Final answer:
Corporate social responsibility (CSR) is the acknowledgment by businesses of their impact on society and the integration of this awareness into their decision making. This approach not only complies with legal requirements but also considers the interests of all stakeholders, including the environment, and extends beyond the traditional focus on profits.
Step-by-step explanation:
The recognition that business activities have an impact on society and the consideration of that impact in business decision making is commonly referred to as corporate social responsibility (CSR). CSR is an approach where businesses acknowledge their social, economic, and environmental effect on society and integrate this consciousness into their decision-making processes. It is a concept whereby companies consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities, and the environment in all aspects of their operations.
Corporations around the world are increasingly recognizing that alongside profit-making, they have duties which involve taking care of the social and environmental aspects that their operations impact. This may include employing ethical business practices, engaging in environmental sustainability initiatives, and ensuring fair treatment and involvement of all people affected by the business's operations. Emphasizing CSR is not just about fulfilling legal requirements, but also about going beyond compliance and investing in human capital, the environment, and relations with stakeholders.
Advocates of CSR argue that businesses should be ethically responsible to all stakeholders, not just shareholders. This view is often contrasted with the perspective put forth by Milton Friedman, who contended that the primary responsibility of business should be to increase profits for its shareholders, within the bounds of the law. However, today's interconnected global economy and informed consumer base are influencing more businesses to adopt CSR practices and blend societal interests with business strategies.