WhatisSocialResponsibility?•Contrasttheclassicalandsocioeconomicviewsofsocialresponsibility.•Discusstherolethatstakeholdersplayinthefourstagesofsocialresponsibility.•Differentiatebetweensocialobligation,socialresponsiveness,andsocialresponsibility.SocialResponsibilityandEconomicPerformance•Explainwhatresearchstudieshaveshownabouttherelationshipbetweenanorganization’ssocialinvolvementanditseconomicperformance.•Explainwhatconclusioncanbereachedregardingsocialresponsibilityandeconomicperformance.5–3TheGreeningofManagement•Describehoworganizationscangogreen.•Relatetheapproachestobeinggreentotheconceptsofsocialobligation,socialresponsiveness,andsocialresponsibility.Values-BasedManagement•Discusswhatpurposessharedvaluesserve.•Describetherelationshipofvalues-basedmanagementtoethics.5–4ManagerialEthics•Contrastthefourviewsofethics.•Discussthefactorsthataffectethicalandunethicalbehavior.•Discussthesixdeterminantsofissueintensity.•Explainwhatcodesofethicsareandhowtheireffectivenesscanbeimproved.•Describetheimportantrolesmanagersplayinencouragingethicalbehavior.5–5SocialResponsibilityandEthicsinToday’sWorld•Explainwhyethicalleadershipisimportant.•Describehowmanagerscanprovideethicalleadership.•Describesocialimpactmanagement.5–6TheClassicalViewManagement’sonlysocialresponsibilityistomaximizeprofits(createafinancialreturn)byoperatingthebusinessinthebestinterestsofthestockholders(ownersofthecorporation).Expendingthefirm’sresourcesondoing“socialgood”unjustifiablyincreasescoststhatlowerprofitstotheownersandraisespricestoconsumers.5–7TheSocioeconomicViewManagement’ssocialresponsibilitygoesbeyondmakingprofitstoincludeprotectingandimprovingsociety’swelfare.Corporationsarenotindependententitiesresponsibleonlytostockholders.Firmshaveamoralresponsibilitytolargersocietytobecomeinvolvedinsocial,legal,andpoliticalissues.“Todotherightthing”5–85–9Exhibit5.1ForPublicexpectationsLong-runprofitsEthicalobligationPublicimageBetterenvironmentDiscouragementoffurthergovernmentalregulationBalanceofresponsibilityandpowerStockholderinterestsPossessionofresourcesSuperiorityofpreventionovercureAgainstViolationofprofitmaximizationDilutionofpurposeCostsToomuchpowerLackofskillsLackofaccountability5–10Exhibit5.2SocialObligationTheobligationofabusinesstomeetitseconomicandlegalresponsibilitiesandnothingmore.SocialResponsivenessThecapacityofafirmtoadapttochangingsocietalconditionsthroughthepracticaldecisionsofitsmanagersinrespondingtoimportantsocialneeds.SocialResponsibilityAfirm’sobligationsasamoralagentextendsbeyonditslegalandeconomicobligations,tothepursuitoflong-termgoalsthataregoodforsociety.5–115–12Exhibit5.3Source:AdaptedfromS.L.WartickandP.L.Cochran,“TheEvolutionoftheCorporateSocialPerformanceModel,”AcademyofManagementReview,October1985,p.766.SocialResponsibilitySocialResponsivenessMajorconsiderationEthicalPragmaticFocusEndsMeansEmphasisObligationResponsesDecisionframeworkLongtermMediumandshorttermStudiesappeartoshowapositiverelationshipbetweensocialinvolvementandtheeconomicperformanceoffirms.Difficultiesindefiningandmeasuring“socialresponsibility”and“economicperformanceraiseissuesofvalidityandcausationinthestudies.Mutualfundsusingsocialscreeningininvestmentdecisionsslightlyoutperformedothermutualfunds.Ageneralconclusionisthatafirm’ssocialactionsdonotharmitslong-termperformance.5–13Therecognitionofthecloselinkbetweenanorganization’sdecisionandactivitiesanditsimpactonthenaturalenvironment.Globalenvironmentalproblemsfacingmanagers:Air,water,andsoilpollutionfromtoxicwastesGlobalwarmingfromgreenhousegasemissionsNaturalresourcedepletion5–14Legal(ofLightGreen)ApproachFirmssimplydowhatislegallyrequiredbyobeyinglaws,rules,andregulationswillinglyandwithoutlegalchallenge.MarketApproachFirmsrespondtothepreferencesoftheircustomersforenvironmentallyfriendlyproducts.StakeholderApproachFirmsworktomeettheenvironmentaldemandsofmultiplestakeholders—employees,suppliers,andthecommunity.ActivistApproachFirmslookforwaystorespectandpreserveenvironmentandbeactivelysociallyresponsible.5–155–16Exhibit5.4Source:BasedonR.E.Freeman.J.Pierce,andR.Dodd.ShadesofGreen:BusinessEthicsandtheEnvironment(NewYork:OxfordUniversityPress,1995).Values-BasedManagementAnapproachtomanaginginwhichmanagersestablishandupholdanorganization’ssharedvalues.ThePurposesofSharedValuesServingasguidepostsformanagerialdecisionsShapingemployeebehaviorInfluencingthedirectionofmarketingeffortsBuildingteamspiritTheBottomLineonSharedCorporateValuesAnorganization’svaluesarereflectedinthedecisionsandactionsofitsemployees.5–175–18Exhibit5.55–19Exhibit5.6PercentageofStatedValueRespondentsCustomersatisfaction77%Ethics/integrity76%Accountability61%Respectforothers59%Opencommunication51%Profitability49%Teamwork47%Innovation/change47%Continuouslearning43%Positiveworkenvironment42%Diversity41%Communityservice38%Trust37%Socialresponsibility33%Security/safety33%Empowerment32%Employeejobsatisfaction31%Havefun24%Source:“AMACorporateValuesSurvey,”(),O