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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 environment or that is socially frowned upon, like nuclear power, liquor, booze, gambling etc.
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