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Responsibilities of a Business Firm
Social Responsibility: proposes that a privatecorporation has responsibilities to society thatextend beyond making a prot
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Responsibilities of a Business Firm
Friedman’s traditional view of a businessrm:
!rgues against the concept of socialresponsibility
" #rimary goal of business is prot maximi$ationnot spending shareholder money for thegeneral social interest
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Responsibilities of a Business Firm
%arroll’s four responsibilities of business: &inorder of priority'
(conomic
)egal
(thical
*iscretionary
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%arroll’s four responsibilities of business:
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Responsibilities of a Business Firm
+he ability to enter localand international markets
(nhanced reputation
%ompetitive advantage
%ost savings
+he ability to chargepremium prices
,mproved relationships withsuppliers and distributors
+he ability to attract bettertalent
-oodwill in the eyes ofpublic o.cials
!ccess to capital
Social capital refers to the goodwill of key stakeholders and provides a company with:
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Responsibilities of a Business Firm
Characteristics of Sustainaility
!"nvironmental
!"conomic
!Social
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%orporate Stakeholders
Stakeholders have an interest in the business
and a/ect or are a/ected by the achievement ofthe rm’s ob0ectives
(nterprise strategy1 articulates the rm’s ethicalrelationship with its stakeholders
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Stakeholder !nalysis1 the identication ofcorporate stakeholders in 2 steps:
34 #rimary stakeholders have a directconnection with the corporation and havesu.cient bargaining power to directly a/ectcorporate activities
54 Secondary stakeholders have an indirect
stake in the corporation but are also a/ected bycorporate activities
24 (stimate the e/ect on each stakeholder from aparticular strategic decision
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Reasons for 6nethical Behavior
6naware that behavior is 7uestionable
)ack of standards of conduct *i/erent cultural norms and values
Behavior1based or relationship1basedgovernance systems
*i/erent values between business people andstakeholders
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8oral Relativism claims that morality is relativeto some personal9 social9 or cultural standardand that there is not a method for decidingwhether one decision is better than another
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+ypes of 8oral Relativism include:
a;ve relativism
Role relativism
Social group relativism
%ultural relativism
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(ncouraging (thical Behavior
%ode of (thics1 species how an organi$ation
expects its employees to behave while on the 0ob
=histleblowers1 employees who report illegal
or unethical behavior on the part of others
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!pproaches to (thical Behavior
6tilitarian1 actions are 0udged by conse7uences
,ndividual rights1 fundamental rights should berespected
>ustice1 decisions must be e7uitable9 fair andimpartial in the distribution of costs and
benets to individuals or groups
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!pproaches to (thical Behavior
%avanagh’s 7uestions to solve ethical
problems:
34 6tility1 does it optimi$e the satisfactions of thestakeholders?
54 Rights1 *oes it respect the rights of theindividuals involved
24 >ustice1 ,s it consistent with the canons of 0ustice?
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!pproaches to (thical Behavior
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34 =hat is the relationship between corporategovernance and social responsibility?
54 =hat is your opinion of -!# ,nternational’s
having a code of conduct for its suppliers?=hat would 8ilton Friedman say? %ontrasthis view with !rchie %arroll’s view4
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24 *oes a company have to act sel@essly to be considersocially responsible? For example9 when building a neplant9 a corporation voluntarily invested in additionale7uipment that enabled it to reduce its pollution emisbeyond any current laws4
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A4 !re the people living in a relationship1based governancsystem likely to be unethical in business dealings?
4 -iven that people rarely use a company’s code of ethito guide their decision making9 what good are the code