The Problem of Function

The Problem of Function

The problem of function.

Closely related to the problem of status is that of function. In addition to expanding greatly in size in recent years, the company has expanded functionally. It no longer is just a producer of goods and services. It now performs a number of political, welfare, social, and cultural functions as well as its primary economic function. In short, the big-business company has become a multipurpose social institution.

Since the end of World War II, corporations have tended to perform noneconomic functions to a greater extent than ever before. They have operated during most of this period at a fairly high level of capacity utilization, and on the whole they have had a favourable profit experience. They have been able to perform their primary economic function satisfactorily with respect to the national interest and their own welfare. At the same time, they have grown and become stronger financially, so that their capacity to perform social functions has expanded. Furthermore, there has been an increasing demand by the public that corporations be more socially responsible and behave in ways that are considered beneficial to the community.

As we have seen, economists are opposed to noneconomic functions of the company because they interfere with the corporation's traditional function of serving as society's chief economizing agent in the allocation of scarce resources. Political scientists have misgivings about corporate functions which are public in nature and traditionally have been the prerogatives of the state. They question whether the tendency of the company to take on political functions is in keeping with the pluralistic tradition of UK social structure and political processes. Cultural objections to the trend are based on a dislike of the tendency for corporate values and goals to become the common denominator by which values and goals in all walks of life are judged. Those who oppose noneconomic corporate functions on social grounds fear that this development may be carried so far that the open society will be destroyed and we will enter a new age of corporate feudalism.

Managers who subscribe to the doctrine of socially responsible management have a congenial attitude toward secondary noneconomic functions of the corporation. The doctrine itself is vague, however, about which functions the company ought to perform. Should the socially responsible manager conduct the affairs of the company in such a way as to bring about a better world for us all? If so, there ought to be no limitations placed on the functions performed by the corporation. Few UKs would agree to such a broad interpretation of the manager's social mandate. But if there is anything to the doctrine of socially responsible management, the company should perform at least some noneconomic functions. But which ones, and upon what grounds of legitimacy?

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