It refers to an organization s obligation to maximize its positive impact on all stakeholders & to minimize its negative impact.

Transcription

1 BUS 4070: BUSINESS ETHICS & VALUES CORPORATE SOCIAL RESPONSIBILITY Social Responsibility It refers to an organization s obligation to maximize its positive impact on all stakeholders & to minimize its negative impact. Stakeholders are customers, shareholders, employers, suppliers and the community that have a vested interest in the organization. Arguments for Social Responsibility 1. Social contract (Jean-Jacques Rousseau) 2. Balance of responsibility with power. 3. Public image. 4. Business contributes to social problems. 5. Limited resources. 6. Long-run profit. 7. Moral obligation. 8. Better social environment. 9. System interdependence requires social involvement. 10. Discouragement of further government regulations. 11. Prevention is better than cure. 12. Changing public needs and expectations Argument against social responsibility 1. Milton Friedman s stand, The Business of Business is Business

2 2. Need for profit maximization 3. Lack of social skills 4. Business has enough power 5. Divided purposes and confused expectations 6. Costs of social responsibility 7. Inability to make moral choices 8. Lack of accountability 9. Weakened international balance of payments Areas of social responsibility: The Employees Rewarding employees equitably. Promoting employees welfare e.g. education, recreation. Effective and efficient personnel administration and industrial relation practices. Giving employees equal opportunities. Safeguarding employees health and safety. Areas of social responsibility: The Consumers Giving consumers good quality and not defective products. Giving them safe products. Avoiding misleading advertisements. Responding to consumer complaints. Proper labeling, packaging and presentation of products. Conducting ample research before allowing a product on the market. Being fair in their terms of sale. Being fair in quantity and prices of products sold. Educating consumers about products and their use. Areas of social responsibility: The Suppliers Paying suppliers in good time. Being fair in allocation of tenders to suppliers. Fair and reasonable terms of purchase. Areas of social responsibility: The Creditors

3 No defaulting in payments. Paying fair and reasonable rates of interest. Paying interests and the principal on time. Areas of social responsibility: The Government Complying with government laws and regulations. Paying proper taxes. Supporting government in welfare and development programs. Areas of social responsibility: The Community Supporting or providing such things as educational, recreational, health facilities. Active participation in community development programs. Welfare programs for the aged, handicapped etc. Areas of social responsibility: Shareholders/owners Increases shareholders earnings. Pay the best dividends through the best dividend payout ratio. Safeguarding shareholders interests e.g. protecting shareholders property from fraud. Improvement of full disclosure and other areas of business dealings and economic activities. Areas of social responsibility: The General Public Creating equal employment opportunities. Giving due consideration to the minorities and disadvantaged groups. Avoiding pollution of the environment. Dimensions of Social Responsibility 1. Legal dimension It is in reference to obedience of the laws of a particular country. Law reflects society s view of codified ethics, in the sense that they embody basic notions of fair practices as established by the law makers. Laws & regulations strive to control business behavior so as to create a conducive working environment. Laws are clear-cut & unambiguous, therefore cannot be bent or broken.

4 However, laws do not address all the issues that a business may face; therefore law alone is sometimes not efficient enough in providing an ethical base in some situations. In addition, laws are good at preventing serious harm, but do nothing to promote goods. 2. The Ethical dimension It refers to the activities & behaviors that are expected or prohibited by stakeholders the community, consumers, the government & organizational members. These stakeholders have a concern about what is fair, just & within the protection of stakeholders rights. 3. The Economic dimension It deals with maximizing stakeholder value. Its goal is to make sure all stakeholders concerned reap maximum profits, whether in terms of profit, consumer satisfaction, employee satisfaction or in any other way. Social responsibility in relation to the economy encompasses a number of issues including: stockholders consumers employers the community The physical environment Competition is a major issue in reference to social responsibility. When businesses compete unfairly, legal & social responsibility issues arise. In cases of intense competition, managers may view previously unaccepted methods as ethical so as to stay ahead of the competition. 4. The Philanthropic dimension It deals with a business contribution to society. Society expects businesses to provide a high living standard & to contribute to the welfare of the society members. It came about because people want more than just the bare necessities required to sustain life, they want other things that will enhance the quality of life. They do not want to spend all their waking hours working; rather, they want to enjoy their leisure time enjoying their recreational activities.

5 Philanthropy is deemed necessary to be carried out by financially successful individuals & organizations because they have reached a point where they have satisfied all their basic & secondary needs, & have enough to give back to the society. 1 Kibera, F. N. (1996). Introduction to Business: A Kenyan Perspective. Nairobi. Ferell, O. C., Fraedrick, J., & Ferell, L. (2011). Business Ethics: Ethical Decision Making and Cases. Mason: South Western - Cengage Learning Copyright Michael G. M. Kirubi, Ph.D