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You will prepare and submit a term paper on Corporate Social Responsibility: The Definitive Guide. Your paper should be a minimum of 1750 words in length.
You will prepare and submit a term paper on Corporate Social Responsibility: The Definitive Guide. Your paper should be a minimum of 1750 words in length. The Classical Model of corporate responsibility argues that the general interests of society can be met by different organizations, each of which plays a distinct role in the system (Okpara, & Idowu, 2013). The basic role of corporate bodies should, therefore, revolve around economic issues rather than social development. Rahim and Alam (2014) noted that the primary objective of the business entity should be to make the highest amount of profit, which practically propels executives to act in the best interest of their company shareholders, provided their actions are within the law.
The basis of this concept is methodological individualism (Crane, & Matten, 2010). The belief implies that the entity is the most important asset in the system. Habisch (2005) noted that such parties pursue ways in which they can best meet their own interests and act logically to increase self-satisfaction. The classical theory requires that if a corporate body “X” has $10, 000 and it is badly in need of raw materials that would cost half the money to make a product for a period of one month, it would exchange $5,000 for the material. This implies that there are no grounds for the company to spend the entire money on the raw materials when half of the amount would meet the current demand. Such a strategy makes the company and its shareholders happy, considering that they would easily access the remainder of the money and benefit from the profits made through the reasoned expenditure.
According to Blowfield and Murray (2014), the invisible hand of parties working together in an environment where each party stands to gain mutually satisfying exchanges creates the platform for the most sustainable economic system. As such, the classical theory requires that a corporate body that is keen on fulfilling its utilitarian institutional obligations to society must limit expenditures on social programs that only deepen their debt status and cut into their profits.
