Weiss5thEd-ch04.pptxVIP

Chapter Four The Corporation And External Stakeholders Corporate Social Responsibility Corporate social responsibility (CSR) involves an organization’s duty and obligation to respond to its stakeholders’ and the stockholders’ economic, legal, ethical, and philanthropic concerns and issues Social concerns of stakeholders Corporate interests What is the philosophical and ethical context from which corporate social responsibility and ethical decisions are made? What role does the free market play? Free Market Constraints Minimal moral restraints Full competitiveness with entry and exit Relevant information available to everyone Accurate reflection of all production costs in prices (assumes an equal balance of power, knowledge, and sophistication) Problems: Resource-rich firms create unequal information Advertising is used questionably “Invisible hand” does not exist for all situations (imperfect markets) Social Contract A set of rules and assumptions about behavior patterns among the parties to the contract Changing Used to be: stable, reliable, predictable Now: disregard for safety, equity, responsibilities toward customers and society as a whole Uneasiness with corporate power and influence (violates the quid pro quo norm) Covenantal Ethics – concerned with both social and economic relationships Figure 4.1: External Stakeholders, Moral Stakes, and Corporate Responsibilities Moral Bases for Social Responsibility Trustee for society’s resources Two-way open system, open disclosure Social costs and benefits Consumer pays for consumption and effects on society Social involvement in core competency areas Competitive Advantages for Socially Responsible Firms Reputation Successful social investment portfolios Ability to attract quality employees Expectation of public that organizations will engage in philanthropy Corporate Social Responsibility and Stakeholder Management Balancing “Carrot” and “Stick” approaches Carrot – voluntary self-regulation Vision/Mission/Valu