What is the role of Business in Society

Allegations About Business

Little concern for the consumer Cares nothing about the deteriorating social order Has no concept of acceptable ethical behavior Indifferent to the problems of minorities and the environment

What responsibility does business have to society?

Does the firm have a social responsibility?

NO!!! Nobel Laureate Economist Milton Friedman argues corporations onl social responsibilit is to ma!e mone " #ome of his !e arguments are$

#ocial issues are in the realm of public polic i"e" government action" Managers have no constituenc to %hom the are responsible Managers are not trained to ma!e public polic decisions"

More Arguments Against CSR

&estricts the free mar!et goal of profit ma'imi(ation )ilutes the primar aim of business

Increase business po%er Limits the firms abilit to compete in a global mar!etplace

Does the firm have a social responsibility?

*E#!!

+he social Contract ,&ousseau etc"- suggests that corporations as citi(ens societ have a responsibilit to give bac! to that societ in fair measure to %hat the receive from that societ "

More Arguments For CSR

.ddresses social issues business ma have caused and allo%s business to be part of the solution /rotects business self0interest

Limits future government intervention .ddresses issues b using business resources and e'pertise .ddresses issues b being proactive

Corporate Social Responsibility (CSR

Corporate #ocial &esponsibilit 1

&e2uires the individual to consider his3her acts in terms of a %hole social s stem4 and holds him3her responsible for the effects of acts an %here in that s stem" +he impact of a compan s actions on societ is the focus"

Business Criticism! Business Response Cycle

Factors Factors in in the the #ocietal #ocietal Environment Environment Criticism Criticism of of 5usiness 5usiness Increased Increased Concern Concern for for the the #ocial #ocial Conte't Conte't
5usiness 5usiness.ssumption .ssumptionof of Corporate Corporate#ocial #ocial&esponsibilit &esponsibilit #ocial #ocial&esponsiveness4 &esponsiveness4leads leadsto to#ocial #ocial /erformance4 /erformance4and andCorporate CorporateCiti(enship Citi(enship . .More More#atisfied #atisfied#ociet #ociet

. .Changed Changed #ocial #ocial Contract Contract

Fe%er Fe%er Factors Factors Leading Leading to to 5usiness 5usiness Criticism Criticism

Increased Increased E'pectations E'pectations Leading Leading to to More More Criticism Criticism

"thical an# Moral Relativism

&esponsibilit according to %hom1111

"volution of Concepts
Corporate Social
Responsibility Responsiveness Performance

Emphasi es
obligation4 accountabilit action4 activit outcomes4 results

Corporate Social $erformance

6C#/ is the firm7s configuration of principles of social responsibilit processes of social responsiveness and policies4 programs and observable outcomes as the relate to the firm7s societal relationships8 , 9ood7s :;;:$<;:-

Acceptance an# Broa#ening of Meaning

From the :;=>s to the present4 the concept of

C#/ has gained considerable acceptance and the meaning has been broadened to include specific issues4 such as$ product safet honest in advertising emplo ee rights affirmative action environmental sustainabilit ethical behavior global C#/

Carroll%s Four&$art Definition of CSR($

!he social responsibility "performance# of

business encompasses the economic$ legal$ ethical and discretionary "philanthropic# e%pectations that society has of organi ations at a given point in time&

Carroll%s Four&$art Definition of CSR

?nderstanding the Four Components
Responsibility Economic Legal Ethical /hilanthropic Societal E%pectation &e2uired &e2uired E'pected3 &e2uired )esired3 E'pected E%amples 5e profitable" Ma'imi(e sales4 minimi(e costs Obe la%s and regulations )o %hat is right4 fair4 and @ust 5e a good corporate citi(en

'he $yrami# of CSR($

/hilanthropic /erformance /hilanthropic /erformance Be a good corporate citi en& Be a good corporate citi en& Ethical /erformance Ethical /erformance Be ethical& Be ethical& Legal /erformance Legal /erformance 'bey the la(& 'bey the la(& Economic /erformance Economic /erformance Be profitable& Be profitable&

Ways Firms Respon# to CSR($ $ressure

)efensive )efensive approach approach Cost0benefit Cost0benefit approach approach #trategic #trategic approach approach Innovation Innovation and and learning learning approach approach

!he Civil Corporation$ #imon Aade!

Corporate Social $erformance

Social an# Financial $erformance

/erspective :$ C#/ )rives the &elationship
Dood Corporate #ocial /erformance Dood Corporate Financial /erformance Dood Corporate &eputation

/erspective B$ CF/ )rives the &elationship

Dood Corporate Financial /erformance Dood Corporate #ocial /erformance Dood Corporate &eputation

/erspective C$ Interactive &elationship .mong C#/4 CF/4 and C&

Dood Corporate #ocial /erformance Dood Corporate Financial /erformance Dood Corporate &eputation

A Multiple Bottom&(ine $erspective

O%ner O%ner #ta!eholders #ta!eholders 65ottom 65ottom LineE LineE ,/rofit ,/rofit and and 9.CC9.CCConsumer Consumer #ta!eholders #ta!eholders 65ottom 65ottom LineE LineE

Corporate Corporate #ocial #ocial /erformance /erformance

Emplo Emplo ee ee #ta!eholders #ta!eholders 65ottom 65ottom LineE LineE Communit Communit #ta!eholders #ta!eholders 65ottom 65ottom LineE LineE Other Other #ta!eholders #ta!eholders 65ottom 65ottom LineE LineE