The Role of Profits Ã¢ÂÂ Is Profit Maximisation Tenable in the Modern Business Environment?
Department of Business, Newham Sixth Form College, London, UK
- *Corresponding Author:
- James Atta-Panin
Department of Business
Newham Sixth Form College
E-mail: [email protected]
Received Date: April 16, 2015; Accepted Date: May 20, 2015; Published Date: May 27, 2015
Citation: Atta-Panin J (2015) The Role of Profits – Is Profit Maximisation Tenable in the Modern Business Environment?. J Entrepren Organiz Manag 4: 135. doi: 10.4172/2169-026X.1000135
Copyright: © 2015 Atta-Panin J. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
The issue of balancing business profitability and corporate social responsibility engagement is a delicate one. Whereas some people in business and academia see the two as inextricably linked and that businesses do well by doing good, others believe that using the legitimate returns of entrepreneurship for philanthropic activities is irresponsible. Modern corporations cannot exist and provide the products and services enjoyed by society if they do not make worthwhile profits for their owners who risk their wealth by investing and providing the funds necessary for their operations. Indeed the ‘free enterprise’ advocates have long held the view that businesses should be left to pursue the principle of profit maximisation as long as they operate within the law. However, this paper takes the position that in an age where business sustainability is being touted across the corporate world as the panacea to achieving organizational viability, companies cannot afford to ignore their corporate social responsibility credentials in the name of profit maximisation. The article goes on to emphasize that adopting a stakeholder concept rather than the shareholder concept enables a business to enhance its competitive advantage. The article uses examples of how contemporary organizations have used their CSR policies as a differentiation strategy to separate themselves from the competition, allowing them to increase sales and market share, thereby improving their financial performance. The article concludes by citing Michael Porter’s principle of creating shared value where business and society recognize their interdependence and work together to provide products and services that meet societal needs while at the same time providing organizations and their investors with satisficing profitability.