Chapter 3 (Mgmt/miller/uic)

-Decision makers must take actions to protect and improve welfare of the society.

-The social role of business is thought as an ideological continuum. Its goal is to ensure long-term viability of the organization and society.

Employs free-market principlesand recognizes the necessity for financial success but also argues that social and environmental responsibilities are of equal importance. According to sustainability advocates, corporations giving close attention to both social and economic duties has a powerful competitive advantage that will contribute to organizational and societal sustainability.

This looks at the longer term view of profitmaximization. They recognize the imperative of a strong return on the shareholders’ investment, but they also believe that achieving that return may require heightened sensitivity to the welfare of employees, consumers, and the community. They believe that socially responsible behavior is the right thing to do.

Here the dominant concern lies in maximizing shareholders’ interests.Those shareholders, after all, are the owners of the firm. They are taking the financial risk. Hence, from a profit maximization POV, the only responsible and moral course of behavior is to reap the highest possible return, within the law.

1. Economic Responsibilities – be profitable. The foundation on which all other responsibilities rest. (Required)

2. Legal Responsibilities – obey the law. Law is society’s codification of right and wrong. Play by the rules of the game. (Required)

3. Ethical Responsibilities – be ethical. Do what is right, just, and fair. Avoid harm. (Expected)

4. Discretionary/Philanthropic Responsibilities – be a good corporate citizen. Contribute resources to the community; improve the quality of life. (Desired)

1. Is CSR good business? Is CSR good business? Market rewards socially responsible performance by business. Studies indicate a positive relationship between social performance and financial performance

2. Do we have a better alternative? Creating shared value (CSV) - Enhances economic competitiveness and increases social returns

1.Corporate community is taking a direct role in the political process. Political actioncommittees (PACs) > Established by corporations to solicit and disburse voluntary campaign contributions. 2.Citizens’ United case - Supreme Court held that federal laws limiting campaign contributions violate free speech rights.

3.Corporate influence - Money is a powerful force in electoral performance, shapes legislative process. Americans stand in need of amendments to the Constitution to clarify that: Money does not constitute speech. Corporations are not entitled to the rights of persons.

4.Critics argue that: America’s big corporations do not serve public interest well. Size and economies of scale of corporations lead to continuing abuse of the American public.

5.Corporate power threatens America’s economy. States compete by improving business climates with incentives. Taxes - America’s biggest publicly traded companies exploit tax code loopholes. The country’s corporate tax rates are the highest in the world

Misconduct/incompetence - Recent scandals and financial failures have supported doubtsabout corporate honor and competence.

Advertising and promotion in schools. Corporations prepare model curricula and donatemoney to improve school performance. Administrators sell ad space in school settings. Criticism - Encourages materialism, celebrates dubious values and discourages critical thinking.

Manage public schools - School districts contract private companies to operate strugglingpublic schools. Expect competition and for-profit efficiencies to improve educational quality

Higher education - Businesses are turning campuses into marketing and developmentopportunities.

Religion - Churches employ standard business practices and compete for market share.Religion has become a product.

Culture - Corporate America supports traditional intellectual culture generously

Criticism - Popular culture has been debased by corporate greed, indifference to quality, and relentless consolidation

Sports - Funding is provided for many unprofitable sports. Revenues support academicprograms. Significance of conversion from sport to business is unclear. Commercialism of athletics is complained about. High school sports facilities mimic college and professional experiences

Social enterprise/social entrepreneurship - People launch non-profits and businesses or takeup jobs to address social problems. Example - Love.futbol - Builds safe soccer fields for children in impoverished nations. Expectations for business in society have been altered. Profit-seeking remains central and essential but social responsibility must be considered.

Decision makers must take actions to protect and improve welfare of the society. Social roleof business is thought of as an ideological continuum. Goal - To ensure long-term viability of the organization and the society