Does Social Responsibility Impact Businesses?


When it comes to social responsibility, organizations feel obligated to support their communities. However, when ignoring social responsibilities, history proved businesses do struggle. The long lasted debate is what is more important for a company to succeed, to make their stakeholders happy or shareholders happy. Truthfully, it is both but for some reason both sides can rarely coincide with one another. Instead a business is forced to decide who they want to make happy, a lot of time it may depend on the product itself. If a business knows they are not going to gain the positive response from shareholders then they lean towards making their stakeholders happy; businesses like oil companies. In case, you are unaware what a shareholder is they simply own a share of a business. Meaning they have invested some of their money to a company expecting a hefty return on their investment. A stakeholder consists of the community, employees, customers, and suppliers. So one may see as to why both of these are bumping heads because they both affect the business in some type of way.

As mentioned, social responsibility is certainly important because it is the people who ultimately make a business money. Social responsibility is typically help that goes to areas

CEO Dan Price on the cover of Inc. magazine

such as poverty, education, and cultural enrichment. There are many businesses who practice social responsibility but what is the end result for these companies. Many times they gain a lot of publicity but then never hear much from them again. For example, a credit card company in Seattle named Gravity Payments decided to pay its employees a salary of $70,000. This included the CEO Dan Price, who took a pay cut from his $1,100,000 salary to make this happen. This story went viral but did it truly work? Price mentioned the gross revenue for his businesses was $150 million in 2014 and rose to an estimated $200 million in 2015. This company has certainly instilled a cultural enrichment to its business and offers a comfortable living for its employees.


Now, a business known as Toms is another great example of practicing social responsibility. But did it truly work? Toms is a company that, for every pair of shoes you buy, gives a pair to someone in the developing world. Their focus is on helping poverty by

Toms donating a pair of shoes

donating shoes. In 2013, Toms estimated a revenue of nearly $250 million and an addition of $50 million with their sunglasses product. At first, they were highly criticized for donating pairs of shoes to an Ethiopian school in which children had already owned shoes. Regardless of the public’s criticism Toms has donated well over 10,000,000 shoes since founding the business in 2006. They have continued to succeed in their business because they are giving back to a community and proves how social responsibility can affect a business.



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