BUSINESS SOCIETY A Strategic Approach to Social Responsibility & Ethics Seventh Edition O. C. Ferrell Auburn University Debbie Thorne Texas State University Linda Ferrell Auburn University and CBP_Ferrell_FM.indd 1 12/9/2019 6:30:41 PM03/18/2020 - tp-70a028a4-6922-11ea-a484-024 (temp temp) - Business and Society BUSINESS & SOCIETY: A STRATEGIC APPROACH TO SOCIAL RESPONSIBILITY & ETHICS © 2021 Chicago Business Press ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be reproduced, transmitted, stored or used in any form or by any means graphic, electronic, or mechanical, including by not limited to photocopying, recording, scanning, digitizing, taping, web distribution, information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the publisher. For product information or assistance, contact us at www.chicagobusinesspress.com ISBN: 978-1-948426-22-0 CBP_Ferrell_FM.indd 2 12/9/2019 6:30:41 PM03/18/2020 - tp-70a028a4-6922-11ea-a484-024 (temp temp) - Business and Society Brief Table of Contents 1 Social Responsibility Framework 2 2 Strategic Management of Stakeholder Relationships 36 3 Corporate Governance 64 4 Business, Government, and Regulation 94 5 The Impact of Business on Government and the Political Environment 120 6 Business Ethics and Ethical Decision-Making 146 7 Strategic Approaches to Improving Ethical Behavior 178 8 Employee Relations 212 9 Consumer Relations 248 10 Community Relations and Strategic Philanthropy 274 11 Technology Issues 306 12 Sustainability Issues 340 13 Social Responsibility in a Global Environment 378 Case 1 Uber Fuels Controversy 399 Case 2 Fixer Upper: Home Depot Works on Stakeholder Relationships 405 Case 3 Big-Box Retailer Walmart Manages Big Responsibility 412 Case 4 Google Searches for Solution s to Privacy Issues 425 Case 5 CVS Smokes the Competition in Corporate Social Responsibility 439 iii CBP_Ferrell_FM.indd 3 12/9/2019 6:30:41 PM03/18/2020 - tp-70a028a4-6922-11ea-a484-024 (temp temp) - Business and Society iv Brief Table of Contents Case 6 Volkswagen Charts a New Course: The Road to Sustainability 448 Case 7 Wells Fargo Banks on Recovery 453 Case 8 A Brew above the Rest: New Belgium Brewing 460 Case 9 Starbucks Takes on Coffee Culture 468 Case 10 If the Shoe Fits: TOMS and the One for One Movement 478 Case 11 Apple Bites into Ethics 486 Case 12 The Hershey Company’s Bittersweet Success 498 Case 13 Corporate Social Responsibility from the Outside In at Patagonia 508 Case 14 Johnson & Johnson Experiences the Pain of Recalls 512 Case 15 Herbalife Nutrition: Managing Risks and Achieving Success 520 Glossary 531 Notes 539 Index 573 CBP_Ferrell_FM.indd 4 12/9/2019 6:30:41 PM03/18/2020 ...

1. BUSINESS
SOCIETY
A Strategic Approach to
Social Responsibility & Ethics
Seventh Edition
O. C. Ferrell
Auburn University
Debbie Thorne
Texas State University
Linda Ferrell
Auburn University
and
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BUSINESS & SOCIETY:
A STRATEGIC APPROACH TO SOCIAL RESPONSIBILITY &
ETHICS
© 2021 Chicago Business Press

2. ALL RIGHTS RESERVED. No part of this work covered by the
copyright herein
may be reproduced, transmitted, stored or used in any form or
by any means
graphic, electronic, or mechanical, including by not limited to
photocopying,
recording, scanning, digitizing, taping, web distribution,
information networks,
or information storage and retrieval systems, except as
permitted under Section
107 or 108 of the 1976 United States Copyright Act, without the
prior written
permission of the publisher.
For product information or assistance, contact us at
www.chicagobusinesspress.com
ISBN: 978-1-948426-22-0
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Brief Table of Contents
1 Social Responsibility Framework 2
2 Strategic Management of Stakeholder Relationships 36
3 Corporate Governance 64
4 Business, Government, and Regulation 94

3. 5 The Impact of Business on Government and the
Political Environment 120
6 Business Ethics and Ethical Decision-Making 146
7 Strategic Approaches to Improving Ethical Behavior 178
8 Employee Relations 212
9 Consumer Relations 248
10 Community Relations and Strategic Philanthropy 274
11 Technology Issues 306
12 Sustainability Issues 340
13 Social Responsibility in a Global Environment 378
Case 1 Uber Fuels Controversy 399
Case 2 Fixer Upper: Home Depot Works on Stakeholder
Relationships 405
Case 3 Big-Box Retailer Walmart Manages Big Responsibility
412
Case 4 Google Searches for
Solution
s to Privacy Issues 425

4. Case 5 CVS Smokes the Competition in Corporate Social
Responsibility 439
iii
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iv Brief Table of Contents
Case 6 Volkswagen Charts a New Course: The Road to
Sustainability 448
Case 7 Wells Fargo Banks on Recovery 453
Case 8 A Brew above the Rest: New Belgium Brewing 460
Case 9 Starbucks Takes on Coffee Culture 468
Case 10 If the Shoe Fits: TOMS and the One for One
Movement 478

5. Case 11 Apple Bites into Ethics 486
Case 12 The Hershey Company’s Bittersweet Success 498
Case 13 Corporate Social Responsibility from the Outside In at
Patagonia 508
Case 14 Johnson & Johnson Experiences the Pain of Recalls
512
Case 15 Herbalife Nutrition: Managing Risks and Achieving
Success 520
Glossary 531
Notes 539
Index 573
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Preface xiii

6. 1 Social Responsibility Framework 2
Social Responsibility Defined 4
Social Responsibility Applies to All Types of Businesses 7
Social Responsibility Needs a Strategic Focus 8
Social Responsibility Fulfills Society’s Expectations 9
Social Responsibility Requires a Stakeholder Orientation 12
Development of Social Responsibility 12
Historical Review of Social Responsibility 13
Recent Developments in Social Responsibility 15
Future Developments in Social Responsibility 16
Global Nature of Social Responsibility 18
Benefits of Social Responsibility 20
Trust 21
Customer Loyalty 22

7. Employee Commitment 22
Shareholder Support 23
The Bottom Line: Profits 24
National Economy 25
Framework for Studying Social Responsibility 26
Strategic Management of Stakeholder Relationships 28
Corporate Governance 28
Legal, Regulatory, and Political Issues 28
Business Ethics and Strategic Approaches to Improving Ethical
Behavior 28
Employee Relations 28
Consumer Relations 29
Community and Philanthropy 29
Technology Issues 29

8. Sustainability Issues 29
Global Social Responsibility 30
Summary 32
Responsible Business Debate: The Brand Name You Won’t
Forget: Brandless 33
Key Terms 34
Discussion Questions 34
Experiential Exercise 35
Two Sides to Tobacco: What Would You Do? 35
Table of Contents
v
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vi Contents
2

9. 3
Strategic Management of Stakeholder
Relationships 36
Stakeholders Defined 38
Stakeholder Issues and Interaction 40
Identifying Stakeholders 40
A Stakeholder Orientation 42
Stakeholder Attributes 44
Performance with Stakeholders 47
Reputation Management 47
Crisis Management 50
Development of Stakeholder Relationships 53
Implementing a Stakeholder Perspective in Social
Responsibility 54
Step 1: Assessing the Corporate Culture 54

10. Step 2: Identifying Stakeholder Groups 55
Step 3: Identifying Stakeholder Issues 55
Step 4: Assessing the Organization’s Commitment to Social
Responsibility 56
Step 5: Identifying Resources and Determining Urgency 56
Step 6: Gaining Stakeholder Feedback 56
Link Between Stakeholder Relationships and Social
Responsibility 57
Summary 59
Responsible Business Debate: Best Buy Excels in Stakeholder
Communication 61
Key Terms 62
Discussion Questions 62
Experiential Exercise 62
Thai Die…Environmental Exploitation or Economic
Development:
What Would You Do? 62

11. Corporate Governance 64
Corporate Governance Defined 66
Corporate Governance Framework 67
History of Corporate Governance 70
Finance Reforms 72
Corporate Governance and Social Responsibility 72
Issues in Corporate Governance Systems 75
Boards of Directors 76
Shareholder Activism 79
Investor Confidence 80
Internal Control and Risk Management 80
Executive Compensation 84
Corporate Governance Around the World 86
Future of Corporate Governance 88
Summary 90

12. Responsible Business Debate: Does Aligning Pay to
Performance Make Cents? 92
Key Terms 92
Discussion Questions 93
Experiential Exercise 93
Core-Tex Creates a Vortex Around Aggressive Accounting:
What Would You Do? 93
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Contents vii
4
5
6
Business, Government, and Regulation 94
Government’s Regulatory Influence on Business 96

13. The Rationale for Regulation 98
Costs and Benefits of Regulation 105
Self-Regulation 107
Global Regulation 108
Government’s Nonregulatory Influence on Business 110
Government’s Focus on Deregulation 111
Deregulation 111
Benefits of Deregulation 114
Costs of Deregulation 115
Summary 115
Responsible Business Debate: Uber Puts It in Reverse on
International Expansion 116
Key Terms 117
Discussion Questions 117
Experiential Exercise 117
The Taxing Role of Being a Politician: What Would You Do?
118

14. The Impact of Business on Government and the
Political Environment 120
The Contemporary Political Environment 122
Changes in Congress 123
Rise of Special-Interest Groups 124
Influencing Government 124
Corporate Approaches to Influencing Government 127
Private Interest Group Influence 129
Laws and Regulations 131
Sherman Antitrust Act 131
Clayton Antitrust Act 131
Federal Trade Commission Act 133
Proposed Financial Reforms 133
Federal Sentencing Guidelines for Organizations 134
Sarbanes-Oxley Act 137

15. Dodd-Frank Wall Street Reform and Consumer
Protection Act 139
Summary 142
Responsible Business Debate: Good, Better, Best: The Better
Business Bureau Fights for
Good Business 143
Key Terms 144
Discussion Questions 145
Experiential Exercise 145
The Case of the Weight-Loss Radio Ads: What Would You Do?
145
Business Ethics and Ethical
Decision-Making 146
The Nature of Business Ethics 149
Foundations of Business Ethics 150
Recognizing an Ethical Issue 151
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16. 7
Ethical Issues in Business 152
Abusive or Intimidating Behavior 153
Misuse of Company Time and Resources 154
Conflict of Interest 155
Bribery 155
Discrimination and Sexual Harassment 156
Fraud 158
Privacy 159
AI and Ethics: An Emerging Issue 160
Understanding the Ethical Decision-Making Process 162
Individual Factors 162

17. Organizational Relationships 165
Opportunity 169
Developing an Ethical Culture 170
Organizational Values 171
Normative Considerations of Ethical Decision-Making 171
Managing the Ethical Culture: Variations of Employee Conduct
172
Summary 173
Responsible Business Debate: Sherwin-Williams Painted into a
Corner 175
Key Terms 175
Discussion Questions 176
Experiential Exercise 176
Moonlighting Monica: What Would You Do? 176
Strategic Approaches to Improving Ethical
Behavior 178
Scope and Purpose of Organizational Ethics Programs 180
Codes of Conduct 183
Ethics and Compliance Officers 185

18. Ethics Training and Communication 186
Establishing Systems to Monitor and Enforce Ethical Standards
189
Systems to Monitor and Enforce Ethical Standards 189
Observation and Feedback 190
Whistleblowing 191
Continuous Improvement of the Ethics Program 192
Institutionalization of Business Ethics 193
Voluntary, Core Practices, and Mandatory Boundaries of Ethics
Programs 193
Ethical Leadership 194
Leadership Power 196
The Role of an Ethical Corporate Culture 198
Requirements of Ethical Leadership 199
Benefits of Ethical Leadership 201
Leadership Styles 201

19. Leader-Follower Relationships 204
Ethical Leadership Communication 204
Summary 207
Responsible Business Debate: Trust Us...Good Ethics Is Good
Business 209
Key Terms 210
Discussion Questions 210
Experiential Exercise 210
Upcharging the Government: What Would You Do? 210
viii Contents
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8
9
10

20. Employee Relations 212
Employee Stakeholders 214
Responsibilities to Employees 214
Economic Issues 215
Legal Issues 222
Ethical Issues 231
Philanthropic Issues 239
Strategic Implementation of Responsibilities to Employees
240
Summary 242
Responsible Business Debate: The Pros and Cons of Hiring
Convicted Criminals 243
Key Terms 245
Discussion Questions 245
Experiential Exercise 245
X, Y, & Millennial: What Would You Do? 245
Consumer Relations 248

21. Consumer Stakeholders 250
Responsibilities to Consumers 251
Economic Issues 251
Legal and Regulatory Issues 253
Ethical Issues 260
Philanthropic Issues 268
Strategic Implementation of Responsibilities to Consumers
269
Summary 270
Responsible Business Debate: Clearance Pricing: Business
Communication in Practice 271
Key Terms 272
Discussion Questions 272
Experiential Exercise 272
There’s a Ringing in My Ears: What Would You Do? 272
Community Relations and Strategic
Philanthropy 274

22. Community Stakeholders 276
Responsibilities to the Community 281
Economic Issues 281
Legal Issues 283
Ethical Issues 284
Philanthropic Issues 285
Philanthropic Contributions 286
Strategic Philanthropy Defined 289
Strategic Philanthropy and Social Responsibility 290
Strategic Philanthropy Versus Cause-Related Marketing 291
Social Entrepreneurship and Social Responsibility 293
History and Development of Social Entrepreneurship 293
Types of Social Entrepreneurship 295
Social Entrepreneurship and Strategic Philanthropy 295
Benefits of Strategic Philanthropy 296

23. Implementation of Strategic Philanthropy 299
Contents ix
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11
12
Top Management Support 299
Planning and Evaluating Strategic Philanthropy 299
Summary 302
Responsible Business Debate: The Giving Pledge 304
Key Terms 305
Discussion Questions 305
Experiential Exercise 305
Creating “Buy-in” for Volunteerism: What Would You Do? 305
Technology Issues 306

24. The Nature of Technology 308
Characteristics of Technology 308
Effects of Technology 309
Technology’s Influence on the Economy 311
Economic Growth and Employment 311
Economic Concerns about the Use of Technology 312
Technology’s Influence on Society 313
The Internet 313
Privacy 316
Intellectual Property 322
Artificial Intelligence 325
Health and Biotechnology 328
Strategic Implementation of Responsibility for Technology
333
The Role of Government 333

25. The Role of Business 334
Strategic Technology Assessment 334
Summary 336
Responsible Business Debate: Ctrl-Alt-Delete: Exploring the
Downside of Technology 337
Key Terms 338
Discussion Questions 338
Experiential Exercise 338
The Email Police: What Would You Do? 339
Sustainability Issues 340
Defining Sustainability 342
How Sustainability Relates to Social Responsibility 343
Global Environmental Issues 344
Atmospheric Issues 344
Water Issues 350
Land Issues 352
Biodiversity 355

26. Genetically Modified Organisms 356
Environmental Policy and Regulation 359
Environmental Protection Agency 359
Environmental Legislation 360
Alternative Energy 363
Wind Power 364
Geothermal Power 364
Solar Power 365
Nuclear Power 365
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27. 13
Biofuels 365
Hydropower 366
Business Response to Sustainability Issues 366
Supply Chain Issues 367
Green Marketing 367
Greenwashing 368
Strategic Implementation of Environmental Responsibility 368
Recycling Initiatives 369
Stakeholder Assessment 370
Risk Analysis 370
The Strategic Environmental Audit 371
Summary 372
Responsible Business Debate: The Powers That Be: How
Sustainable Is Nuclear Energy? 374
Key Terms 375

28. Discussion Questions 375
Experiential Exercise 375
The “Sustainability” of Sustainability: What Would You Do?
375
Social Responsibility in a Global
Environment 378
Cultural Intelligence 380
Global Stakeholders 382
Shareholder Relations and Corporate Governance 384
Employee Relations 385
Consumer Relations 388
Global Development 389
Conventional Business Partnerships 391
Corporate Social Responsibility Partnerships 392
Corporate Accountability Partnerships 393
Social Economy Partnerships 393

29. Global Reporting Initiative 395
Summary 396
Responsible Business Debate: The Gloves Are Off: The U.S.-
China Trade War
Escalates 397
Key Terms 398
Discussion Questions 398
Experiential Exercise 398
Manufacturing Misconduct: What Would You Do? 398
Case 1 Uber Fuels Controversy 399
Case 2 Fixer Upper: Home Depot Works on Stakeholder
Relationships 405
Case 3 Big-Box Retailer Walmart Manages Big Responsibility
412
Case 4 Google Searches for