The primary difference between a corporation and any other business is that ownership of a corporation is typically diluted. This means that decisions about how the corporation functions have a less-direct line between the owners and the managers who run the business. Shareholders vote for board members, who appoint officers, who then run the business according to what will drive the most value to shareholders.

This is really no different than with a sole proprietorship or partnership, where owner decisions are typically translated almost directly into action. A single businessowner can decide to boycott products from China at any time, and to the extent that it's possible to do so, firmly and consistently abide by that decision. He can do so regardless of the financial impact on his firm, simply by making the decision to accept loses to stand by his principles.

The same can happen at a corporation, where shareholders can vote that the board is to implement such a policy even when it impacts corporate profitability. The difference is that some majority of shareholders must support the position and vote the resolution into effect, which becomes a very political process.

However, the fundamental principle remains: it is up to the owners of the corporation to decide what that corporation's policies should be regarding "social" (or any other) issues. If any given shareholder disagrees with a corporation's policies on some issue, she is free to sell her shares and invest in a corporation with similar social values.

Learn more about this author, Mark Coppock.
Click here to send author comments or questions.

---

Add your voice

Know something about How corporate social responsibility impacts business?
We want to hear your view. Write now!