CSR | Corporate Social Responsibility – Social contract approach

Social contract approach

Social contract approach is the perspective that a corporation has an obligation to society over and above the expectations of its shareholders.

Prior years, the primary focus of the social contract was an economic one, assuming that continued economic growth would bring an equal advancement in the quality of life.

The modern social contract approach argues that since the corporation depends on society for its existence and continued growth, there is an obligation for the corporation to meet the demands of that society rather than just the demands of a targeted group of customers.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility – Instrumental approach

Instrumental approach






















































Instrumental approach is the perspective that the only obligation of a corporation is to maximize profits for its shareholders in providing goods and services that meet the needs of its customers.


Most famous advocate of this “classic” model is the Nobel Prize-winning economist Milton Friedman. 


Friedman argues it would be unethical for a corporation to do anything other than deliver the profits for which its investors have entrusted it with their funds in the purchase of shares in the corporation.


Friedman also argues that, as an employee of the corporation, the manager has an ethical obligation to fulfill his role in delivering on the expectations of his employers.


Source: Ghillyer_Business Ethics A Real World Approach 2e