CHAPTER 1

Social Responsibility Framework

Chapter Objectives

• To define the concept of social responsibility• To trace the development of social responsibility• To examine the global nature of social responsibility• To discuss the benefits of social responsibility• To discuss the framework for understanding social

responsibility

What do you believe organizations should be responsible for

accomplishing?

Social Responsibility Defined

The adoption by a business of a strategic focus for fulfilling the economic, legal, ethical and philanthropic responsibilities expected of it by its stakeholders

Social Responsibility Defined (cont.)

• Businesses should look beyond their self-interests and recognize that they belong toa larger group that expects responsible participation.

• Applies to all types of businesses • Adopts a strategic focus • Fulfills societal expectations

Social Responsibility Defined (cont.)

• Economic responsibilities• Legal responsibilities• Ethical responsibilities• Philanthropic responsibilities

Who are the keystakeholders of the organization?

Social Responsibility Defined (cont.)

• Requires a stakeholder orientation – Customers– Employees– Investors– Stockholders– Suppliers– Government– Communities

Stakeholders

Those constituents who have a stake in, or claim on, some aspect of a company’s products, operations, markets, industry, and outcomes

Lessons Learned from Economic Crises

• Transparency• A long-term perspective• Liquidity• Limited use of derivatives• Absence of rating triggers• Minimal counter-party exposure• Diversification

Global Nature of Social Responsibility

• Who determines social responsibility on a global scale?– Host country– Home country– Outside organizations

Benefits of Social Responsibility

• Greater trust with stakeholders• Greater customer satisfaction• Stronger employee commitment• Stronger investor loyalty• Greater profitability• Countries with greater trust-based institutions

foster a productivity-enhancing environment.

Social Responsibility Builds Trust

• Trust is the glue that holds organizational relationships together.

• Stephen Covey contends that low trust results in organizational decay and relationship deterioration.

Social ResponsibilityStrengthens Employee Commitment• The greater a company’s dedication to

employees, the greater the likelihood that employees will take care of the organization.

What happens whenemployee loyalty is breached?• Quality is compromised.• Service is compromised.• Efficiency decreases.

StrengtheningEmployee Commitment

• Employee stock ownership plans (ESOPs)• Employee-centered programs

Social ResponsibilityContributes to Investor Loyalty• Investor relationships require dependability,

trust, and commitment.• Shareholders are concerned about ethics,

social responsibility, and corporate reputation.• Half of investors sell their stock

within one year.

Social ResponsibilityEnhances Economic Performance

– Economic well-being is promoted by:• Trust and a sense of community • Rigor in the legal and ethical systems • Consistent exercise of authority within society • Social institutions that foster access,

productivity and economic growth • Positive attitudes about work, innovation,

savings, and profits

Framework for Studying Social Responsibility

• Chapter 2– Strategic Management of Stakeholder Relationships

• Chapter 3– Corporate Governance

• Chapter 4– Legal, Regulatory, and Political Issues

• Chapter 5– Business Ethics and Ethical Decision Making

Framework for Studying Social Responsibility (cont.)

• Chapter 6– Strategic Approaches to Improving Ethical Behavior

• Chapter 7– Employee Relations

• Chapter 8– Consumer Relations

• Chapter 9– Community Relations and Strategic Philanthropy

Framework for Studying Social Responsibility (cont.)

• Chapter 10– Technology Issues

• Chapter 11– Sustainability Issues

• Chapter 12– Social Responsibility in a Global Environment