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York University
Administrative Studies
ADMS 1000
Len Karakowsky

SESSION 3 Societal Context & Labour Context QUESTIONS TO ADDRESS What is the importance of considering business’s role in society? What stakeholders must business consider and how might this affect business policy? WHAT IS BUSINESS & SOCIETY? Business: private, commercially oriented organizations Society: a community/national or group of people with common values, traditions, institutions, activities & interests THE BUSINESS-SOCIETY RELATIONSHIP Assuming a relationship between business and society connects to notions of ‘embeddedness’ and organizations as ‘open systems’ BUSINESS & SOCIETY: CONTEMPORARY CONCERNS Business helping society Example: Levi’s SHOULD BUSINESS HAVE ANY RESPONSIBILITIES TO SOCIETY? AND IF SO, WHAT IS THE NATURE OF THOSE REPSONSIBILITIES? CORPORATE SOCIAL RESPONSIBILITY THE ROLE OF BUSINESS IN SOCIETY: CORPORATE SOCIAL RESPONSIBILITY The obligation of decision makers to take actions which protect and improve the welfare of society as a whole along with their own interests (Davis & Blomstrom, 1975). Corporate Social Responsibility (CSR) obligations that involve going beyond: the production of goods/services at a profit the requirement of competition, law or custom To create policies, make decisions & engage in actions that are desirable in terms of the values & objectives of society. Examples of CSR: • 3M & health of employees • Merck Pharmaceutical & River Blindness Can you think of examples of companies that have recently demonstrated CSR? • 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 (Carroll, 1979). • A PYRAMID OF RESPONSIBILITIES! THE CSR PYRAMID THE CSR PYRAMID: A STAKEHOLDER PERSPECTIVE • Economic responsibilities • Legal responsibilities • Ethical responsibilities • Philanthropic responsibilities THE CSR PYRAMID • Components can be interdependent rather than mutually exclusive. e.g., serving ethical responsibilities does not necessarily mean that profit (economic responsibilities) will be sacrificed – or vice versa. Let’s explain what that means through an example • Components can be interdependent rather than mutually exclusive. • Example: Merck Pharmaceutical case re-visited THE CSR PYRAMID • However, there may also be tensions between the components – e.g., “profits versus ethics”. • Our discussion of this pyramid has already implied that business is responsible to more than simply its owners or shareholders! • Rather there exists a network of STAKEHOLDERS FOR WHICH THESE REPSONSIBILITIES EXITS • What or who are the stakeholders of business? Find out in our next module! THE STAKEHOLDERS OF BUSINESS STAKEHOLDERS, BUSINESS & SOCIETY WHAT IS A STAKE? An Interest or share in an activity A Right - a legal right e.g. to fair treatment or a moral right, e.g. to expect satisfactory service Ownership – a legal title to an asset/ property A stakeholder is any individual or group who can affect or is affected by the actions, decisions, policies, practices or goals of the organization STAKEHOLDER VIEW OF THE FIRM: Primary & Secondary Stakeholders PRIMARY & SECONDARY STAKEHOLDERS Primary stakeholders have a direct stake in the organization and its success Secondary stakeholders influential but stake is more representational – of public or special interest Accountability to secondary stakeholders is less but these groups may be very powerful NONSOCIAL STAKEHOLDERS PRIMARY NONSOCIAL STAKEHOLDER SECONDARY NONSOCIAL STAKEHOLDERS The natural environment Environmental pressure groups Future generations Animal welfare groups Nonhuman species KEY QUESTIONS IN STAKEHOLDER MANAGEMENT Who are our stakeholders? What are our stakeholders stakes? What opportunities and challenges do our stakeholders present to the firm? What responsibilities does the firm have to its stakeholders? What strategies or actions should the firm take to manage challenges and maximize opportunities? THE CASE AGAINST CORPORATE SOCIAL RESPONSIBILITY Who is the main stakeholder of business? The owners/shareholders! A business’s primary responsibility is to its owners or shareholders Businesses are economic NOT social institutions profit maximization is the goal of private business social policy is the jurisdiction of gov’t An excuse for big business to increase its power keep business out of politics “Business should stick to its business. Any other position will
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