Chapter 3 Social Responsibility and Ethics

Management: Challenges for Tomorrows Leaders 5th Edition

Pamela S. Lewis Stephen H. Goodman Patricia M. Fandt Joseph F. Michilitsch
Slides Prepared by Bruce R. Barringer University of Central Florida

2007 Thomson South-Western Publishing

Stakeholders
Stakeholders are all those who are affected by or can affect the activities of the firm.

2001 South-Western Publishing

Transparency 3-2

Primary and Secondary Stakeholders

Primary Stakeholders
Those who have a formal, official, or contractual relationship with the organization.

Secondary Stakeholders
Other societal groups that are affected by the activities of the firm.

2001 South-Western Publishing

Transparency 3-3

The Stakeholder View of the Firm

Secondary Stakeholders Primary Stakeholders Owners Suppliers Other Special Interest Groups

Environmental Group

Consumer Group

Local Community Group

Organization
Employees Customers

Media
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ACLU
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Corporate Social Responsibility Defined

Slide 1 of 2

The interaction between business and the social environment in which it exists.

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Corporate Social Responsibility Defined

Slide 2 of 2

What specifically does social responsibility mean?

Does it mean that the corporations actions must not harm society? Does it mean that a corporations actions should benefit society?

or

2001 South-Western Publishing

Transparency 3-6

The Premises of the Social Responsibility Debate

Social contract
An implied set of rights and obligations that are inherent in social policy and assumed by business.

Moral agent
The obligation of a business to act honorably and to reflect and enforce values that are consistent with those of society.

2001 South-Western Publishing

Transparency 3-7

Four Perspectives of Social Responsibility

Slide 1 of 2

Economic Perspective
The responsibility of business is to make a profit within the rules of the game. Organizations cannot be moral agents. Only individuals can serve as moral agents.

Legal Perspective
Businesses should act in a way that is consistent with societys view of responsible behavior, as well as with established laws and policies.
2001 South-Western Publishing Transparency 3-8

Four Perspectives of Social Responsibility

Slide 2 of 2

Ethical Perspective
Organizations should develop an internal environment that encourages and supports ethical behavior at an individual level.

Philanthropic Perspective
Business should proactively seek to contribute to society in a positive way.

2001 South-Western Publishing

Transparency 3-9

The Four Faces of Social Responsibility

Legal/Responsible

Legal/Irresponsible

Illegal/Responsible

Illegal/Irresponsible

2001 South-Western Publishing

Transparency 3-10

Social Responsibility Strategies

Slide 1 of 3

Continuum of strategies based on the organizations tendency to be socially responsible or responsive.

Reaction Do Nothing Defense Accommodation Proaction Do Much

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Social Responsibility Strategies

Slide 2 of 3

Reaction
An organization that assumes a reaction stance simply fails to act in a socially responsible manner.

Defense
Organizations that pursue a defense strategy respond to social challenges only when it is necessary to defend their current position.

2001 South-Western Publishing

Transparency 3-12

Social Responsibility Strategies

Slide 3 of 3

Accommodation
Corporations with an accommodation strategy readily adapt behaviors to comply with public policy and regulation where necessary and, more importantly, attempt to be responsive to public expectations.

Proaction
Organizations that assume a proaction strategy subscribe to the notion of social responsiveness.
2001 South-Western Publishing Transparency 3-13

Ten Commandments of Social Responsibility

Slide 1 of 4

Commandment I
Thou shall take corrective action before it is required.

Commandment II
Thou shall work with affected constituents to resolve mutual problems.

Commandment III
Thou shall work to establish industry-wide standards and self-regulation.
2001 South-Western Publishing Transparency 3-14

Ten Commandments of Social Responsibility

Slide 2 of 4

Commandment IV
Thou shall publicly admit your mistakes.

Commandment V
Thou shall get involved in appropriate social programs.

Commandment VI
Thou shall help correct environmental problems.
2001 South-Western Publishing Transparency 3-15

Ten Commandments of Social Responsibility

Slide 3 of 4

Commandment VII
Thou shall monitor the changing social environment.

Commandment VIII
Thou shall establish and enforce a corporate code of ethics.

Commandment IX
Thou shall take needed public stands on social issues.
2001 South-Western Publishing Transparency 3-16

Ten Commandments of Social Responsibility

Slide 4 of 4

Commandment X
Thou shall strive to make profits on an ongoing basis.

2001 South-Western Publishing

Transparency 3-17