Chapter 5 - Chapter 5: Social Responsibility and Managerial...

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Chapter 5: Social Responsibility and Managerial Ethics Social Responsibility Two Views of Social Responsibility The Classical View: The view that management’s only social responsibility is to maximize profits. - Milton Friedman argues that managers’ primary responsibility is to operate the business in the best interest of the stockholders (the owners of the corporation) The Socioeconomic View: The view that management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare - They have a responsibility to the larger society that allows their formation through various laws and regulations and supports them by purchasing their products and services. - I.E. Avon Products Inc. started the Breast Cancer Crusade, to educate women about early breast cancer detection. Lesser Social Responsibility Greater Stage 1 Stage 2 Stage 3 Stage 4 Owners and Management Employees Constituents in the Specific Environment Broader Society Stage 1 – Manager is following the classical view of social responsibility and obeys all laws and regulations while caring for the stockholders’ interest Stage 2 – Managers expand their responsibilities to another important stakeholder group, to attract keep and motivate good employees - improve working conditions, expand employee rights, increase job security, and focus on human resource concerns Stage 3 – Managers expand their responsibilities to other stakeholders in the specific environment, primarily customers and suppliers - this includes fair prices, high quality products and services, safe products, good supplier relations, and similar actions Stage 4 – Managers have a responsibility to society as a whole they view their business as a public entity and therefore feel it’s important to advance the public good - this includes social justice, preserving the environment, and social and cultural activities Obligations to Responsiveness to Responsibility Social obligation – When affirm engages in social actions because of its obligation to meet certain economic and legal responsibilities Social responsiveness – When a firm engages in social actions in response to some popular social need Social responsibility – A business’s intention, beyond its legal and economic obligations, to do the right things and act in ways that are good for society 1/9
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Chapter 5: Social Responsibility and Managerial Ethics Social Responsibility Social Responsiveness Major consideration Ethical Pragmatic Focus Ends Means Emphasis Obligation Responses Decision framework Long term Medium and short term -------------------------------------------------------------------------------------------------------------------------------------- - Social Involvement and Economic Performance Some investors have mutual funds that support socially responsible companies. These funding use a type of social screening to apply social criteria to investment decisions. Don’t invest in companies that will harm the
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This note was uploaded on 04/08/2010 for the course BUS mgmt340 taught by Professor Tompson during the Spring '10 term at University of Illinois, Urbana Champaign.

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Chapter 5 - Chapter 5: Social Responsibility and Managerial...

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