Workshop_2,_Notes_09

Workshop_2,_Notes_09 - Chapter 4 Corporate Social...

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Chapter 4 Chapter 4 Corporate Social Responsibility Corporate Social Responsibility Is making a profit the only duty of the corporation? Are there duties to other stake- holders in addition to the share- holders?
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Some Criticisms of Corporations Some Criticisms of Corporations 1. Production matters more than people. 2. Undesirable bad traits are produced. 3. Corporations often seem to make the choice to be between virtue or financial success, as if it is either one or the other. 4. Executive compensation is unfair.
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Corporate Moral Responsibility Corporate Moral Responsibility Some argue that individual people have moral responsibility, but corporations do not. However - Corporations play a dominant role in American society. Owners of corporations receive from society the gift of Limited liability for owners . Historically, the legal status of corporations has changed From "legal permission" (1600) To "legal rights" (1900). Rights certainly seem to imply responsibility.
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Corporate Moral Responsibility Corporate Moral Responsibility The moral duty of corporations must include responsibility for - The actions they take The interests of all major stakeholders The decisions they make Externalities they produce Corporations also fail if they try to shield individual members from accountability for bad choices and decisions they may make.
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Corporate Moral Responsibility Corporate Moral Responsibility Narrow view - Milton Friedman: “The business of business is to make a profit.” Within the set legal limits, maximize profit. Corporations are simply custodians of wealth. (Fiduciary View) Broader view Social power of corporations brings obligations. Changing priorities makes society expect more. Corporations are responsible for externalities they produce.
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Institutionalizing ethics within the Institutionalizing ethics within the corporation corporation Corporations can take some steps: 1. Acknowledge the importance of conducting business in a moral manner. 2. Make a real effort to encourage corporate employees to be moral. 3. End defensiveness to public discussion and criticism. 4. Recognize the pluralistic nature of the social system. There is mutual interdependence between varied social groups, business included.
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Some ways to institutionalize ethics 1. Recognize that the legal system is limited and not sufficient as the sole moral guide. Being “legal” is not equal to being “moral.” 2. Balance ethics and economic efficiency. 3. Develop corporate codes of conduct. 4. Strengthen corporate moral culture - Provide models in management leadership. Provide training in ethics.
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Workshop_2,_Notes_09 - Chapter 4 Corporate Social...

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