CHAPTER 3

Social Responsibility and Ethics

in strategic management

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Learning outcomes:
1. Understanding the relationship between social responsibility and corporate performance
2. Understanding the concept of sustainability and business ethics

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1. Corporate Social Responsibility

CSR (Corporate Social

Responsibility) proposes
that a private corporation
has responsibilities to
society that extend beyond
making a profit.

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Carroll’s Four Responsibilities of Business
1. Economic responsibilities of a business organization’s management are to produce goods
and services of value to society so that the firm may repay its creditors and increase the wealth
of its shareholders.
2. Legal responsibilities are defined by governments in laws that management is expected to
obey.
3. Ethical responsibilities of an organization’s management are to follow the generally held
beliefs about behavior in a society.
4. Discretionary responsibilities are the purely voluntary obligations a corporation assumes.

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Benefits of social responsibility
Ø Increase company’s reputation
Ø Improve customer’s loyalty
Ø Boost value and profitability
Ø Endure relationships with suppliers and distributors
Ø Attract outstanding employees
Ø Attract capital infusions from investor
Ø more likely to be welcomed into a foreign country
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Disadvantages of social responsibility
Ø Requires higher cost
Ø Requires skill business may lack
Ø Creates shareholder resistance
Ø May lead to business failures and job losses

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2. Sustainability

Sustainability means meeting our

own needs without compromising
the ability of future generations to
meet their own needs

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The 3 pillars of subtainability

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Example

Unilever's
Sustainable
Living Plan
helps cut costs
and drive
growth
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3. Business Ethics
Business ethics refers to
contemporary organizational
standards, principles, sets of
values and norms that govern
the actions and behavior of an
individual in the business
organization

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Discussion

https://www.youtube.com/watch?v=-mOgmm_lQZE

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