Social Responsibility (Chapter 2)
Social Responsibility: Definition and Stakeholders
- Social responsibility is the overall way a business attempts to balance its commitments to its stakeholders.
- Organizational Stakeholders: entities that are directly affected by the practices of an organization
- Customers
- Employees
- Investors
- Suppliers
- Local Community
- Environment
Responsibility toward Customers
- Consumerism: protecting the rights of consumers in their dealings with businesses.
- Consumer Bill of Rights: the right to
- safe products
- be informed
- be heard
- to choose
- be educated
- courteous service
- Offering fair pricing
- Not engaging in collusion: an illegal agreement between companies to commit a wrongful act
- Not engaging in price gouging: responding to increase in demand with an overly steep price increase
- Providing ethical advertising
- Not exaggerating
- Not using confusing or misleading terms
- Not being inappropriate or offensive
Responsibility toward Employees
- Provide work and life balance
- Offer professional development
- Treat terminated employees with respect
- Provide equal opportunity
- Understand the complexities regarding a whistle-blower
- An employee who discovers and tries to put an end to a company’s unethical actions
- by publicizing them to a regulatory agency or the media
Responsibility toward Investors
- Not engaging in irresponsible behavior towards investors (share/stockholders)
- Examples of irresponsible actions include:
- Insider trading: using confidential information to gain from the purchase or sale of stocks
- Misrepresentation of finances: not following accounting standards or over/under inflating numbers
- Suppliers: create mutually beneficial partnership arrangements with suppliers
- Local and International Communities: involvement in programs and charities
- Maximize positive impact and minimize negative impact
Responsibility toward the Environment
- Work to reduce air, water and land pollution
- Green Marketing of environmentally friendly goods
- Promoting sustainable products and packaging
- Adopting eco-friendly production and materials
- Investing in carbon offset and environmental restoration
Spectrum of Approaches to Social Responsibility
- Obstructionist Stance: doing as little as possible, deny and deflect
- Defensive Stance: meeting only minimum legal requirements
- Accommodative Stance: if asked to do so, exceeding minimum responsibilities
- Proactive Stance: actively seeking opportunities to contribute to the community and environment
- (Note: The spectrum is usually read from most to least proactive; Obstructionist represents the least proactive and Proactive the most.)
Evaluating Social Responsibility & Contemporary Social Consciousness
- Contemporary Social Consciousness: the expectation of an expanded role for business
- To protect and enhance the general welfare of society and the environment
- And to hold the business accountable
- Corporate Social Audit: an analysis of the effectiveness of a firm’s social performance
- How well the firm used funds to achieve social responsibility goals
