Ch05_Summary - CHAPTER SUMMARY CHAPTER 5 What Is Social...

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CHAPTER SUMMARY – CHAPTER 5 What Is Social Responsibility? Contrast classical and socioeconomic views of social responsibility. Discuss the role that stakeholders play in the four stages of social responsibility. Differentiate between social obligation, social responsiveness, and social responsibility. The classical view says that management’s only social responsibility is to maximize profits. The socioeconomic view says that management’s social responsibility goes beyond making profits to protecting and improving society’s welfare. In the four-stage stakeholder model of social responsibility, (see Exhibit 5-1), a stage 1 manager feels responsible to only the stockholders. At stage 2, managers expand their responsibility to the employees. At stage 3, managers expand their responsibilities to other stakeholders in the specific environment, primarily customers and suppliers. Finally, at stage 4, managers feel they have a responsibility to society as a whole. Social obligation is when a firm engages in social actions because of its obligation to meet certain economic and legal responsibilities. Social responsiveness is when a firm engages in social actions in response to some popular social need. Social responsibility is a business’s intention, beyond its economic and legal obligations, to pursue long-term goals that are good for society. (See Exhibit 5-3.)
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Social Responsibility and Economic Performance Explain what research studies have shown about the relationship between an organization’s social involvement and its economic performance. Explain what conclusion can be reached regarding social responsibility and economic performance. Although the majority of the research studies have shown a positive relationship between social involvement and economic performance, it was thought that no generalizable conclusions could be made because of methodological and definitional concerns. And one study showed that social
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This note was uploaded on 02/14/2012 for the course FINANCE & 101 taught by Professor Mrhoang during the Spring '11 term at Shanghai Normal University.

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Ch05_Summary - CHAPTER SUMMARY CHAPTER 5 What Is Social...

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