Social Responsibility and Organizational Ethics

AuthorThomas Haynes
Pages673-677

Page 673

The term social responsibility means different things to different people. Generally, corporate social responsibility is the obligation to take action that protects and improves the welfare of society as a whole, as well as supports organizational interests. According to the concept of corporate social responsibility, a manager must strive to achieve both organizational and societal goals.

CURRENT PERSPECTIVES

Current perspectives regarding the fundamentals of social responsibility for businesses include the long-standing Davis model of corporate social responsibility, various categories of business social responsibility, and varying positions regarding the role and expectations for business in the social responsibility arena.

First, the Davis model for social responsibility, developed by Keith Davis, suggests that there are five key concepts or propositions that drive business socially responsible behavior. These are:

Proposition 1: Social responsibility arises from social power.

Proposition 2: Business shall operate as an open system, with open receipt of inputs from society and open disclosure of its operation to the public.

Proposition 3: The social costs and benefits of an activity, product, or service shall be thoroughly calculated and considered in deciding whether to proceed with it.

Proposition 4: Social costs related to each activity, product, or service shall be passed on to the consumer.

Proposition 5: Business institutions, as citizens, have the responsibility to become involved in social problems that are outside their normal areas of operation.

The areas in which business can become involved to protect and improve the welfare of society are numerous and diverse. Some of the most publicized of these areas are urban affairs, consumer affairs, environmental affairs, and employment practices. Although numerous businesses are involved in socially responsible activities, much controversy persists about whether such involvement is necessary or appropriate. There are several arguments for and against businesses performing socially responsible activities.

Arguments in Support

The best-known argument supporting such activities by business is that because business is a subset of and exerts a significant impact on society, it has the responsibility to help improve society. Since society asks no more and no less of any of its members, why should business be exempt from such responsibility? Additionally, profitability and growth go hand in hand with responsible treatment of employees, customers, and the community. Only a few studies, however, have indicated a relationship between corporate social responsibility and profitability.

Arguments Against

The distinguished economist Milton Friedman (1912– ) advanced one of the better-known arguments against specific social responsibility activities. Friedman argued that making business managers simultaneously responsible to business owners for reaching profit objectives and to society for enhancing societal welfare represents a conflict of interest that has the potential to cause the demise of business. According to Friedman, this demise almost certainly will occur if business consistently is expected to behave in a socially responsible manner when this is in direct conflict with private organizational objectives. He also argued that to require business managers to pursue socially responsible objectives may be unethical, since it requires managers to spend time, money, and other resources that really belong to other purposes and are supported by other individuals (e.g., investors, customers, owners, leaders).

Regardless of which argument or combination of arguments particular managers might support, they must make a concerted effort to perform all legally required socially responsible activities, should consider voluntarily performing socially responsible activities beyond those legally required, and inform all relevant individuals of the extent to which their organization will become involved in performing social responsibility activities.

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Milton Friedman (1912– ) Economist Friedman, winner of the Nobel Prize in economics in 1976 and the Presidential Medal of Freedom in 1988, in Washington, D.C., May 9, 2002. © BROOKS KRAFT/CORBIS


Government Requirements

Federal law requires that businesses perform certain socially responsible activities. In fact, several government agencies have been established and are maintained to develop such business-related legislation and to make sure the laws are followed. The U.S. Environmental Protection Agency does indeed have the authority to require businesses to adhere to certain socially responsible environmental standards. Adherence to legislated social responsibilities represents the minimum performance standard that business leaders must achieve. Managers must ask themselves, however, how far beyond the minimum they should attempt to go. This difficult and complicated question entails assessing the positive and negative outcomes of performing socially responsible activities. An overarching principle is that business should pursue only those activities that contribute to the...

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