Management - Ch. 5

Says that management's only social responsibility is to maximize profits. Milton Friedman maintains that "there is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.

Classical Economic Model

The idea that business has social obligations above and beyond making a profit.

Corporate Social Responsibility

Remaining faithful to the classical economic model, opponents of corporate social responsibility rely on the first two arguments below. The third and fourth arguments have been voiced by those who think business is already too big and powerful. Profit maximization ensures the efficient use of society's resources. As an economic institution, because lacks the ability to pursue social goals. Business already has enough power Because managers are not elected, they are not directly accountable to the people

Describe some arguments against Corporate Social Responsibility.

Convinced that a business should be more than simply a profit machine, proponents of social responsibility have offered the following arguments. Business is unavoidably involved in social issues Business has the resources to tackle today's complex societal problems. A better society means a better environment for doing business Corporate social action will prevent government intervention.

Describe some arguments in favor of Corporate Social Responsibility.

A business ultimately helping itself by helping to solve societal problems.

Enlightened self-interest

Study of moral obligation involving right versus wrong, without it business would be chaos.

Ethics

Top-management support Open discussion of realistic ethics cases or scenarios A clear focus on ethical issues specific to the organization Integration of ethics themes into all training A mechanism for anonymously reporting ethical violations An organizational climate that rewards ethical conduct

Improve Business Ethics Techniques:

Reactive - denying responsibility and resisting change Defensive - resisting additional responsibilities with legal and public relations tactics Accommodative - assuming additional responsibilities in response to pressure Proactive - taking the initiative with new programs that serve as models for the industry

List and describe the four social responsibility strategies.

The view that management's social responsibility goes beyond making profits to include protecting and improving society's welfare. The four fundamentals to corporate social responsibilities - economic, legal, ethical, and philanthropic.

Socioeconomic Model