Chapter 5' Social Responsibility and Ethics

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Chapter 5. Social Responsibility and Ethics

• Learning Objectives
• Understand corporate social responsibility
• Identify the costs and benefits that a socially
  responsible business incurs in todays
  competitive world
• Identify the different stakeholders and their
  interests
• Identify the major social issues facing
  organizations and managers today
• Understand the different ways to measure social
  responsibility

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What are Business Organizations Responsibilities?

• Economic responsibility
• Maximize profits for shareholders
• Social Responsiveness
• A business firms responsive action to pressures
  from external environment, e.g., do not
  discriminate, do not pollute, etc
• Social responsibility
• A business firms obligation beyond that required
  by law and economies, to pursue long-term goals
  that are good for the society

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The Benefits and Costs of Being Socially
Responsible

• Benefits?

• Costs?

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How do we measure social responsibility?

• Stakeholders
• Credit market stakeholders
• Shareholders
• Banks and other creditors
• Product market stakeholders
• Customers
• Suppliers
• Organizational stakeholders
• Employees
• Communities
• Think about this What are the different
  interests of the various stakeholder groups?
  Which one should the organization try to satisfy
  first?

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Analysis of Stakeholder Power and Importance
1. Higher Power 2.High Power Low
Importance High Importance 3.
Low Power 4. Low Power Low
Importance High Importance
High Power of Stakeholder Group of Org.
Relative Importance of Stakeholder Group
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Major Social Issues

• Environmental issues
• Quality of work environment
• Consumerism
• Equal Employment Opportunity
• Community Support

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Managerial Ethics

• Philosophies guiding managerial ethical behavior
• Principles of utilitarian
• Principles of moral rights
• Whose rights should be considered?
• Principles of justice
• Golden principle
• Do onto others as you want others do onto you!

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Ethical Dilemma

• Whistle blowing
• Professional ethics vs. loyalty/obligation to
  organizations

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Ethical Issues in Global Business

• Bribery and FCPA
• Human rights vs. economic benefits
• South Africa
• China after 1989
• Consumer rights in less developed countries

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