Is Making Profit the Only Purpose of Companies? Analysis of the CSR Role of Companies in Promoting Social Welfare

The earliest forms of modern companies were instinctively and inherently social entities that were first invented to support societal welfare. However, over the past several years, dictated by the principles of capitalism and the Agency Theory of the Firm, companies are recognised by law as institutions that are primarily organised to operate economic activities that aim to maximise profit, and they are not required by law to engage in corporate social responsibility (CSR) activities. Recently, however, in accordance with the Stakeholders Theory of the Firm, the societal purpose of companies is regaining ground. The impact of business and its place in society are once again changing for a variety of reasons, including the proliferation of globalisation, the absence of effective global governance mechanisms, and the existence of weak national governments. This has increased the ability of businesses to play significant roles in public policy and social welfare and, as a result, enabled them to address global problems of welfare in a coordinated manner. Consequently, requiring companies to participate in CSR initiatives aimed at advancing public welfare has now become the standard on a global scale. Moreover, taking in to account the amount of capital mobilised or profit earned, many countries are requiring companies by law to set aside a particular portion of their annual revenues to engage in CSR initiatives meant to contribute back to the society in which they operate the business. In line with the foregoing, this article analyses the corporate social responsibilities of companies (including Transnational Corporations) and argues that companies can and should engage in activities that advance social welfare.