Week 4 Notes
January 31, 2023 11:43 PM
Chapter 6
Managing Responsibly and Ethically
What is meant by socially responsible management
Are these companies being socially responsible
• Businesses facing a drastically changed industry environment offer employees early retirement
and buyout packages
• Large global corporations lower their costs by outsourcing to countries where human rights are
not a high priority and justify it by saying their bringing in jobs and helping strengthen the local
economies
The concept of social responsibility has been interpreted as
• Profit making only
• Going beyond profit making
• Any discretionary corporate activity intended to further social welfare
• Improving social or environmental conditions
The classical view : social obligation (filthy capitalists)
• Management's only social responsibility is to maximize profits for the benefit of the stockholders
• Doing social good unjustifiably increases costs
Social Obligation
Social obligation is a firms engaging in social actions because of its obligation to meet certain economic
and legal responsibilities
The Socio-economic view - Social Responsiveness and social responsibility (decent people)
• Management should also protect and improve societies welfare
• Corporations are responsible to more then stockholders
• Firms have a moral responsibility to larger society "to do the right thing"
Social Responsiveness
• Social responsiveness
○ A firms engaging in social actions in response to some popular social need
• Social Need
○ A need of a segment of society caused by factors such as physical and mental disabilities;
language barriers; and cultural, social or geographical isolation
• Managers in these companies are guided by social norms and values and make practical, market-
oriented decisions about their actions
• Social Responsibility
○ Is a business intention, beyond its legal and economic obligations, to do the rights things
and act in ways that are good for society
○ A socially responsible organization views things differently
○ It goes beyond what its obligated to do or chooses to do because of some popular social
need and does what it can to help improve society because its the right thing to do
, The evolution of socially responsible management
• Those supporting the socio-economic view would respond that managers should be responsible to
any group affected by the organizations decisions and actions
• Classicists would say that shareholders, or owners are the only legitimate concern
Corporate and social responsibility and economic performance
Many studies have shown positive relationship between social involvement and economic performance
• However, cannot generalize findings
A recent analysis of several studies concluded that managers can afford to be (and should be) socially
responsible
Socially Responsible Investing (SRI)
• SRI's are funds which provide a way for individual investors to support social responsible
companies
• These funds generally use some type of social screening that is - applying social and environmental
criteria to investment decisions
Sustainable management practices
Managing for sustainability
• Managers considering the impact of their organization on the natural environment
Global Environmental problems
• Serious global environmental problems include global climate change, natural resource depletion,
pollution, industrial accidents and toxic waste
• Much of the blame can be placed on industrial activities in developed 9economically wealthy)
January 31, 2023 11:43 PM
Chapter 6
Managing Responsibly and Ethically
What is meant by socially responsible management
Are these companies being socially responsible
• Businesses facing a drastically changed industry environment offer employees early retirement
and buyout packages
• Large global corporations lower their costs by outsourcing to countries where human rights are
not a high priority and justify it by saying their bringing in jobs and helping strengthen the local
economies
The concept of social responsibility has been interpreted as
• Profit making only
• Going beyond profit making
• Any discretionary corporate activity intended to further social welfare
• Improving social or environmental conditions
The classical view : social obligation (filthy capitalists)
• Management's only social responsibility is to maximize profits for the benefit of the stockholders
• Doing social good unjustifiably increases costs
Social Obligation
Social obligation is a firms engaging in social actions because of its obligation to meet certain economic
and legal responsibilities
The Socio-economic view - Social Responsiveness and social responsibility (decent people)
• Management should also protect and improve societies welfare
• Corporations are responsible to more then stockholders
• Firms have a moral responsibility to larger society "to do the right thing"
Social Responsiveness
• Social responsiveness
○ A firms engaging in social actions in response to some popular social need
• Social Need
○ A need of a segment of society caused by factors such as physical and mental disabilities;
language barriers; and cultural, social or geographical isolation
• Managers in these companies are guided by social norms and values and make practical, market-
oriented decisions about their actions
• Social Responsibility
○ Is a business intention, beyond its legal and economic obligations, to do the rights things
and act in ways that are good for society
○ A socially responsible organization views things differently
○ It goes beyond what its obligated to do or chooses to do because of some popular social
need and does what it can to help improve society because its the right thing to do
, The evolution of socially responsible management
• Those supporting the socio-economic view would respond that managers should be responsible to
any group affected by the organizations decisions and actions
• Classicists would say that shareholders, or owners are the only legitimate concern
Corporate and social responsibility and economic performance
Many studies have shown positive relationship between social involvement and economic performance
• However, cannot generalize findings
A recent analysis of several studies concluded that managers can afford to be (and should be) socially
responsible
Socially Responsible Investing (SRI)
• SRI's are funds which provide a way for individual investors to support social responsible
companies
• These funds generally use some type of social screening that is - applying social and environmental
criteria to investment decisions
Sustainable management practices
Managing for sustainability
• Managers considering the impact of their organization on the natural environment
Global Environmental problems
• Serious global environmental problems include global climate change, natural resource depletion,
pollution, industrial accidents and toxic waste
• Much of the blame can be placed on industrial activities in developed 9economically wealthy)
