Social Responsibility: Definition and Perspectives
• Corporate Social Responsibility
• The idea that business has social obligations above and beyond making a profit.
• Business has an obligation to constituent groups in society other than stockholders and beyond that prescribed by law.
Social Responsibility: Definition
and Perspectives (cont’d)
• What Does Social Responsibility Involve?
• CSR for global & transnational company
• Make profit (economic responsibility)
• Obey law (legal responsibility)
• Be ethical (ethical responsibility)
• Be a good global corporate citizen (philanthropic responsibility)
• CSR requires voluntary action
• Take creative and inspiring leadership
What Is the Role of
Business in Society?
• The Classical Economic Model (Adam Smith)
• An “invisible hand” (i.e., the efforts of competing entrepreneurs) promoted the public welfare when individuals tried to maximize short-run profits in pursuit of their own economic self-interests.
• Equates short-run profitability to social responsibility.
What Is the Role of
Business in Society? (cont’d)
• The Socioeconomic Model
• Business has an obligation to meet the needs of the many groups in society besides stockholders in its pursuit of profit.
• Stakeholder Audit: systematically identifying all the parties that could possibly be impacted by the company’s performance
Arguments For and Against
Social Responsibility
• Arguments For
• Business is unavoidably involved in social issues.
• Business has the resources to tackle today’s complex societal problems.
• A better society means a better environment for doing business.
• Corporate social action will prevent government action.
Arguments For and Against
Social Responsibility (cont’d)
• Arguments Against:
• Profit maximization ensures the efficient use of society’s resources.
• As an economic institution, business lacks the ability to pursue social goals.
• Business already has enough power.
• Because business managers are not elected, they are not directly accountable to the people.
Toward Greater Social Responsibility
• Iron Law of Responsibility
• Those who do not use power in a socially responsible way will eventually lose it.
• If business does not meet the challenge of social responsibility, then government reform legislation will force it to meet its obligations.
Social Responsibility Strategies
• Reactive Strategy
• Denying responsibility while striving to maintain the status quo by resisting change.
• Defensive Strategy
• Resisting additional social responsibilities with legal and public relations tactics.
Social Responsibility Strategies (cont’d)
• Accommodation Strategy
• Assuming social responsibility only in response to pressure from interest groups or the government.
• Proactive Strategy
• Taking the initiative in formulating and putting in place new programs that serve as role models for industry.
Figure 5.2
A Continuum of Social Responsibility Strategies
Who Benefits from Corporate
Social Responsibility
• Altruism
• The unselfish devotion to the interests of others.
• Research Findings
• There is a positive correlation between industry leadership on a socially responsible issue (pollution control) and profitability.
• Corporate social responsibility is a competitive advantage.
Who Benefits from Corporate
Social Responsibility (cont’d)
• Enlightened Self-Interest
• A business ultimately helps itself by helping solve social problems.
• An Array of Benefits for the Organization
• Tax-free incentives to employees.
• Retention of talented employees.
• Help in recruiting the talented and socially conscious.
• Help in swaying public opinion.
• Improved community living standards.
• …Others.
The Ethical Dimension
of Management
• Ethics
• The study of moral obligation involving the distinction between right and wrong.
• Business Ethics
• The study of the complex business practices and behaviors that give rise to ethical issues in organizations.
Personal Values as
Ethical Anchors
• Values
• Abstract ideals that shape one’s thinking and behavior.
• Instrumental value: enduring belief in a certain way (mode) of behaving is appropriate in all situations.
• Terminal value: enduring belief in that a certain end-state of existence (being admired) is worth striving for.
• Identifying Your Own Values
• Basic personal values are taken.
• They are not arranged consciously in order of priority
Personal Values as
Ethical Anchors (cont’d)
• Managerial Ranking of Values:
• Instrumental Values
• Honest
• Responsible
• Capable
• Ambitious
• Independent
• Terminal
• Self-respect
• Family security
• Freedom
• A sense of accomplishment
• Happiness