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Lecture 2 - Chapter 2

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PHIL 2600
Aaron Massecar

Philosophy - Lecture 2 Corporation  Legal status and the ownership of assets  Typically regarded as “artificial persons” in the eyes of the law  Notionally “owned” by shareholders, but exist independently of them  Managers and directors have a “fiduciary” responsibility to protect the investment of shareholders Can a Corporation have Social Responsibility?  Milton Friedman's classic article is “the social responsibility of business is to increase its profits” ◦ He argued against the notion of social responsibilities for corporations based on three main arguments: ▪ Only human beings have a moral responsibility for their actions ▪ It is managers responsibility to act solely in the interests of shareholders ▪ Social issues and problems are the proper province of the state rather than corporate managers  All organizations manifest a set of beliefs and values that lay out what is generally regarded as right or wrong in the corporation – organizational culture Why Do Corporations Have Social Responsibilities?  Business Reasons (enlightened self-interest) ◦ Extra and/or more satisfied customers ◦ Employes may be more attracted/committed ◦ Forestall legislation ◦ Long-term investment which benefits corporation  Moral Reasons: ◦ Corporations cause social problems ◦ Corporations should use their power responsibly ◦ All corporate activities have some social impacts ◦ Corporations rely on the contribution of a wide set of stakeholders in society, not just shareholders What is the Nature of Corporate Social Responsibilities?  Corporate social responsibility includes the economic, legal, ethical and philanthropic expectations placed on organizations by society at a given point in time Carroll's Four-Part Model of Corporate Social Responsibility Philanthropic Responsibilities (Desired by society) Ethical Responsibilities (Expected by society) Legal Responsibilities (Required by Society) Economic Responsibilities (Required by society) CSR In an International Context  Economic Responsibility ◦ Focus in USAon shareholders; France has extensive responsibility for employees; India has tradition of investment in the local community  Legal Responsibility ◦ State seen in Europe as key enforcer of rules; elsewhere government seen with more skepticism (e.g. corrupt, interfering with liberty)  Ethical Responsibility ◦ Wide range of local ethical values and preferences; expectations vary  Philanthropic Responsibility ◦ Europe tends to compel giving via legal framework; elsewhere (e.g. USA, India, China) companies are expected to share their wealth CSR and Strategy: Corporate Social Responsiveness  Corporate social responsiveness: Refers to the capacity of a corporation to respond to social pressures  4 “philosophies” or strategies of social responsiveness ◦ Reaction ◦ Defense ◦ Accommodation ◦ Pro-action Outcomes of CSR: Corporate Social Performances  Outcomes delineated in three concrete areas: ◦ Social Policies ◦ Social Programmes ◦ Social Impacts Stakeholder Theory Of The Firm  Developed by Edward Freeman  Stakeholder of an organization is:
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