Social Responsibility

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