MGMT 4000 Chapter 3:
12 Nov 2018
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Department
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MGMT*4000 Alex Kremer Chapter 3
SOCIAL RESPONSIBILITY AND ETHICS
IN STRATEGIC MANAGEMENT
SOCIAL RESPONSIBILITIES OF STRATEGIC DECISION MAKERS • • •
Social Responsibility: The ethical and discretionary responsibilities a corporation owes its stakeholders
RESPONSIBILITIES OF A BUSINESS FIRM (Friedman vs. Carroll)
1. FRIEDMAN’S TRADITIONAL VIEW OF BUSINESS RESPONSIBILITY
• Friedman is an opponent of government regulation and social responsibility as a business
function
• “General social interest” should not be the primary goal of any business
• The only way to achieve social responsibility is to increase profits and engage in free
competition
2. CARROLL’S 4 RESPONSIBILITIES OF BUSINESS (in order!)
• Profits are a means to an end, not an end unto itself
1. Economic (traditional profitability goals)
2. Legal (adhering to legislation)
3. Ethical (fluid definitions across different cultures; align with society’s expectations)
4. Discretionary (voluntary obligations such as philanthropy)
THE TWO ARGUMENTS’ WEIGHT
• Friedman’s interpretation is losing traction with executives
• There is a small but difficult to measure positive relationship between long-term profitability
and social initiatives
• Porter and Kramer both agree that social and economic goals are integrally connected
• Reputation, growth in trust, attraction of investors, and brand building is what is objectively won
when giving back to society
SUSTAINABILITY • • •
• Sustainability is often broken into economic/social/enviro., but they are integrated and must be
mutually-considered
• Corporate stakeholders are at the center of all sustainability-related decisions
CORPORATE STAKEHOLDERS
• Every company, regardless of their variables, have a huge list of potential stakeholders
• A common issue with responsibility to stakeholders is deciding who should be prioritized
o The interest of one group may conflict with another, making it all a minefield of sorts
