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Chapter 5
(Lecture Outline and
Line Art Presentation)

Management’s
Social and Ethical
Responsibilities

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.

managepedia.blogspot.com Lecture Outline Presentation and Line Art, 5–2

Social Responsibility: Definition
and Perspectives (cont’d)
• What Does Social Responsibility Involve?
• Voluntary action
• Action before lawsuits or other actions that are
taken to force a firm to take action on a matter.
• An emphasis on means, not ends
• How the decision to act was reached, not the
decision itself.


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


Figure
A Sample
Stakeholder
Audit for Wal-
Mart, the
World’s Largest
Reailer


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.


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