Department of Professional Psychology

Course: Principles of Management (MGT 111)

Assignment on Social Responsibility

Submitted by: Maryam Javaid

Enrollment #: 01-171192-025

Registration Number: 63984

BS-Psychology 4-A

Date of Submission: 22th April 2021

Submitted to: Dr. Sumaira Iqbal

Q. Contrast the classical and socioeconomic views of the social responsibility?
Discuss the role that stakeholders play in the four stages of social responsibility?

Two major viewpoints, classical and socioeconomic, determine the decisions

managers make when it comes to social responsibility. A classical viewpoint aligns
with the view that businesses and organizations have no responsibility to do social
good; instead their top priority is profit maximization. In this viewpoint it is believed
that the cost for executing socially responsible actions should be fulfilled by the
customers, which then raises the prices of products or reduces the profit made.
However on the other hand, the socioeconomic viewpoint takes a more holistic
approach in that it is believed that organizations do have social responsibility to act in
a way that is beneficial for the society. Different from the classical viewpoint is
believed that an organizations focus should be beyond making profits, but to consider
the society’s larger interests when making decisions and taking actions.

Another difference between the two viewpoints is that in the classical viewpoint the
main focus is on achieving the goals and objectives of an organizations however in
the socioeconomic viewpoint, the focus is on achieving the goals but also using the
means that are beneficial for the society as a whole.

Furthermore, in the classical viewpoint, stockholders are the only legitimate concern
and only they should be kept in mind when making managerial decisions whereas
from the socioeconomic viewpoint, managers are responsible and answerable for any
group affected by the organizations decisions and actions such as the customers,
suppliers as well as other stakeholders.

As for anything, it is not that organizations are to act on only these two viewpoints. In
fact, there are 4 stages of social responsibility that have been formulated that elaborate
on a business’ transition from a classical to a socioeconomic viewpoint with a
progressive increase of social responsibility.

The first stage is the stockholder stage which emphasizes the classical viewpoint. In
this stage, the stakeholders that an organization considers important are only the
stockholders or people who have direct financial interest or involvement in the
business. Apart from these stockholders, the organization is not responsible to anyone
thus the owners and management make decisions keeping only these stakeholders in
mind.

The second stage is the employee stage where the stakeholder group is expanded to
include employees as well as stockholders therefore the managers expand their
responsibilities as well. Here, the managers want to attract, keep and motivate good
employees and they do this through the improvement of working conditions, ensuring
job satisfaction, and handling HR concerns appropriately. Through this stage,
employees are inducted into the decision making process and are communicated to
and trained properly.

In the third stage, responsibilities are expanded to other stakeholders in the specific
environment – the customers and suppliers. Efforts are made to keep them happy and
satisfied through fair prices, good supplier relations, good customer service,
producing high quality and safe products etc.

In the last and 4th stage which consists of the highest socioeconomic commitments,
managers feel a responsibility towards the society as a whole hence the business is
considered a public entity. In this stage, activities involved in environmental
protection, social and cultural responsibilities, public good and public justice among
many others are undertaken in order to fulfil the sense of responsibility.