorship during a period of financial hardship often appear overly concerned with its bottom dollar insensitive to public concerns.

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Related Links: Small Biz, eHow, Wiki, Related Blog, Corporate Watch

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