STRAMA (PL) - H4

Social Responsibility

According to Akhilesh Ganti (2022), (___ ___) is an ethical framework that asserts that an individual is obligated to work and cooperate with other individuals and organizations to benefit society and their environment as a whole.

Corporate Social Responsibility (CSR)

Social Responsibility is referred to as?

Corporate Social Responsibility (CSR)

This self-regulating business model helps a company act responsibly in many ways, such as engaging in ethical labor practices, producing goods and services in a way that is not harmful to society or the environment, preserving natural resources, and changing manufacturing processes to reduce carbon emissions.

Corporate Social Responsibility (CSR)

The realization that businesses must adopt policies and engage in (__) emphasizes that a business's ability to maintain a balance between pursuing economic performance and adhering to societal and environmental issues is a critical factor in operating effectively and efficiently.

Friedman’s traditional view of business responsibility.

Milton Friedman argued against the concept of social responsibility as a function of the business. According to Friedman, the primary social responsibility of a business is to use its resources and engage only in activities designed to increase profit so long as it stays within the rules of open and free competition without deception or fraud.

Milton Friedman

He argued against the concept of social responsibility as a function of the business.

Friedman’s traditional view of business responsibility.

Example: A businessperson who acts “responsibly” by cutting the price of the firm’s product to aid the poor, or by making expenditures to reduce pollution, or hiring the hard-core unemployed, is spending the shareholder’s money for general social interest.

Friedman’s traditional view of business responsibility.

Even if the businessperson has shareholder permission or even encouragement to do so, he or she is still acting from motives other than economic and may, in the long run, harm the very society the firm is trying to help. By taking on the burden of these social costs, the business becomes less efficient, resulting in price increases to pay for the increased costs or postpone investments in new activities and research. These results negatively affect the long-term efficiency of a business.

Carroll’s four (4) responsibilities of business.

Archie Carroll proposed that maximization of profits cannot be the primary obligation of a business. He suggested that business organizations have four (4) responsibilities as follows.

Archie Carroll

He suggested that business organizations have four (4) responsibilities as follows.

Economic.

A business organization is responsible for producing goods and services of value to society so that the firm may repay its creditors and increase the wealth of its shareholders.

Economic.

Example: The launch of Apple’s Iphone devices has changed society in many ways. It allows users to call, text, email, facetime, and use social networking at an easier and faster rate. In return, Apple became the world’s first $3 trillion company.

Legal.

A business organization has legal responsibilities that are defined by governments in laws that management is expected to obey.

Legal.

Example: U.S. business firms are required to hire and promote people based on their credentials rather than to discriminate on non-job-related characteristics such as race, gender, or religion.

Ethical.

A business organization is responsible for following the generally held beliefs about behavior in a society.

Ethical

Example: Society generally expects firms to work with the employees and the community in planning for layoffs, even though no law may require this. The affected people can get very upset if an organization’s management fails to act according to prevailing ethical values.

Discretionary.

A business organization has responsibilities that are purely voluntary on the part of the corporation.

Discretionary.

The difference between ethical and discretionary responsibilities is that few people expect an organization to fulfill discretionary responsibilities, whereas many expect an organization to fulfill ethical ones.

Discretionary.

Example: philanthropic contributions, training unemployed people, and providing day care centers.

Carroll’s four (4) responsibilities of business.

Carroll listed these four (4) responsibilities in order of priority. A business firm must first make a profit to satisfy its economic responsibilities. To continue, the firm must follow the laws, thus fulfilling its legal obligations. Having met the two (2) basic responsibilities, according to Carroll, a firm should look to fulfilling its social responsibilities.

Carroll’s four (4) responsibilities of business.

Social responsibility, therefore, includes both ethical and discretionary, but not economic and legal responsibilities. A firm can fulfill its ethical responsibilities by taking actions that society tends to value but has not yet put into law. When ethical responsibilities are satisfied, a firm can focus on discretionary responsibilities—purely voluntary actions that society has not yet decided to expect from every company.

Carroll’s four (4) responsibilities of business.

Example: When Cisco Systems decided to dismiss 6,000 full-time employees, it provided a novel severance package. Those employees who agreed to work for a local non-profit organization for a year would receive one-third of their salaries plus benefits and stock options and be the first to be rehired. Non-profit organizations were delighted to hire such highly qualified people, and Cisco could maintain its talent pool for when it could hire again.

Peter Drucker’s view of social responsibility.

Peter Drucker suggests that companies should ensure that their social responsibilities also become business opportunities.

Peter Drucker’s view of social responsibility.

Cohen (2010) cited that (?) highlights considerations for workers that are part of the responsibility of a corporate leader just as much as the profits, survival, and growth of the business or organization.

Peter Drucker

He suggests that companies should ensure that their social responsibilities also become business opportunities.

Government cannot solve many social problems.

This suggests that companies may tailor their program to help eradicate existing social problems while maintaining business stability and profitability.

The corporate mission comes first.

The first social responsibility of the business is to make a profit sufficient to cover operational costs in the future.

The corporate mission comes first.

Once the organization failed in its primary mission, its initiative for social responsibility would go out of existence.

The corporate mission comes first.

So, if this basic social responsibility of fulfilling the organization’s purpose is not met, no other social responsibility can be met either.

The unlimited liability clause.

An unlimited liability clause means that the organization assumes full legal responsibility for the future outcome of their initiatives, their company’s debts, and all other financial commitments.

Albert Carr’s view of social responsibility.

Carr argues that business is a game and that business ethics differs from private life ethics.

Albert Carr’s view of social responsibility.

Wheelen (2018) cited that (?) views business practices such as bluffing and not telling the truth as normal and morally acceptable in business.

Albert Carr’s view of social responsibility.

He also claims that one cannot apply a single standard of ethics universally as situations differ.

Edward Freeman’s view of social responsibility.

He holds a very favorable view of social responsibility.

Edward Freeman’s view of social responsibility.

Wheelen (2018) cited that (person) believes in a “Stockholder Theory,” that any person or organization that has an underlying interest in the business should also play a role of participation in the business’ actions and decisions --- responsibility to customers, responsibility employees, responsibility to financers, responsibility to suppliers, and responsibility to communities.

Stakeholder

It is someone with an interest or concern in a particular business undertaking.

Stakeholder analysis

It involves the identification and evaluation of corporate stakeholders.

Identify primary stakeholders.

The (?) stakeholders are those who directly connect with the corporation and have sufficient bargaining power to affect corporate activities directly.

Identify primary stakeholders.

These include customers, employees, suppliers, shareholders, and creditos.

Identify secondary stakeholders.

The (?) stakeholders are those who have only an indirect stake in the corporation and are also affected by corporate activities.

Identify secondary stakeholders.

These usually include non governmental organizations, activists, local communities, trade associations, competitors, and the government.

Analyze stakeholder influence over strategic decisions.

The primary decision criteria used by management are generally economic, which is why secondary stakeholders may be ignored or discounted as unimportant.

Analyze stakeholder influence over strategic decisions.

For a firm to fulfill its ethical or discretionary responsibilities, it must seriously consider the needs and wants of its secondary stakeholders in any strategic decision.

Ethics

It is the consensually accepted standard of behavior for an occupation, a trade, or a profession.

Morality

It constitutes one’s rules of personal behavior based on religious or philosophical grounds.

Law

It refers to formal codes that permit or forbid certain behaviors and may or may not enforce ethics or morality.

Utilitarian approach.

This approach proposes that actions and plans should be judged by their consequences.

Utilitarian approach.

Therefore, people should behave in a way that will produce the greatest benefit to society and produce the least harm or the lowest cost.

Utilitarian approach.

A problem with this approach is the difficulty in recognizing all the benefits and costs of any particular decision.

Utilitarian approach.

Camillus et al. (2021) stated that research reveals that CEOs prioritize only the stakeholders who have the most power (ability to affect the company), legitimacy (legal or moral claim on company resources), and urgency (demand for immediate attention). Therefore, only the most obvious stakeholders will likely be considered while others are ignored.

Individual rights approach.

This approach proposes that human beings have certain fundamental rights that should be respected in all decisions.

Individual rights approach.

A particular decision or behavior should be avoided if it interferes with the rights of others.

Individual rights approach.

A problem with this approach is in defining “fundamental rights.” Some constitution includes a “bill of rights” or a list of important rights to a country’s citizens, which may or may not be accepted worldwide.

Individual rights approach.

The approach can also encourage selfish behavior when someone defines a personal need or want as a “right.”

Justice approach.

This approach proposes that decision-makers can be equitable, fair, and impartial in distributing costs and benefits to individuals and groups.

Justice approach.

It follows the principles of distributive justice wherein people who are similar on relevant dimensions such as job seniority should be treated similarly.

Justice approach.

In addition, it follows fairness wherein liberty should be equal for all persons.

Justice approach.

This approach can also include the concepts of retributive justice, wherein punishment should be proportional to the offense, and compensatory justice, wherein wrongs should be compensated in proportion to the offense.