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University of Toronto Scarborough
Mc Kinon

Chapter Two: The Responsibilities of Business Managing the Societal Force Business and Society - Unethical behaviour may be directed against the organization itself, or it may be consistent with the organizations goals but inconsistent with commonly accepted ethical principles - Unethical behaviour includes discrimination against other employees, padding expense accounts, paying or accepting bribes, questionable advertising - Media has increasingly reported a concern over the erosion of business responsibility and unethical activities in organizations cost instruct billions of dollars yearly - Massive layoffs contribute to the publics dim view of business - Issues that raise questions about ethics of business include: misuse of natural resources, close relationship with government, not treating employees properly, corporations being too big and powerful - Crisis of confidence in corporate activities - Countless major scandals shaken up business-society relationship - Enron, WorldCom, Tyco International, Xerox are some of the companies that have undermined public confidence in the integrity of business through their scandalous activities Managing the Forces of Business and the Stakeholders of Business Managing Stakeholders Interests - Business organization is the institutional centrepiece of a complex society - Society consists of people with multitude of interests, expectations and demands as to what major organizations ought to provide to accommodate peoples lifestyles - Business organizations needs to be responsive to individuals and groups who they once viewed as powerless to make claims on them - Stakeholders: individuals/groups who bear some kind of risk, whether financial, physical or other, as a result of a corporations actions. Includes such parties as suppliers, the government, and society in general. There are ethical as well as practical reasons to attend to all of their interests, even when they conflict. - A stake ranges from simply an interest in managements actions to a legal or moral right to be treated a certain way to a legal claim of ownership at the other extreme - Two broad groups of stakeholders: External and Internal Stakeholders Internal: business owners and employees among the principal groups External: government, consumers and community members - Fundamental responsibility of management is to address and manage the needs of differing stakeholder groups and the needs of the most obvious stakeholders, the owners/investors or shareholders of the business - Development of loyal relationships with customers, employees, shareholders and other stakeholders will become one of the most important determinants of commercial viability and business success; increasing shareholder value will be best served if company cultivates support of all who may influence its importance Managing the Challenges of the Societal Force Corporate Social Responsibility CSR: obligations or responsibilities of an organization to go beyond the production of goods/services at a profit, and beyond the requirements of competition, legal regulation or custom, thus acting in a way desirable in terms of the values and objectives of society - The bottom line of business is to make a profit 1. Free and competitive marketplace will moralize corporate behaviour; businesses need only to be concerned with profit since the invisible hand of free market will produce a systematic morality Free market: no economic intervention and regulation by government Competitive market: a market in which companies are generally free to enter or to leave; easy entry and exit 2. The law and the political process that turns objectives to the common good - Both views reject the exercise of independent moral judgement by corporations as actors in society 3. It is the responsibility of business organizations to develop a moral conscience and exercise ethical judgement or social responsibility - Social responsibility refers to obligations or responsibilities of an organization that involve going beyond: Production of goods/services at a profit Requirements of competition, legal regulations or customs - Archie Carrolls four-part definition asserts that the social responsibility of business encompasses the economic, legal ethical, and discretionary (philanthropic) expectations that society has of organizations at a given point in time There are issues about economic and legal ones that businesses must confront Business must address economic responsibilities it must generate goods or services that society wants A business must abide by the laws in order to fulfill its legal responsibilities Ethical responsibilities include the standards or expectations that reflect what the societal stakeholders regard as fair Business has somewhat voluntary or philanthropic responsibilities which reflect part of the implicit agreement between business and society and includes corporate donations, volunteerism and other voluntary involvement of the business with the community or other stakeholders The CSR Debate The Case FOR CSR The Case AGAINST CSR 1. Conform to Societal Expectations 5. Business is Business - Businesses are created to serve public needs - Milton Friedman argued that profit
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