In the end, all business operations can be reduced to three words: People, Product and Profits. Unless you’ve got a good team, you can’t do much with the other two. -Lee Iacocca
The modem concept of sustainability was originally defined at the World Commission on Economic Development in 1987, often known as the Brundtland Commission. At the most basic level, sustainability is balancing the three concepts of people, planet, and profit to maximize the absolute value of an undertaking. Using this concept, sustainability has been embraced at the corporate level in many corporations. However, this definition does not…show more content… Ford Motor Company, the Supreme Court of the State of Michigan, USA, held that the primary objective of a business is to make profits, and that any business is responsible to its shareholders and not to the community as a whole or to its employees. To date, this judgment is treated as a fundamental reference point in relation to the responsibilities of a business and the inherent principle in it has not been overruled by courts.
In 1970, Nobel Laureate Milton Friedman wrote that the responsibility of a business is to increase profits and that engaging in activities which discharge the corporate social responsibilities (CSRs) of a business is an instance of ‘agency conflict’ or a conflict between managers and shareholders. In Friedman’s view, CSR activities were undertaken by managers for their personal needs and at the expense of the shareholders, and he even went on to say that in a free enterprise society, CSR reflects an inappropriate use of corporate funds.
Since the early 1980s, social scientists have moved away from the theory of agency as propagated by Friedman and gravitated towards a new model developed by Peston and Caroll, which was embodied in a structure they called the ‘corporate social performance’ (CSP) framework, which combines the principles and philosophy of societal needs with the economic responsibilities of a…show more content… The stakeholder concept has facilitated the inclusion of the sustainability concepts in the core business practices of a company. The concepts of sustainability and stakeholder inclusion have been motivated by the belief that adopting sustainability practices in the long run would lead to the improved financial performance of the firm, increased competitive advantage, profit maximisation and the long-term success of the