CHAPTER 1

SocialResponsibility
Framework

95% of Respondents Agree

U.S.corporationsshouldhavemorethanone
purpose.Theyalsoowesomethingtotheir
workersandthecommunitiesinwhichthey
operate,andtheyshouldsometimessacrifice
someprofitforthesakeofmakingthings
betterfortheirworkersandcommunities.
Source:"HowBusinessRates:BytheNumbers,Business
Week,Sept.11,2000,pp.148149.

Whatdoyoubelieveorganizations
shouldberesponsiblefor
accomplishing?

Social Responsibility Defined

Socialresponsibility
Theadoptionbyabusinessofastrategicfocus
forfulfillingtheeconomic,legal,ethicaland
philanthropicresponsibilitiesexpectedofitby
itsstakeholders

Businessesshouldlookbeyondtheirself
interestsandrecognizethattheybelongto
alargergroupthatexpectsresponsible
participation.

Social Responsibility Defined (cont.)

Appliestoalltypesofbusinesses
Smallbusinesses
Largebusinesses
Soleproprietorships
Multinationalcorporations

Social Responsibility Defined (cont.)

Adoptsastrategicfocus
Requiresaformalcommitmentfromtopmanagement
Communicatedthroughmissionandvisionstatements,
annualreports,websites,andpublicrelations
Requiresactionandresults
Dependsoncollaborationandcoordinationacrossbusiness
andamongconstituencies
Largecompaniesoftencreatespecificpositionsand
departmentstosupportsocialresponsibilityprograms

Social Responsibility Defined (cont.)

Fulfillssocietalexpectations
Providesareturnoninvestmentforowners
Obeysthelawandregulatoryagencies
Actsinajust,fair,andcorrectmanner
Promoteshumanwelfareandgoodwill

TOTO Corporate Responsibility Committee

Structure

Pyramid of Social Responsibility

Social Responsibility Defined (cont.)

Economic
Maintainprofitability

Legal
Abidebylegalandregulatoryinfluence

Ethical
Ensurejustandfairbehaviorintheworkplace

Philanthropic
Promotehumanwelfareandgoodwill

Social Responsibility Continuum

Add Figure 1.5 here

Whoarethekey
stakeholdersoftheorganization?

Social Responsibility Defined (cont.)

Requiresastakeholderorientation
Customers
Employees
Investors
Stockholders
Suppliers
Government
Communities

Stakeholders
Thoseconstituentswhohaveastakein,or
claimon,someaspectofacompanys
products,operations,markets,industry,and
outcomes
Companiesthatoperatewithastakeholder
orientationrecognizethatbusinessandsociety
areinterpenetratingsystems,inthateach
affectsandisaffectedbytheother.

Evolution of Social Responsibility:

1940s1960s
1940s
Economicdominanceofcorporations
Totalautonomyoftopmanagement
1950s60s
Fewformalgovernanceproceduresrestraining
managementactions
Organizationalcharitablegivingexpanded
(charities,arts,culture,andcommunity)
Lawsarepassedthatrequireprotectionofthenatural
environment,saferproducts,promotionofequity,
andsupportingworkplacediversity.

Evolution of Social Responsibility:

1970s1980s
1970s
Worldcompetition,bankruptcies,mergersand
acquisitions

1980s
Flatterorganizations(downsizing)
Morebusinessscandals
Empowermentoflowerlevelemployees
Focusonprofitabilityandeconomiesofscale

Evolution of Social Responsibility:

1990s2000s
1990s
Lessemployeeloyaltyandincreasedjobhopping
Growthoftemporaryemployment
Greaterinterestinethicsandsocialresponsibility
2000s
Specialinterestgroups,companies,humanrightsactivists,
andgovernmentstrivetobalanceeconomicandsocialgoals.
Majorscandalsdamagetheglobaleconomy.

Lessons Learned from Economic

Crises

Transparency
Longtermperspective
Liquidity
Limiteduseofderivatives
Absenceofratingtriggers
Minimalcounterpartyexposure
Diversification

Global Nature of Social

Responsibility
Whodeterminessocialresponsibility
onaglobalscale?
Hostcountry
Homecountry
Outsideorganizations

Managing Social Responsibility

in Home and Host Markets

Benefits of Social Responsibility

Greatertrustwithstakeholders
Greatercustomersatisfaction
Strongeremployeecommitment
Strongerinvestorloyalty
Greaterprofitability
Countrieswithgreatertrustbasedinstitutionsfostera
productivityenhancingenvironment.
Competitiveprocessesaremoreefficientandeffective.

Social Responsibility Builds Trust

Trustisthegluethatholdsorganizational
relationshipstogether.
StephenCoveycontendsthatlowtrust
resultsinorganizationaldecayand
relationshipdeterioration.
Politicalproblemsandinefficiency

Mostworkersfeeltheycanbe
trustedmorethantheycan
trustothers.

Social Responsibility Builds Trust

(cont.)

Allorganizationalmembersshouldsharea
senseoftrust.
Trustshouldexistbetweendepartments
withinafirm.
AnEthicsResourceCenterstudyshowsthat
93%ofemployeeswhosaytrustis
frequentlyevidentintheirorganization
reportsatisfactionwiththeiremployer.

To Trust or Not to Trust

Social Responsibility
Improves Customer Satisfaction
Focusesoncustomersatisfactionand
strengthenstrust.Thisisespeciallykeyin
serviceorganizations.
Seventypercentofconsumersina
Cone/Roperpollindicatedtheywould
switchtobrandsassociatedwithagood
causeifpriceandqualitywereequal.

What happens when consumer

organizational trust is breached?
Seventyfivepercentofconsumerssaythey
wouldavoidorrefusetobuyfromcertain
businesses.
Consumersmayavoidproductsfrom
companiesthattreattheiremployeesunfairly.

Social Responsibility
Strengthens Employee Commitment
Thegreateracompanysdedicationtoemployees,thegreater
thelikelihoodthatemployeeswilltakecareofthe
organization.
Failuretocareforemployeesresultsinlowerloyaltyand
commitment.
Employeesperceptionsareaffectedby:
Safeworkingconditions,competitivesalaries,and
contractualfulfillment
Socialprograms,includingworkfamilyrelationships,
stockownership,communityservice

What happens when

employee loyalty is breached?
Qualityiscompromised.
Serviceiscompromised.
Efficiencydecreases.

Strengthening
Employee Commitment
Employeestockownershipplans(ESOPs)
Rewardsemployeesforcontributingtoandgainingfrom
organizationalsuccessandallowsthemtogainfromit

Employeecenteredprograms

Healthcarebenefits
Healthclubs
Childcareandeldercare
Cafeteriabenefitsplans

Social Responsibility
Contributes to Investor Loyalty
Investorrelationshipsrequiredependability,
trust,andcommitment.
Shareholdersareconcernedaboutethics,
socialresponsibility,andcorporatereputation.
Halfofinvestorsselltheirstock
withinoneyear.

Social Responsibility
Enhances Economic Performance
Doesbusinessconductrelatetoa
nationsoveralleconomicconduct?
Economicwellbeingispromotedby:
Trustandasenseofcommunity
Rigorinthelegalandethicalsystems
Consistentexerciseofauthoritywithinsociety
Socialinstitutionsthatfosteraccess,
productivity,andeconomicgrowth
Positiveattitudesaboutwork,innovation,
savings,andprofits

Are the following companies

considered socially responsible?
Why or why not?

Procter&Gamble
WashingtonMutual
Starbucks
GeneralMotors

Avon
AIG
McDonalds
CocaCola

Framework for Studying

Social Responsibility
Chapter2
StrategicManagementofStakeholderRelationships

Chapter3
CorporateGovernance

Chapter4
Legal,Regulatory,andPoliticalIssues

Chapter5
BusinessEthicsandEthicalDecisionMaking

Framework for Studying

Social Responsibility (cont.)
Chapter6
StrategicApproachestoImprovingEthicalBehavior

Chapter7
EmployeeRelations

Chapter8
ConsumerRelations

Chapter9
CommunityRelationsandStrategicPhilanthropy

Framework for Studying

Social Responsibility (cont.)
Chapter10
TechnologyIssues

Chapter11
SustainabilityIssues

Chapter12
SocialResponsibilityinaGlobalEnvironment