The James Hardie case and Friedman Arguments on CSR

Published Date: 23 Mar 2015

Pendapat Friedman tentang Corporate Social Responsibility (CSR) telah menjadi dasar gerak aktivitas bisnis dan kebijakannya selama berpuluh tahun. Pendapatnya tersebut antara lain adalah manajer seharusnya hanya bertanggung jawab pada pemegang sahan atas hal yang terkait dengan bisnis dan bukan dalam hal yang terkait dengan pertanggung jawaban sosial, CSR adalah tugas pemerintah dan bukan tugas manajer; dan CSR hanyalah sebuah doktrin dari paham sosialis. Kasus James Hardie merupakan salah satu contoh yang cukup baik untuk menguji penyataan dari Friedman tersebut. Selanjutnya, apakah argumen Friedman yang selama ini dipakai merupakan argumen yang tepat dalam mensikapi aktifitas corporate social responsibility di dunia bisnis?

Keywords: ultimate shareholders, socialist doctrine, smart capitalist doctrine

Background

From 1960s to the social responsibility era, Friedman arguments had a big influence to managers in making company decisions and policies. There are some premises in supporting and opposing the arguments. From several industrial tragedies in an international business world, The James Hardie case can be the good example for criticizing the Friedman argument about corporate social responsibility. The discussion about several foundations of Friedman arguments and those failures to deal with the condition which The James Hardie experienced are basically taken from the problems that are revealed below. In his article, Mulligan (1986) reveals at least three foundations of The Friedman arguments. Those are manager should be responsible to shareholder for decisions and actions in business and not in social responsibility; corporate social responsibility is the duty of government and not manager; and Friedman also states that the doctrine of social responsibility is the socialist doctrine.

The History of Corporate Social Responsibility Definition

There are some experts tried to define the thoughtful meaning of corporate social responsibility (CSR). This highlights the points made by Locke (2003) on the need for consistent, objective definitions. Wood (1991) described the field of CSR as data looking for a theory. This still can be argued today with the many definitions, conceptualizations, and theories associated with CSR. Oosterhout and Pursey (2006), argued CSR should be done away with altogether because it supposedly contributes nothing to existing frameworks in the field of management and organization. Most researchers and practitioners alike do not agree with this assertion. Archie Carroll (1999) created an excellent article tracing the definitional history of CSR. He takes readers on a journey from past researchers'1950's ideas of CSR and then finishes his analysis in the 1990's time period. First, Carroll (1999) began in 1953, with Howard R. Bowen's presentation of a definition of CSR. Bowen discussed how CSR referred to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society. This definition is over 50 years old but could still be applied to our society today.

Carroll (1999) then discussed the sudden increase of literature focusing on what exactly CSR is, in the 1960's. In this period Keith Davis was one of the prominent researchers of CSR (Carroll, 1999). Davis (1960) argued CSR referred to businessmen's decisions and action taken for reasons at least partially beyond the firm's direct economic or technical interest. He was also one of the first to admit CSR was a rather vague construct but still argued it should be seen within the managerial context. Carroll was impressed with the work of Davis and argued he could be seen as the runner-up to Bowen for the Father of CSR. Davis is well known for his Iron Law of Responsibility which stated the social power of businessmen should be equal to their social responsibilities. Essentially, Davis believed the more socially responsible business people were the more social power they would have. Other definitions were provided by William Frederick and Joseph W. McGuire. Frederick's (1960) definition echoed that of Davis (1960). He asserted businesses and firms should not focus on simply meeting their needs and interests but should also be concerned with using their resources for broad social ends. Later in 1963, McGuire wrote: The idea of social responsibilities supposes that the corporation has not only economic and legal obligations but also certain obligations to society which extend beyond these observations. Carroll (1999) highlighted how this definition is more specific than any of the others previously provided. McGuire specifically stated firms must be aware of the welfare of the community, education, and the happiness of employees. Like Bowen's (1953) definition, this too could be used to represent CSR in today's society. These are all examples of what McGuire meant when he said the duties of corporations extend beyond economic and legal obligations. Milton Friedman's views was very different from what mainstream society believed CSR to be. Friedman (1962) very passionately stated few trends would so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their shareholders as they possibly can. A final definition Carroll (1999) believed to be influential in the study of CSR was presented by Clarence C. Walton (1967). In his fundamental definition, Walton viewed CSR as a recognition of the close link between firms and society. A component Walton included in his discussion of CSR which was not mentioned in previous definitions was the idea that CSR is voluntary and costs may be involved which may be measureable directly to determine any economic return. As mentioned by Carroll, this is a significant contribution to the study of CSR.

In 1970's the study of CSR embarked on a book written by Morrell Heald, titled The Social Responsibilities of Business: Company and Community, 1900-1960. Heald (1970) wrote the book from the perspective of businessmen and described most as being preoccupied with corporate philanthropy and community relations. Following Heald's (1970) book was Harold Johnson's (1971) Business in Contemporary Society: Framework and Issues. Carroll (1999) discussed the book in great detail in his article. It seems however, Johnson's analysis of the construct is a good example of what Locke (2003) described as convoluted definitions. Johnson analysed and criticized a variety of CSR definitions and then offered his own. He purported there are four views to defining CSR. Those views included (1) a conventional wisdom component (which Carroll noted is basically a stakeholder perspective), (2) an idea that CSR is used for long-run profit maximization, (3) utility maximizationâ€- to meet multiple goals not only to maximize profits, and finally a (4) lexicographic view of social responsibility.

In the 1970's alone Carroll found there to be more than 18 definitions of CSR. In 1971 the Committee for Economic Development provided a definition of CSR further linking corporations'goals with the needs of society. Others still continued to write and publish focusing on CSR, many of which defer back to earlier definitions. For example, Eilbert and Parket (1973) defined CSR in terms of good neighbourliness, in which corporations did what they could to help and not harm the neighbourhood. Keith Davis did reenter the scene during the 1970's and provided a more in depth definition than before. He defined CSR as the firm's consideration of and response to issues beyond the narrow economic, technical, and legal requirements of the firm… (to) accomplish social benefits along with the traditional economic gains which the firm seeks (Davis, 1973). Davis'definition is very similar to one of the most commonly used definitions still today, presented by Archie Carroll. Carroll (1979) suggested four main components of CSR: economic, legal, ethical, and discretionary. The economic component refers to an organization's duty to produce and sell goods to make a profit. Secondly, organizations have a legal responsibility. They must operate and run their business following rules and regulations set forth by societal laws and government. The third component, ethical responsibility, refers to organizations going above and beyond what is expected of them by the law. It is the behavioural norms society expects them to follow. Lastly, the discretionary component of CSR refers to organizations'voluntary roles they believe but society does not provide any clear-cut method of following.

In 1980's, it is the time when new constructs such as corporate social productivity, business ethics, and stakeholder theory begin to emerge. One of the first noteworthy definitions of the 1980's, according to Carroll (1999), was that of Thomas M. Jones. He defined CSR as the notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law and union contract (Jones, 1980). As mentioned by Carroll, a key part of Jones'definition is how this obligation is voluntary and broad. Additionally, Jones'argued CSR should be viewed as a process and not as some final outcome. This is a valid argument. Certainly corporations cannot expect that by engaging in some activity for a short period of time that they are suddenly socially responsible. Being socially responsible encompasses all aspects of a firm's operations and must be a part of daily activities.

In 1981, Frank Tuzzolino and Barry Armandi desired to create a more effective means of assessing CSR. The authors used Carroll's (1979) definition of CSR and then applied Maslow's (1954) need hierarchy to explain how various organizations have different needs. They viewed this framework as a tool to conceptually assess the social responsibility of an organization. While Tuzzolino and Armandi (1981) did not redefine CSR, they did provide readers with a new conceptualization of the construct. He purported the physiological needs of an organization are related to profitability. Businesses cannot operate if they are not profitable, just as human beings cannot live without air, water, and food. Yet another model was presented in the 1980's, Dalton and Cosier's (1982) 2 x 2 matrix, which viewed CSR as having four faces. On one axis was illegalâ€- and legal and on another was responsible and irresponsible. Carroll (1999) does state however that it may be complicated to define a socially responsible firm from this model. This complexity may stem from the fact that defining responsible versus irresponsible corporate behaviour is relative. During the 1980's, rather than creating new definitions of CSR, most researchers began to discuss different themes and categories of the concept. One example of this trend was the work completed by Rich Strand in 1983. He presented a systems model and sought to connect concepts such as CSR, social responsiveness, and social responses in an organization-environment model. It is also during the 1980's that Carroll revised his previous definition of CSR. Basically, Carroll (1983) modified the discretionary component of his definition and changed it to voluntary or philanthropic. He believed voluntary and philanthropic activities were the best examples of his discretionary component. Even though Carroll did reorient his definition, it seems throughout the CSR literature, most authors or researchers still cite Carroll's previous definition which includes the discretionary component. Perhaps the earlier definition is more appropriate for scholarly work related to CSR. Continuing the trend of linking CSR to similar concepts, Edwin M. Epstein (1987) defined CSR in hopes of relating social responsibility, responsiveness, and business ethics. Epstein defined CSR as primarily relating ―to achieving outcomes from organizational decisions concerning specific issues or problems which (by some normative standard) have beneficial rather than adverse effects on pertinent corporate stakeholders. Further, Epstein defined social responsiveness and business ethics. He tied all three concepts into what he termed corporate social policy process. What is most interesting with Epstein's definition of CSR and his term corporate social policy processâ€- is his use of outcomes and process. In his definition he presented CSR as the achievement of certain outcomes but when viewed with other constructs, such as business ethics and social responsiveness, it was part of a process. This idea somewhat contradicts Jones'(1980) definition of CSR as a process in and of itself.

The 1990's proved to be quite similar to the 1980's with CSR research. Most researchers were still concentrating on themes and related constructs of CSR, rather than seeking new definitions (Carroll, 1999). In 1991, Carroll revisited his definition of CSR once again. He wrote, The CSR firm should struggle to make a profit, obey the law, be ethical, and be a good corporate citizen. Carroll (1991) expressed his revised definition of CSR in the form of a pyramid. At the base of the pyramid was the economic component. There may be some who argue by placing the economic component as the base as the foundation of CSR is contradictory to what CSR should represent. What is important to remember however, is that if a firm does not make a profit, they cannot exist and in turn, cannot provide any type of service to society? Consequently, this is why Carroll believed the economic component is the basis of his CSR pyramid. An equally important point Carroll (1991) makes is how each of his four components of CSR should not be fulfilled sequentially. For example, a corporation should not try to meet the economic component of CSR, next concentrate on obeying the law, and so forth. Each of these aspects should be a concern of corporations at all times. As the 1990's researchers still continued the trend of researching themes of CSR rather than trying to narrowly define the construct.

However, Sims (2003) did provide one of the more concise definitions of CSR which includes most of what was presented by the previous scholars' work. Sims (2003) defined CSR as the efforts of companies to advance conditions for their employees, their communities, and the environment above and beyond what is necessitated by the law or market. While Sims does not go into detail regarding various categories of CSR, his definition does provide a general overview of the main idea of CSR. His definition included the key stakeholders of organizations (the employees, the community, and the environment) and indicates how CSR is essentially going above and beyond what is expected by the law and/or market.

Esrock and Leichty (1998) stated the definition of CSR is still unclear. Like leadership, most scholars have a common idea of what it means to guide but cannot agree on a precise definition. It also occurs on CSR. Perhaps an ideal definition is not possible, but as scholars there must be some general agreement on what is the meaning of CSR. CSR is based on the idea that businesses and society are interwoven, rather than different entities (Wood, 1991) and as noted by Sims (2003), society expects businesses to go above and beyond what is demanded by the law and/or market. Wood (1991) believed there were three behavioural characteristics of a responsive firm: (a) it monitors and assesses environmental conditions, (b) it attends to the many stakeholder demands placed on it, and (c) it designs plans and policies to respond to changing conditions all of which were originally proposed by Ackerman (1975).

Theories

According to Klimosky (1991) a theory is a set of logically related propositions that explain a set of observations. He further expressed a theory as a linguistic device used to organize a complex empirical world. With this idea in mind, scholars have cracked to create theories which best describe and capture the entire CSR phenomenon. However there is an inconsistency within the literature as to which theory is most suitable for the study of CSR. Just as there are many definitions of CSR proposed in the literature, there are also a considerable number of proposed theories. Depending on what the researcher is investigating, they theory to explain CSR may vary from others'conceptualizations. While there are a variety of theories in the literature - Garriga and Mele (2004) discussed over ten different theories - there are several theories which are more prevalent in the literature. One of the most commonly discussed and often cited theories is stakeholder theory.

Stakeholder theory is based on the questions of who matters to an organization and to whom should organizations pay attention to (Mitchell, Agle, & Wood, 1997). A stakeholder can be considered anyone an organization may impact whether those are employees, consumers, society, or even the environment. In the organizational literature, there is no major disagreement on entities which may be considered stakeholders (Mitchell, et al., 1997). What is seen as more of an issue is which stakeholders are most affected by an organization's actions and to which stakeholders should organizational management devote their attention. One of the main components of stakeholder theory is the actual stakeholders. Freeman's (1984) definition of stakeholders has been one of the most commonly used definitions in the literature: a stakeholder is any group or individual who can affect or is affected by the achievement of the organization's objectives. Carroll (1991) believed there was a natural fit between an organization and its stakeholders and many researchers echoed this belief as many primarily focused on stakeholder issues and CSR. Despite the apparent ease of fit between stakeholders and CSR, the two constructs did not develop consecutively (Jones, Wicks, & Freeman, 2002). Kakabadse and Rozuel (2007) argued this was mainly due to the difference between CSR and stakeholders. They argued that CSR dealt more with what responsibilities businesses should fulfil while the stakeholder concepts was more concerned with to whom businesses should be accountable. Garriga and Mele (2004) categorized instrumental theories are those in which the corporation is viewed only as a means to create profits and wealth with its social activities only implemented to help achieve those results. Theories of this type are driven by Friedman's (1962) view that the main goal of business is to make profits for the shareholders. The conservative theory of CSR would plunge in this category. Conservative theory emphasizes the thought that business is business, and in alignment with Friedman's (1970) thoughts, the theory is based on the idea that businesses have the sole responsibility to make adequate provisions of goods and services for society at a profit under a regulatory framework (Quazi, 2003, p. 823). While this is not the most popular theory on which to base a research framework, there are several scholars who endorse conservative theory (Bhide & Stevenson, 1990; Gaski, 1985; James, 1991). A final theory which is somewhat common in the literature is legitimacy theory. The main idea of legitimacy theory is grounded in a definition of legitimacy provided by Suchman (1995). According to him, legitimacy is a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions. Suchman went on to emphasize how heavily legitimacy of an organization relies on communication. Garriga and Mele (2004) presented four categories of theories. One of these theories is political theories that dealt with corporations' responsible (or irresponsible) use of power in society. Suchman (1995) in his definition of legitimacy, incorporated actions of an entity that are desirable, proper, and appropriate as based on some commonly accepted norms and values.

The James Hardie Business Phenomenon

In The James Hardie Story: Asbestor Victims' Claims evaded by Manufacturer, Ben Hills gives an excellent picture about managing stakeholders' fiasco. This article also provides a brief story of the asbestos manufacturer in Australia, James Hardie Industries Ltd (Hills, 2005). The James Hardie is the largest asbestos manufacturer in southern hemisphere. It was founded in 1892 by James Hardie and Andrew Reid, two Scots businessmen. The James Hardie also became "a blue-eyed boy" of Australia government because of facilities given to them. One-fourth of all the houses built in Australia used asbestos that The James Hardie produced, by the early 1950s. In 2001 the company had grown from its Australia base into a global building-product business with a market capitalization of $A3.6 billion. The problem is that The James Hardie asbestos product has given a bad effect to in contact with. One of most horrible effect is Mesothelioma. The victims of the asbestos effect sue the company to pay for the damage the company has caused. In this case, the relevant stakeholders are employees, tradesmen, users, handymen, bystanders and the government. At least until the Hills (2005) article was published, the James Hardie has been struggling with the victims claim on asbestos effect. Many efforts have been done by the company to avoid what the company said as "losses", from moving the company legal domicile to marking out some fund to pay for the asbestos damage as a response for share price collapse. These all efforts are belatedly response to what the company has done. Shortly, James Hardie has been facing several problems (Hills, 2005; Engel & Martin, 2006). Those problems are resulted by some policies and activities: company ignored its obligation to protect the health of its worker; company regularly allowed dust level in its factories to exceed then-decreed safety levels; polluted rivers; allowed its men to work without masks; denied the danger of its product in public statements; fought government attempts to place health warnings on its products; the company established what it called a Medical Research and Compensation to compensate asbestos victims without enough fund; the company moved its legal domicile overseas so that company could never be successfully sued again; the company moved it headquarter to Netherland that does not have treaty with Australia; the company provided dodgy data on claims and false also misleading information to stock exchange.

Discussion

First of all, Friedman argues that manager should be responsible for decisions and actions in business and not in social responsibility. Narrowly, decisions and actions in business are only related in maximizing the income and minimizing the cost. All cost not related in production directly has to be avoided. This includes the social responsibility cost. In the James Hardie case, the company seemed to follow this narrow perspective. Before the tribulation, this company ignored to give more attention on the worker health. There was no attention in waste processing so all waste could pollute the river directly. For pursuing the high income, company allowed the dust level to exceed and decreased the safety level. In the beginning and in the short term this strategy could be a good decision for company but for long term reason it can be a disastrous policy. The company has been paying millions dollar for compensation and rehabilitation reason over the past policies. We can see the result of this policy years later. Ignoring the social responsibility, the company has to deal with the bigger looses in the future. At least in 1980s, the problem has started to smack the company down. Organizations that create a context within which their employees are influenced to embrace environmental issues as opportunities stand to reap significant benefits from a number of sources... (Sharma, Pablo & Vredenburg, 1999).

In the short term, commonly, there are several consequences for business because of this kind of bad behaviour. It can result in the higher level of worker turn over. The company's productivity can be lower because the employees also have lower motivation. Although the company can get considerable profit, it is only a temporary trend in short term. It is because in the long term and with the market condition which is so democratic and transparent just like now, it can be predicted that the company can face a big challenge and cannot get the big profit. It can be seen in the James Hardie case when its share price collapsed in share market significantly. The consequences are not only can be experienced by the company but even more than that, it can be impacted environment and community. The pollution of the James Hardie operation that has remained in the river, air and ground, is not only can destroy the environment but also can influence the community point of view. The community can be public, non government organization and the government who concern about environment issue and can do everything to save public interest. Further, boycott also can be happened at this stage. Boycott is one of the most powerful responses of stakeholder as a reaction of the company's disobedience. The company can avoid public responsibility by doing everything but the company will never have ability to stop public or stakeholders reaction such as boycott. As the implication, the current investors and also the potential investors will think twice to put their money on the company. It is not only thinking more than twice to put their money on the company but further, they can withdraw their current investment from the company capital and it can result in the company collapse.

It can be said that stakeholders are "ultimate shareholders". This means that shareholders and top level managers are not the only entities who determine the company live. The stakeholders, such as employee, tradesmen, users, and also government, are indirect determiners for the company policy. It can be said that the company cannot stand any longer when there are no users that buy their product. The company also cannot produce anything without any employee and also it will be no distribution without any tradesmen. Another point is that the share market today is very sensitive regarding the stakeholders issue. For example, the investor and potential investor always carefully monitor the relationship between companies and their stakeholders. They will not put some fund and hope on the company that has bad relation with its stakeholders. The investors understand deeply that only with good relationship with the stakeholders, the company will grow continually. Analogically, it is similar like plants; stakeholder is an environment where the company planted and grow. Modern management, today, has more attention in customer satisfaction. This is also a fact that stakeholders have very significant role in directing the company policy. The good relationship between company and stakeholders can result in the company's prosperity. The result is that managers should not only structurally responsible to stockholder but also should socially and environmentally responsible to other stakeholders. To enact their commitment to CSR, businesses must embrace a solid set of principles and processes that can help to systematically address stakeholder demands and secure stakeholder support (Maignan & Ferrell, 2008). Thus, managers should pay keen attention to the matters of CSR and some guidance as to how they might strategically approach the subject. (Galbreath, 2006)

Friedman also mentions that social responsibility is the duty of government and not manager. From the James Hardie lesson, the government could not guarantee that such things and had no intention in a social responsibility effort. The government also did not care about the environmentally unfriendly decisions of the company. Generally, governments only care about their income from tax and others. In several countries, governments can be the backup power for companies or even the best friend of companies. It is because companies can give lot of income to governments. It also happened in the James Hardie case whereby the government gave lot of facilities to this company. Apparently, giving a lot of responsibility in social and environment matter to governments cannot guarantee companies can escape from the social responsibility in the future. This statement also justify that the social responsibility tend to be more a voluntary responsibility for companies than a mandatory one if companies want to have better future in their businesses. However, governments are also one of primary stakeholders which play the role in social responsibility. Business forms an important triangular relationship with the State and the Civil Society (Marrewijk, 2006). Public sector has to create better atmosphere for business and civil society interaction in social responsibility. The three components (company, public sector and civil society) have to voluntarily work together in this issue to achieve benefits for all. There is no reason that the social responsibility matter is the only duty of one of them. Government, pressure groups, management, the public, labour, and others, are in a constant battle to shape the CSR profile of the competitors in our marketplace (Cottrell, 1990). Further, there is also no reason that social responsibility is the duty of government and not manager.

The third statement is that the social responsibility doctrine is a socialist doctrine. It is clear that the duty of manager is not only pursuing the profit but also sustaining the life of the company. Going concern is the very famous term in modern business which so relevant with this matter. This means that one of duty of manager is to make sure that company can survive for long (Clarkson, 1995). Return to The James Hardie case, this company could get lot of profit from its policies in the past but has to pay lot of money now. The company has not only been getting financial problem from the compensation program but also financial problem from the market boycott and the share collapse. The managers had proven that they could pursue the big profit for the company but they failed to keep the company to survive. The question is can the company get more profit when it has collapsed? Definitely, it is impossible to get more profit so besides pursuing the profit managers also have to provide the sustainability of companies. Further, the main factor which has a big role in company's sustainability is social and environment responsibility. The social environment continues to play a critical role in the survival of the business firm given the increasing and ever-changing expectations of its stakeholders (Husted, 2000). Both market and control mechanisms have shown major fallacies with respect to organizing societal behaviour (Marrewijk, 2006). It can be fact that market is getting smarter now. Issues of social and environment are very sensitive factor in choosing the product. In her paper, Maignan (2001) argues that the appropriateness of corporate social responsibility as an instrument to market the organization to consumers. In this case market can be product market and share market. It also includes corporate reputation and goodwill (Sharma, Pablo & Vredenburg, 1999). When managers are more consciously aware of the social consequences of their decisions, CSR is changed from the product mode to an institutionalized process. All of those have a big impact for company's sustainability (Tuzzolino & Armadi, 1981). Sustainability can provide a chance for manager to pursue more profit for company. All ethical, moral consideration and values in corporate social responsibility concept which result in the sustainability and profitability of companies are figured by Joyner & Payne (2002) in the table below.

Table 1

Concepts of CSR

Authors

Corporate social responsibility

Ethical/Moral considerations

Values/Other

Barnard (1938)

Analyse economic, legal, moral, social and physical aspects of environment

Moral are active result of accumulated influences on persons evident actions

Responsibility: power of private code of morals to control individual conduct

Simon (1945)

Organizations must be responsible to community values

Ethical proportion assert "ought", rather than facts

Firm survival involves adapting objectives to values of customers

Drucker (1954)

Management must consider impact of every business policy upon society

Morality must be principle of action exhibited through tangible behaviour

First responsibility to society is to make a profit

Selznick (1957)

Enduring enterprise will contribute to maintenance of community stability

Definition of mission includes wider moral objectives

Leadership requires defence of critical values

Andrews (1971- revision)

Firm should have explicit strategy for community institutions

Defining firm only in financial terms leads to subordination of ethical concerns

Ethical requires defence of critical values

Freeman (1984)

Business must satisfy multiple stakeholders

Concern for ethics necessary but not sufficient to decide "what we stand for"

Enterprise strategy: what do we stand for?

Sumber: Joyner, B.E., Payne, D. (2002), Evolution and Implementation: A Study of Values, Business Ethics and Corporate. Social Responsibility, Journal of Business Ethics 41: 297-311.

In their ever-increasing need to differentiate themselves and their products, many companies are turning to the use of cause related marketing not only as a marketing strategy, but also as a way to communicate more effectively their effort to achieve high standards of corporate social responsibility through the affiliation with non-profit organizations and the decision to support important social cause (Arts, 2002).

In other words, companies that seek to promote and comply with pro-social practices should look for effective marketing and communication tools in order to stand out as renowned social responsible firms (McMurtrie, 2005). In this respect, the most obvious link between CRM and CSR is through their implication for the company's reputation, which has a relevant role in helping the firm to effectively fulfill the expectations of multiple stakeholders (Baghi et. al, 2008). Firms also realize that by promoting their CSR program the more benefit they will get. It is also the reason why in every stage of business area, firms have a different style of CSR strategy and concept.

At the local level CSR messages espouse activities that are designed to improve the neighbourhoods in which employees work and live. At the nation-state level organizations use statements describing their attempts to advance important national interests of particular countries, especially during times of great urgency or need. Finally, at the worldwide level firms present their concerns about and efforts to enhance the quality of life of citizens using the opportunities inherent in their product offerings. (Snider et. al, 2003)

Furthermore, as globalization continues to broaden its reach, firms must increasingly acknowledge and assess their responsibilities on a global scale (Pérez, 2003, Carroll, 2004). In short, more sustainable a company can result in more profitable company so manager managers have to pursue not only profit but also social responsibility for sustainability reason. It seems clear that a CSR programme can be a profitable element of corporate strategy, contributing to risk management and to the maintenance of relationships that are important to long-term profitability (The Geneva Papers, 2005). Although Friedman states and strongly oppose any responsibility of the company out of the economic, some researches propose that CSR beyond just the economic "pays" (Griffin and Mahon, 1997; Margolis and Walsh, 2001; Orlitzky et. al, 2003). CSR does have a positive financial benefit to firms (Galbreath, 2006). Conversely, the total social cost that must be born by US businesses due to socially irresponsible behaviour is well over two trillion dollars per year (Estes, 1996). Some findings suggest that CSR is an area of corporate concern that cannot be overlooked. In fact, CSR is argued to be essential to a firm's overall strategy (Andrews, 1971; Carroll and Hoy, 1984). Finally, corporate social responsibility definitely is not socialist doctrine. Social responsibility might be an obstacle for maximizing the profit in the short term but it can provide more sustainable and profitable business for long term (Sharma, Pablo & Vredenburg, 1999). Smart company does not only focus on short term profit but also maintain it sustainability power for the future. It can be said that the social responsibility doctrine is "a smart capitalist doctrine".

Conclusion

The James Hardie case has revealed the problem in Friedman argument about social responsibility. Business atmosphere, recently, has changed to a better climate not only for company but also for other stakeholders such as government and civil society. Managers should not only structurally responsible to stockholder but also should socially and environmentally responsible to other stakeholders. Also more sustainable a company can result in more profitable company so managers have to pursue not only profit but also social responsibility for sustainability reason. Moreover, the social responsibility becomes a doctrine for smart managers or smart companies.