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8/3/2019 Social Responsibility & Ethics-CH-4
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Social ResponsibilitySocial Responsibility
&&
EthicsEthics
8/3/2019 Social Responsibility & Ethics-CH-4
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Prof. Rajni Patel. GHPIBM 2
What is Social Responsibility?What is Social Responsibility?
Managers responsiveness to public consensus Managers responsiveness to public consensus--AdolphAdolph BerleBerle
Keith Davis SR to two types of Business obligations viz. (a)Keith Davis SR to two types of Business obligations viz. (a)sociosocio--economiceconomic obligation and (b)obligation and (b)sociosocio--humanhuman obligationobligation SocioSocio--economiceconomic obligations to see that the economic consequences of itsobligations to see that the economic consequences of its
action do not adversely affect public welfareaction do not adversely affect public welfare
SocioSocio--humanhuman obligation is to nurture and develop human values (morale,obligation is to nurture and develop human values (morale,cooperation, motivation, and selfcooperation, motivation, and self-- realization in work.)realization in work.)
A business firms obligation, beyond that required by laws andA business firms obligation, beyond that required by laws andeconomics, to pursue long term goals.economics, to pursue long term goals.
Different views on Social Responsibility:Different views on Social Responsibility: Communist viewCommunist view-- Imposition of SR on business through theImposition of SR on business through the
instrumentality of stateinstrumentality of state
Capitalist ViewCapitalist View an uncontrolled right to make money free from allan uncontrolled right to make money free from allsorts of SR.sorts of SR.
Pragmatic ViewPragmatic View-- it acknowledges the importance of profit butit acknowledges the importance of profit butsimultaneously stresses the need pro social responsibility.simultaneously stresses the need pro social responsibility.
Trusteeship ViewTrusteeship View-- enjoy thy wealth by renouncing itenjoy thy wealth by renouncing iti.e. earn youri.e. earn yourcrorescrores by all means but understand that your wealth is not yours.by all means but understand that your wealth is not yours.
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EvolvingEvolving ViewpointsViewpoints
3
CSR mandates that the corporation has not onlyCSR mandates that the corporation has not only
economic and legal obligations, but also certaineconomic and legal obligations, but also certain
responsibilities to society that extend beyond theseresponsibilities to society that extend beyond these
obligations (McGuire)obligations (McGuire)
CSR relates primarily to achieving outcomes fromCSR relates primarily to achieving outcomes fromorganizational decisions concerning specific issues ororganizational decisions concerning specific issues or
problems, which by some normative standard haveproblems, which by some normative standard have
beneficial rather than adverse effects upon pertinentbeneficial rather than adverse effects upon pertinent
corporate stakeholders. The normative correctness ofcorporate stakeholders. The normative correctness ofthe products of corporate action have been the mainthe products of corporate action have been the main
focus of CSR (Epstein)focus of CSR (Epstein)
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Pyramid of SRPyramid of SR
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FourFour--Part model of Corporate Social ResponsibilityPart model of Corporate Social Responsibility
Type of ResponsibilityType of Responsibility SocietalSocietal
ExpectationExpectation ExamplesExamples
PhilanthropicPhilanthropic
EthicalEthical
LegalLegal
EconomicEconomic
DESIRED ofDESIRED of
business bybusiness by
societysociety
EXPECTED ofEXPECTED of
business bybusiness bysocietysociety
REQUIRED ofREQUIRED of
business bybusiness by
societysociety
REQUIRED ofREQUIRED of
business bybusiness by
societysociety
Corporate contributions.Corporate contributions.
Programs supporting community/education.Programs supporting community/education.
Community involvement/improvement; volunteerismCommunity involvement/improvement; volunteerism
Avoid questionable practices.Avoid questionable practices.
Respond to spirit of laws.Respond to spirit of laws.
Assume law is a floorAssume law is a floor behaviorbehavior; operate above minimum; operate above minimumrequired by law.required by law.
Assert ethical leadership.Assert ethical leadership.
Obey all laws; adhere to regulations.Obey all laws; adhere to regulations.
Environmental laws.Environmental laws.
Consumer laws.Consumer laws.
Laws affecting all employees.Laws affecting all employees.
Obey Foreign Corrupt Practices Act.Obey Foreign Corrupt Practices Act.
Fulfil all contractual obligations.Fulfil all contractual obligations.
Be profitable.Be profitable.
Maximise sales revenue.Maximise sales revenue.
Minimize costs (administrative, production, marketingMinimize costs (administrative, production, marketing,,
distributiondistribution).).
Make wise strategic decisions.Make wise strategic decisions.
Be attentive to dividend policyBe attentive to dividend policy
Source: Carroll (1979))Source: Carroll (1979))
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Social Obligation
Social
Responsiveness
Social
Responsibility
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Prof. Rajni Patel. GHPIBM 7
Social responsibility vs. Social ResponsivenessSocial responsibility vs. Social Responsiveness
SocialSocial
ResponsibilityResponsibility
SocialSocial
ResponsivenessResponsiveness
Major ConsiderationMajor Consideration EthicalEthical PragmaticPragmatic
FocusFocus EndsEnds MeansMeans
EmphasisEmphasis ObligationObligation ResponsesResponses
Decision FrameworkDecision Framework Long termLong term Medium &Medium &
Short TermShort Term
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Social Responsibility of BusinessSocial Responsibility of Business
Towards Different Groups (Stakeholders)Towards Different Groups (Stakeholders)
Shareholders
Employees
Consumers
Creditors
Suppliers
Government
Society in General
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Prof. Rajni Patel. GHPIBM 9
Concept of Social ResponsibilityConcept of Social Responsibility
Andrew Carniges published a bookThe
Gospel of wealth.
His view on social responsibility was based ontwo principles:
Charity Principle.
Stewardship Principle.
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Charity PrincipleCharity Principle
Charity principle required the more fortunate
members of society to assist its less fortunate
members including the unemployed, the
handicapped, the sick & elder.
e.g. Helping to victims of natural calamities
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Stewardship PrincipleStewardship Principle
StewardshipStewardship PrinciplePrinciple requiredrequired thatthat
BusinessBusiness && wealthywealthy individualsindividuals toto viewview
themselvesthemselves asas stewards,stewards, oror caretakers,caretakers,holdingholding theirtheir propertyproperty inin trusttrust forfor thethe
benefitbenefit ofof thethe wholewhole societysociety..
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Milton Friedmans ArgumentMilton Friedmans Argument
In the 1970s and 1980s , the convergence of a numberIn the 1970s and 1980s , the convergence of a numbereconomic forces led some scholars to reeconomic forces led some scholars to re--examine the notionexamine the notionof corporate social responsibility.of corporate social responsibility.
oo There is one and only one SR of business : to use itsThere is one and only one SR of business : to use itsresources and energy in activities designed to increase itsresources and energy in activities designed to increase its
profits so long as it stays within the rules of gameprofits so long as it stays within the rules of game[and] engages in open and free competition, with out[and] engages in open and free competition, with outdeception and frauddeception and fraud
oo He also insists that managers who devotes corporateHe also insists that managers who devotes corporateresources to pursue personal and perhaps misguided ,resources to pursue personal and perhaps misguided ,
notion of the social good unfairly tax their ownnotion of the social good unfairly tax their ownshareholders, employees and customers.shareholders, employees and customers.
oo Business should produce goods and services efficientlyBusiness should produce goods and services efficientlyand leave the solution of social problems to concernedand leave the solution of social problems to concernedindividuals and govt. agenciesindividuals and govt. agencies
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Prof. Rajni Patel. GHPIBM 13
Concept of Enlightened Self InterestConcept of Enlightened Self Interest
Keith Davis has Said that there isKeith Davis has Said that there is an iron law ofan iron law of
responsibility which states that in the long runresponsibility which states that in the long run
those who do not use power in a manner thatthose who do not use power in a manner that
society considers responsible will tend to lose it.society considers responsible will tend to lose it.So it may be that it is in the enlightened selfSo it may be that it is in the enlightened self--
interest of organizations to be socially responsibleinterest of organizations to be socially responsible--
or at least responsive to social forces.or at least responsive to social forces.
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Corporate Social ResponsivenessCorporate Social Responsiveness
Robert Ackeran was among the first to suggest responsivenessRobert Ackeran was among the first to suggest responsiveness
not responsibility should be the goal of corporate socialnot responsibility should be the goal of corporate socialendeavorendeavor
How organizations become aware of and then respond toHow organizations become aware of and then respond to
social issuessocial issues--takes two approaches.takes two approaches.
oo On one hand the theory deals with how individual companiesOn one hand the theory deals with how individual companies
respond to social issues, and on other hand it deals with therespond to social issues, and on other hand it deals with the
forces that determine the social issues to which businessesforces that determine the social issues to which businesses
should respond.should respond.
oo These two approaches can be combined to classify the ways inThese two approaches can be combined to classify the ways in
which corporations can and do respond to specific social issueswhich corporations can and do respond to specific social issuesoo Corporate responses to the social issues has life cycle, startingCorporate responses to the social issues has life cycle, starting
with recognition of problem, continuing through study of thewith recognition of problem, continuing through study of the
problem and consideration of ways to deal with it.problem and consideration of ways to deal with it.
oo Implementation often comes late and at some point a companyImplementation often comes late and at some point a company
may lose the initiative as govt. or public opinion forces it to act.may lose the initiative as govt. or public opinion forces it to act.
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Prof. Rajni Patel. GHPIBM 15
Corporate Social PerformanceCorporate Social Performance In 1979, ArchieIn 1979, Archie CarroliCarroli combined the philosophies ideas ofcombined the philosophies ideas of
social responsibility and social responsiveness into a singlesocial responsibility and social responsiveness into a singletheory of corporate social action called corporate socialtheory of corporate social action called corporate socialperformance.performance.
The arena of SR debates is shaped by economic, legal andThe arena of SR debates is shaped by economic, legal andethical principlesethical principles
We support free enterprise (economic principle), the publicsWe support free enterprise (economic principle), the publicsright to a safe work place (a legal principle), and equalright to a safe work place (a legal principle), and equalemployment opportunity (an ethical principle). Together theseemployment opportunity (an ethical principle). Together theseprinciples create a social contract between business andprinciples create a social contract between business andsociety that permits companies to act as moral agencies.society that permits companies to act as moral agencies.
Their decisions and policies can reflect one of four stancesTheir decisions and policies can reflect one of four stances
oo ReactiveReactive-- respond to a social issue only after it has challengedrespond to a social issue only after it has challengedcompanys goals.companys goals.
oo DefensiveDefensive-- acts to ward off a challenge.acts to ward off a challenge.
oo AccommodativeAccommodative-- brings itself into line with govt. requirements andbrings itself into line with govt. requirements andpublic opinion.public opinion.
oo ProactiveProactive-- anticipates demands that have not yet been made.anticipates demands that have not yet been made.
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Prof. Rajni Patel. GHPIBM 16
EthicsEthics
What is Ethics?What is Ethics?
oo It is a study of how our decisions affect otherIt is a study of how our decisions affect other
people.people.
oo It is the study of people's rights and duties, theIt is the study of people's rights and duties, the
moral rules that people apply in makingmoral rules that people apply in making
decisions, and nature of the relationships amongdecisions, and nature of the relationships among
people.people.
oo Pattern of thinking of a person influence by thePattern of thinking of a person influence by the
moral principle instill in him.moral principle instill in him.
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Prof. Rajni Patel. GHPIBM 17
Four Levels of EthicsFour Levels of Ethics
LEVEL 1
Society
LEVEL 2
Stakeholders
LEVEL 3
Internal Policy
LEVEL 4
The Individual
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Prof. Rajni Patel. GHPIBM 18
Levels of Ethical Question in BusinessLevels of Ethical Question in Business
SocietalSocietal
At this level we ask questions about the basic institutions in a societyAt this level we ask questions about the basic institutions in a society
Gross inequalities of wealth, status and powerGross inequalities of wealth, status and power
StakeholderStakeholder
We ask questions about how a company should deal with the externalWe ask questions about how a company should deal with the external
groups affected by its decisions, as well as how the stakeholders shouldgroups affected by its decisions, as well as how the stakeholders shoulddeal with the companydeal with the company
Internal PolicyInternal Policy
Here we ask questions about the nature of a companys relations withHere we ask questions about the nature of a companys relations with
its employees.its employees.
PersonalPersonal Here we ask questions about how people should treat one anotherHere we ask questions about how people should treat one another
within an organization. Should we be honest with one another,within an organization. Should we be honest with one another,
whatever the consequences?whatever the consequences?
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Prof. Rajni Patel. GHPIBM 19
The Tools of EthicsThe Tools of Ethics ValuesValues
Values are relatively permanent desires that seem toValues are relatively permanent desires that seem tobe good in themselves, like peace truth, goodwillbe good in themselves, like peace truth, goodwill
Rights and DutiesRights and Duties
Right is a claim that entitles a person the room inRight is a claim that entitles a person the room inwhich to take actionwhich to take action-- a sphere of autonomya sphere of autonomy
A duty is an obligation to take specific steps and toA duty is an obligation to take specific steps and toobey the law in other respects.obey the law in other respects.
Moral RulesMoral Rules
It guide us through situations where competingIt guide us through situations where competinginterests collide.interests collide.
Human RelationshipsHuman Relationships
Every human being is connected to others in a web ofEvery human being is connected to others in a web ofrelationships. These relationships exist because werelationships. These relationships exist because weneed one another for mutual support and toneed one another for mutual support and to
accomplish our goals.accomplish our goals.
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Prof. Rajni Patel. GHPIBM 20
Common MoralityCommon Morality
Common morality is the body of moral rules governingCommon morality is the body of moral rules governing
ordinary ethical problems. Some basic principles ofordinary ethical problems. Some basic principles ofcommon morality are..common morality are..
Promise KeepingPromise Keeping
doing what you say, acceptdoing what you say, accept
NonNon--malevolencemalevolence
Have good feelings for others.Have good feelings for others.
to avoid violence in settling disputesto avoid violence in settling disputes
Mutual AidMutual Aid
Help each otherHelp each other
Respect for personsRespect for persons Regard other people as ends in themselves, not as means to ourRegard other people as ends in themselves, not as means to our
own endsown ends
Respect for propertyRespect for property
Should get consent of others before using their property.Should get consent of others before using their property.
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Prof. Rajni Patel. GHPIBM 21
Applying EthicsApplying Ethics
Institutionalizing EthicsInstitutionalizing Ethicsoo Establishing rules that do not conflict commonEstablishing rules that do not conflict common
moralitymorality
oo Create code of ethics and adhere to them.Create code of ethics and adhere to them.
oo Ways of instutionalizing ethical policy areWays of instutionalizing ethical policy are Corporate code of conductCorporate code of conduct
Ethics committeesEthics committees
Ombudsman officesOmbudsman offices
Judicial boardsJudicial boards
Ethics training programmes andEthics training programmes and Social auditsSocial audits
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Prof. Rajni Patel. GHPIBM 22
Ethical challengesEthical challenges
The challenges of RelativismThe challenges of Relativism
Moral RelativismMoral Relativism The idea that we can't decide matter of right and wrong,The idea that we can't decide matter of right and wrong,
good & evil in any rational way.good & evil in any rational way.
Nave RelativismNave Relativism The idea that all human being are themselves the standard byThe idea that all human being are themselves the standard by
which their action should be judgedwhich their action should be judged
Cultural RelativismCultural Relativism The idea that morality is relative to particular culture, societyThe idea that morality is relative to particular culture, society
or communityor community..
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Prof. Rajni Patel. GHPIBM 23
THANKSTHANKS
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