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4. areas of social responsibility
- 1. Areas of Social Responsibility Responsibility Toward the Environment – Properly disposing of toxic waste – Engaging in recycling – Controlling air, water, and land pollution – Green Marketing The marketing of environmentally friendly goods Includes a number of strategies and practices: – Production processes – Product modifications – Carbon offsets – Packaging reduction – Sustainability Greenwashing: Using advertising to project a green image without substantially altering processes or products Federal Trade Commission (FTC) started hearings in January 2008 regarding green marketing claims
- 2. Areas of Social Responsibility (cont’d) Responsibility Toward Customers – Involves providing quality products and pricing products fairly Consumerism – Social activism dedicated to protecting the rights of consumers in their dealings with businesses Basic Consumer Bill of Rights – To possess safe products – To be informed about all relevant aspects of a product – To be heard – To choose what to buy – To be educated about purchases – To receive courteous service
- 3. Areas of Social Responsibility (cont’d) Unfair Pricing – Collusion: When two or more firms agree to collaborate on such wrongful acts as price fixing – Price gouging: Responding to increased demand with overly steep (and often unwarranted) price increases Ethics in Advertising – Truth in advertising – Morally objectionable advertising
- 4. Areas of Social Responsibility (cont’d) Responsibility Toward Employees – Legal and social commitments to: Not practice illegal discrimination Provide a physically and socially safe workplace Provide opportunities to balance work and life Provide protection for whistleblowers (an employee who discovers and tries to put an end to a company’s unethical, illegal, or socially irresponsible actions by publicizing them) Responsibility Toward Investors – Proper financial management (no insider trading) – Proper representation of finances
- 5. Implementing Social Responsibility (SR) Programs Arguments Against SR – The cost of SR threatens profits. – Business has too much control over which SR issues would be addressed and how SR issues would be addressed. – Business lacks expertise in SR matters. Arguments for SR – SR should take precedence over profits. – Corporations as citizens should help others. – Corporations have the resources to help. – Corporations should solve problems they create.
- 6. Approaches to Social Responsibility Obstructionist Stance – A company does as little as possible and may attempt to deny or cover up violations Defensive Stance – A company does everything required of it legally but no more Accommodative Stance – A company meets its legal and ethical requirements and also goes further in certain cases Proactive Stance – A company actively seeks to contribute to the well-being of groups and individuals in its social environment
- 7. FIGURE 2.4: Spectrum of Approaches to Corporate Social Responsibility
- 8. Managing Social Responsibility Programs 1. Social responsibility must start at the top and be considered as a factor in strategic planning. 2. A committee of top managers must develop a plan detailing the level of management support. 3. One executive must be put in charge of the firm’s agenda. 4. The organization must conduct occasional social audits—systematic analyses of its success in using funds earmarked for its social responsibility goals.
- 9. Social Responsibility and the Small Business Large Business versus Small Business Responses to Ethical Issues – Differences are primarily differences of scale – More issues are questions of individual ethics Ethics and social responsibility are decisions faced by all managers in all organizations, regardless of rank or size
Editor's Notes
- Responsibility toward the environment is an important area of social responsibility for an organization. This can include: Properly disposing of toxic waste from manufacturing processes. Engaging in recycling of materials. This could include making sure computers that are outdated are recycled through appropriate state-level, prison-industry recycling programs. Green marketing, which includes the marketing of environmentally friendly goods such as power saving computers and monitors, flex fuel vehicles, etc. Such strategies can include a number of practices including: Production processes. Product modifications, such as the addition of flex fuel capabilities for cars. Carbon offsets that reduce the carbon footprint consumers and producers leave on the planet. Packaging reduction, for example, eliminating the foil wrapper from Hershey candy bars and just using paper. Sustainability, such as a product that is made from recycled plastics. Green marketers need to be aware of “green washing” or the use of advertising to project a “green” image without substantially altering the processes or products they produce. The Federal Trade Commission started holding hearings in January 2008 regarding false green marketing claims. Teaching Tips: What is an example of a product that uses “green washing”? BP was accused of promoting its company as being environmentally friendly with no backing for that claim. The company was charged in 2000 with not disclosing that a subcontractor was dumping toxic waste in Alaska. Other examples from the BP case in the introduction to this chapter can also be presented as well as other examples from current affairs. In your student teams, choose one of the “green marketing” strategies and practices we have just discussed and provide an example. We will then share the examples with the class. Answers may vary but can include those from the slide or those presented in the text.
- Other examples of areas of social responsibility for a company include: Responsibility toward customers: This involves providing quality products and pricing products fairly. Consumerism: This includes social activism dedicated to protecting the rights of consumers in their dealings with business. The basic consumer bill of rights, which includes the rights: To possess safe products. To be informed about all relevant aspects of a product. To be heard. To choose what to buy. To be educated about purchases. To receive courteous service. Teaching Tips: In your student teams, choose one of the basic rights of consumers presented in the basic consumer bill of rights. Then in your team, discuss three products that have or have not granted that right to consumers. Also discuss how they did or did not accomplish providing this right. Answers will vary.
- Two other areas of social responsibility include unfair pricing and ethics in advertising. 1. Unfair pricing includes: Collusion: Collusion occurs when two or more firms agree to collaborate on such wrongful acts as price fixing. This practice has been outlawed for years by the Robinson-Patmann Act. An example is when airlines charge the same fare to the same destination. Price gouging: This occurs when businesses respond to an increased demand with overly steep and often unwarranted price increases. Anytime there is a natural disaster or act of war, stores may engage in this practice by allowing the demand for the products they have within their stores to drive prices much higher than would be normal for certain items. 2. Ethics in advertising includes: Providing truth in advertising, and not making false claims when stating product benefits. Avoiding morally objectionable advertising such as ads for women’s undergarments, condoms, etc. Teaching Tips: In your student teams, please list an example of unfair pricing and ethics in advertising. Discuss the strategies that were applied and be prepared to discuss these with the class. Answers will vary based on the product or company chosen, but must include either collusion or price gouging, such as occurred after Hurricane Katrina. Answers to the ethics in advertising issue must deal with truth in advertising or morally objectionable advertising. These answers could include examples from the text such as Victoria’s Secret ads, ads for condoms or ads promoting sexuality.
- Responsibility toward employees and investors includes both legal and social commitments to: Not practice illegal discrimination in hiring, job duties, firing, etc. Provide a physically and socially safe workplace, meeting OSHA and the Americans with Disabilities Act standards. Provide opportunities to balance work and life, such as providing fitness opportunities at work or memberships at gyms. Provide protection for whistleblowers (an employee who discovers and tries to put an end to a company’s unethical, illegal or socially irresponsible actions by publicizing them with the media). In addition, responsibility toward investors includes: Proper financial management, including no insider trading. Proper representation of finances, such as we discussed earlier in our prepaid consulting services example. Teaching Tips: In your student teams please choose one of the legal or social commitments toward employees and provide an example of it. We will share these with the class. Answers will vary, but need to be from one of the above mentioned legal and social commitments. Please give an example of insider trading. What is it and who has done this? One answer could be trading securities or stocks with knowledge of upcoming financial reports prior to their release to the public. Martha Stewart is an example of someone who was convicted of insider trading.
- There are arguments for and against an organization’s implementation of a social responsibility program. Let’s first examine the arguments against implementation of social responsibility programs: The cost of social responsibility programs threatens profits. Or, essentially, why should we spend money we don’t have to? This is truly a short-term business perspective. The business or organization would have too much control over which programs would be addressed and how they would be addressed. In this argument, people believe that business would not choose the most appropriate socially responsible project to fund, and only fund those that enhance its image and reputation. The business or organization lacks expertise in social responsibility matters. There is a new trend toward what is called “philanthrocapitalism,” whereby businesses are learning how they can apply their for-profit frameworks to the non-profit sector. Next we will examine the arguments for the implementation of social responsibility programs by business: Social responsibility should take precedence over profits. Corporations as citizens should help others, or those less fortunate. Corporations have the resources to help. This is true of many multinational corporations. Examples include Warren Buffet and Bill Gates and the combining of their foundations to address those less fortunate. Corporations should solve problems they create. This position believes that corporations will continue to cause problems or continue to be socially irresponsible, and hence need to implement social responsibility programs to fix what they have broken. It is important to note that the United Nations developed its Millennium Development Goals (http://www.un.org/millenniumgoals/), which were formed to end world poverty and hunger by 2015. There are eight specific goals to achieve the overarching development goal. The eighth goal specifically addresses the development of partnerships with businesses and other organizations to assist in meeting employment goals to help end poverty and thus hunger. Teaching Tips: In your student teams, please choose an argument either for or against the implementation of social responsibility programs and choose an example from current or past business news that supports your position. We will then share our team positions with the class. Answers will vary but should show direct evidence to the arguments for and against implementation of social responsibility programs as stated above in this slide.
- These different arguments for or against social responsibility programs by businesses take four stances. Let’s examine them: Obstructionist stance: With this stance, the company does as little as possible and may attempt to deny or cover up violations. Defensive stance: In the defensive stance, a company does everything required of it legally, but no more. Accommodative stance: A company taking an accommodative stance meets its legal and ethical requirements and also goes further in certain cases. Proactive stance: With this stance, a company actively seeks to contribute to the well-being of groups and individuals in its social environment. Let’s take a look at this from a visual standpoint.
- In Figure 2.4 we can see the spectrum of approaches to corporate social responsibility more graphically. Those corporations or organizations with the lowest level of social responsibility fit the obstructionist and defensive stance, while those with higher levels of social responsibility take the accommodative and proactive stances. Teaching Tips: In your student teams, please choose one of the four stances toward corporate social responsibility. In your teams, provide an example of a company or a type of company and what their actions might be if they take the stance your team has chosen. We will share these with the class. Answers will vary, but should include specific evidence from the previous slide or examples from the text or current affairs.
- Managing social responsibility programs involves a number of steps. Let’s review these: Social responsibility must start at the top of the corporation and be considered as a factor in strategic planning. A committee of top managers must develop a plan detailing the level of management support. One executive must be put in charge of the firm’s social responsibility agenda. The organization must conduct occasional social audits or systematic analyses of its success in using funds earmarked for its social responsibility goals. Teaching Tips: Please join with another class member. In your team, please develop an example of how you believe a company should initiate and manage a social responsibility program. Answers will vary. Each team should provide evidence from the four steps provided in this slide.
- Now we are going to discuss social responsibility and the small business. We take it for granted that large, multinational firms must be socially responsible in the 21st century. But how can a small business be socially responsible? The differences between how large and small businesses respond to ethical issues are primarily difference of scale. In general, more issues are questions related to individual ethics. Ethics and social responsibility are decisions faced by all managers in all organizations, regardless of rank or size. Teaching Tips: In your student teams, choose a small business that you know in your community. Then discuss together how this small business could or does address social responsibility based on the information you have learned today from Chapter 2. The answers will vary based on the small business chosen. However, as this slide states, ethical and social responsibility are decisions faced by all managers in all organizations, regardless of rank or size. Student answers should reflect back on the concepts from this chapter.