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CH 6: Managing Social Responsibility

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Silviana Falcon

on 14 November 2017

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Transcript of CH 6: Managing Social Responsibility

Legal Approach - firms simply do what is legally required by obeying laws, rules, and regulations willingly and without legal challenge. (example: Social Obligation)

Market Approach - firms respond to the preferences of their customers for environmentally friendly products. (example: Social Responsiveness)

Stakeholder Approach - firms work to meet the environmental demands of multiple stakeholders—employees, suppliers, and the community. (Example Social Responsiveness)

Activist Approach - firms look for ways to respect and preserve the environment and be actively socially responsible. (Example: Social Responsibility)
How Organizations Go Green
Social Obligation
- the obligation of a business to
its economic and
legal responsibilities
and nothing more. (ie. equal pay for equal work)

Social Responsiveness
- when a firm engages in social actions in
to some popular
social need
. Panera Cares

Social Responsibility
- a
business’s intention
its legal and economic obligations, to do the right things and act in ways that are good for society.
From Obligation to Responsiveness to Responsibility
Green Approaches
Corporate Social Responsibility (CSR) goes beyond making profits to include protecting and improving society’s welfare.
Corporations are
not independent entities
responsible only to stockholders.
Firms have a
moral responsibility
to larger
to become involved in social, legal, and political issues.
“To do the right thing”

The Socioeconomic View
Advocate: Milton Friedman
Management’s only social responsibility is to
maximize profits
(create a financial return) by
the business in the
best interests of the stockholders
(owners of the corporation).

Expending the firm’s resources on doing “social good” unjustifiably increases costs that lower profits to the owners and raises prices to consumers.

The Classical View
Managing Social Responsibility
SRIs investors encourage corporations to improve their practices on environmental, social, or governance issues. SRI investors seek to own profitable companies.....that make positive contributions to society.

SRIs= Social Screening - applying social criteria (screens) to investment decisions. Green Management - managers consider the impact of their organization on the natural environment.

SRIs also known as mission investing, responsible investing, double or triple bottom line investment (profit, people, planet),
ethical investing, or green investing.
Sustainable and Responsible Investments (SRIs)
Business and Environment
Full transcript