Corporate social responsibility

Corporate Social Responsibility (CSR) is one of the most important concepts in business reporting. Every corporation does its best to try out and implement a policy regarding the CSR with the mindset of guiding the production of the annual report with details of the activitiy. In that light, it is possible to diagnose the action of business, which is communally accountable against strategies and actions that are irresponsible. Regardless, there is no agreement on what is socially responsible. Business corporations have focused on using the CSR programs to improve the image and reputation, improve the engagement of both consumer and employee, and maximize the income through innovation and reduction of operation costs. This paper considers the case of Merck and Company and the river blindness medicine and describes how right or wrong the decision was with regard to the four CSR principles.

The Stakeholders

Merck was faced with a dilemma of choosing whether to produce a drug for curing river blindness, Mectizan, from Ivermectin, a veterinary drug. The drug would have to be tested and modified to make it fit for consumption by humans. The Food and Drug Authority (FDA) would have to verify it and approve it. World Health Organization (WHO) would also be interested in knowing whether the drug meets the health standards. Since the tests had to be done on humans, the human rights activists would want to know whether the tests are done in compliance with human rights. Since Merck is a corporation and can only afford to carry out its transactions using the corporates’ money, the corporates would also be interested in knowing what decision is made and how the company intends to proceed. The most important stakeholders, however, are the poor people who are suffering from a deadly disease whose drug they cannot afford. Other stakeholders include the department of health and federal, state and local authorities, the company’s employees and trustees, and the general public.

Corporate Social Responsibility Pyramid

The production of Ivermectin in a form that is suitable for human consumption was too costly. Production and trials for the sake of approval of the new drug would cost $100 million. This implies that the drug would be too expensive for those who needed it. Even if the company was to decide to sell the drug at cost, it would still be way too expensive for the poor population in need of the drug. This fact makes the decision to go ahead with the production of the drug a violation of the economic responsibility, which requires the corporation to be profitable in all of its investments. The society requires any business to be profitable since it is only by being profitable that it can sustain itself and pay back the owners or shareholders. The corporates expect the company to generate profits from any investment of their money. To take care of this violation, Merck went ahead and asked humanitarian organizations like WHO to help it cover the cost of production, their attempts were unsuccessful. Even though the drug was promising, no organization was willing to help cover the costs of producing it. The organization is also required by the society to abide by all federal, state and local laws, even if the nature of the business does not require it to follow such rules. Merck’s research scientists were convinced that Ivermectin was well suited for curing river blindness, and all that had to be done was to reproduce it in a form that is consumable by humans. However, despite their conviction, it was the company’s legal responsibility to carry out all the necessary researches and tests in order to prove that it is actually suitable for human consumption, as is required by the law. This would cost millions of dollars, but it had to be done if the drug was to be approved. The fact that the research and tests could be very costly also presented a dilemma since the cost incurred could be too high to warrant any profit considering the economic status of the target population.

Merck also had a responsibility to conduct the research ethically and abide by all norms and moral laws, which are not included in the existing laws. It was their ethical responsibility to ensure that the drug was completely harmless to the people who would use it. They also were required to save humanity by providing the drug that would help save the vast populations of people who were affected by river blindness. Knowing a drug exists that could help the suffering people, but choosing to develop the drug thereby letting people die could have been a violation of the company’s ethical responsibility. There was no law that compelled Merck to go ahead with the development of Mectizan but it was only morally upright to proceed with the investment.

Philanthropic responsibilities require businesses to give voluntarily without expecting any profits. The public today expect businesses to give back to the society by helping the members of the community who need help. Since the people who were suffering from river blindness really needed help, it was their responsibility to go ahead and save the people. The problem was, the action would violate the economic responsibilities of the company.

Organizational Values

Merck has a set of values that are adhered to by the company. They devote themselves to preserving and improving human life. They also strive to uphold the highest standards of ethics and integrity. The company commit their research and activities to improving human and animal health. According to their values, they only expect profits from work that is benefits humanity and meets the needs of the customers. If the company goes ahead and produces Mectizan then distributes it for free, it violates its value where it expects profits from satisfying works, since producing the drug is both satisfying to the customers and benefits humanity. If the company ignores the drug prospect and does not produce it, it will violate its commitment to improving human life and put its ethical and integrity standards in jeopardy.

Stakeholder Impact and Trust

In case the drug failed after millions of dollars had been spent on it, the harm to the company would be justifiable because it was only undertaken in a bid to improve human life and benefit the society. The intention for undertaking the activity would justify any resulting harm to the company. If Merck decided not to pursue the development of the drug, its research scientists would not trust the company and its commitment to ethical requirements. They would also lose their trust in the leadership of the executives. The stakeholders, who are members of the society, would also lose their trust in the company because they expect the company to take any necessary steps to minimize human suffering.

Final Decision

If I was the CEO of Merck and the final decision was mine, I would choose to permit the development of the new drug even though the decision would be very risky. I believe that the fact that there will be no profit generated should not hinder a decision to save people from their suffering. The act of mercy can also help in boosting the public image of the company, thereby making it more profitable. Many people will trust the company’s reputation and its intentions. As a result, the company will receive more customers. So, indirectly, the free distribution of Mectizan will help the company become more profitable, thereby meeting the economic responsibility. Since in this view, the investment complies with the economic, legal, ethical and philanthropic responsibilities as proposed by Carroll’s theory of corporate social responsibility, I would feel very comfortable as the CEO of Merck to announce my position to the board of trustees, the employees and the media.