3. Social Responsibility and Ethics in Strategic Mgmt - Copy

8/16/2019 3. Social Responsibility and Ethics in Strategic Mgmt - Copy

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Saturday, May 21, 2016

Responsibilities of a Business Firm

Social Responsibility: proposes that a privatecorporation has responsibilities to society thatextend beyond making a prot


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Friedman’s traditional view of a businessrm:

!rgues against the concept of socialresponsibility

" #rimary goal of business is prot maximi$ationnot spending shareholder money for thegeneral social interest


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%arroll’s four responsibilities of business: &inorder of priority'

(conomic

)egal

(thical

*iscretionary


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%arroll’s four responsibilities of business:


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+he ability to enter localand international markets

(nhanced reputation

%ompetitive advantage

%ost savings

+he ability to chargepremium prices

,mproved relationships withsuppliers and distributors

+he ability to attract bettertalent

-oodwill in the eyes ofpublic o.cials

!ccess to capital

Social capital refers to the goodwill of key stakeholders and provides a company with:


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Characteristics of Sustainaility

!"nvironmental

!"conomic

!Social


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%orporate Stakeholders

Stakeholders have an interest in the business

and a/ect or are a/ected by the achievement ofthe rm’s ob0ectives

(nterprise strategy1 articulates the rm’s ethicalrelationship with its stakeholders


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Stakeholder !nalysis1 the identication ofcorporate stakeholders in 2 steps:

34 #rimary stakeholders have a directconnection with the corporation and havesu.cient bargaining power to directly a/ectcorporate activities

54 Secondary stakeholders have an indirect

stake in the corporation but are also a/ected bycorporate activities

24 (stimate the e/ect on each stakeholder from aparticular strategic decision


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Reasons for 6nethical Behavior

6naware that behavior is 7uestionable

)ack of standards of conduct *i/erent cultural norms and values

Behavior1based or relationship1basedgovernance systems

*i/erent values between business people andstakeholders


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8oral Relativism claims that morality is relativeto some personal9 social9 or cultural standardand that there is not a method for decidingwhether one decision is better than another


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+ypes of 8oral Relativism include:

a;ve relativism

Role relativism

Social group relativism

%ultural relativism


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(ncouraging (thical Behavior

%ode of (thics1 species how an organi$ation

expects its employees to behave while on the 0ob

=histleblowers1 employees who report illegal

or unethical behavior on the part of others


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!pproaches to (thical Behavior

6tilitarian1 actions are 0udged by conse7uences

,ndividual rights1 fundamental rights should berespected

>ustice1 decisions must be e7uitable9 fair andimpartial in the distribution of costs and

benets to individuals or groups


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%avanagh’s 7uestions to solve ethical

problems:

34 6tility1 does it optimi$e the satisfactions of thestakeholders?

54 Rights1 *oes it respect the rights of theindividuals involved

24 >ustice1 ,s it consistent with the canons of 0ustice?


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34 =hat is the relationship between corporategovernance and social responsibility?

54 =hat is your opinion of -!# ,nternational’s

having a code of conduct for its suppliers?=hat would 8ilton Friedman say? %ontrasthis view with !rchie %arroll’s view4


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24 *oes a company have to act sel@essly to be considersocially responsible? For example9 when building a neplant9 a corporation voluntarily invested in additionale7uipment that enabled it to reduce its pollution emisbeyond any current laws4


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A4 !re the people living in a relationship1based governancsystem likely to be unethical in business dealings?

4 -iven that people rarely use a company’s code of ethito guide their decision making9 what good are the code

3. Social Responsibility and Ethics in Strategic Mgmt - Copy

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