Social Responsibility: Definition and Perspectives

Corporate Social Responsibility (CSR) is the idea that business has: Social obligations above and beyond making a profit. Social obligations are to constituent groups in society other than stockholders and beyond that prescribed by law. Organizations include financial, environmental, and social responsibility in their core business strategies. Triple bottom line is people, planet and profit.

Carroll’s Corporate Global Social Responsibility Pyramid

CSR for global and transnational corporations working from the bottom up, CSR requires voluntary action, the global corporation should:

·         Make a profit

·         Obey the law

·         Be ethical in its practices

·         Be a good corporate citizen

What Is the Role of Business in Society?

The Classical Economic Model (Adam Smith)

An “invisible hand” promoted the public welfare. The public interest served by individuals pursuing their own economic self-interests. According to the classical economic model of business, profitability and social responsibility are the same thing.

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 affected by the company’s performance.

Sample Stakeholder Audit for Wal-Mart, the World’s Largest Retailer

Arguments For and Against Corporate 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 intervention.

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 society.

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: is denying responsibility while striving to maintain the status quo by resisting change.

Defensive Strategy: is resisting additional social responsibilities with legal and public relations tactics.

Accommodation Strategy: is assuming social responsibility only in response to pressure from interest groups or the government.

Proactive Strategy: is taking the initiative in formulating and putting in place new programs that serve as role models for the industry.

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 in environmental protection/pollution control and profitability. Corporate social responsibility is a competitive advantage in recruiting.

Enlightened Self-Interest: A business ultimately helps itself by helping solve social problems.

Corporate philanthropy: The charitable donation of company resources can be good use. Research shows that corporate giving is a form of profit-motivated advertising

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

Attracting socially conscious investors

A nontaxable benefit for employees from company donations to charitable causes

The Ethical Dimension of Management

Ethics is the study of moral obligation involving the distinction between right and wrong

Business Ethics is narrows the frame of reference to productive organizations and also referred to as management ethics or organizational ethics.

Practical Lessons from Business Ethics Research:

Ethical Hot Spots

·         Balancing work and family

·         Poor internal communications

·         Poor leadership

·         Work hours, work load

·         Lack of management support

·         Need to meet sales, budget, or profit goals

·         Little or no recognition of achievements

·         Company politics

·         Personal financial worries

·         Insufficient resources

Pressure from Above: The problem of superiors pressuring subordinates to achieve results is widespread.

Managers’ responses to pressure from above: Consciously avoid putting undue pressure on subordinates (who may act unethically to relieve the pressure). Prepare to deal with excessive organizational pressure.

Ambiguous Situations: Situations where there are no clear-cut ethical guidelines or ethical codes.
Rationalization: How Good People End Up Doing Bad Things, Perceiving an objectively questionable action as normal and acceptable.

A Call to Action: The deliberate and conscious action of a manager to do the right thing is an ethical and personal matter.

 

How Employees Tend to Rationalize Unethical Conduct

Personal Values as Ethical Anchors

Values are abstract ideals that shape one’s thinking and behavior.

Instrumental value: Enduring belief that a certain way (mode)  of behaving is appropriate in all situations

Terminal value: Enduring belief that a certain end-state of existence (being admired) is worth striving for

Identifying and Acting Upon Your Own Values

Basic personal values are taken for granted. They are not arranged consciously in order of priority.

Managerial Ranking of Values

Terminal Values:

Self-respect

Family security

Freedom

A sense of accomplishment

Happiness

Instrumental Values:

Honesty

Responsibility

Capability

Ambition

Independence

General Ethical Principles:

Self-interests

Personal virtues

Religious injunctions

Government requirements

Utilitarian benefits

Universal rules

Individual rights

Economic efficiency

Distributive justice

Contributive liberty

Encouraging Ethical Conduct

Ethics Training

Amoral managers: Managers who are neither moral nor immoral, but ethically lazy

Key features of effective ethics programs

Support of top management

Open discussion

A clear focus on ethical issues

Integration of ethics into the organization

A mechanism for anonymously reporting ethical violations

Rewarding of ethical conduct

Twelve Questions for Examining the Ethics of a Business Decision

Ethical Advocate: An ethics specialist who plays a role in top management’s decision-making.

Code of Ethics: Published statement of moral expectations requirements for an effective code:

Reference to specific practices

Is supported and equitably enforced by top management

Whistle Blowing: The reporting of perceived unethical matters