1. Social Responsibility Framework
Social Responsibility and Business
FERRELL • THORNE • FERRELL
4TH EDITION
CHAPTER 1
Social Responsibility Framework

2. Social Responsibility Defined
The adoption by a business of a strategic focus for fulfilling the economic, legal, ethical and philanthropic responsibilities expected of it by its stakeholders
Businesses should look beyond their self-interests and recognize that they belong to a larger group that expects responsible participation.

3. What do you believe organizations should be responsible for accomplishing?

4. Social Responsibility Defined (cont.)
Applies to all types of businesses
Small businesses
Large businesses
Sole proprietorships
Multinational corporations

5. Social Responsibility Defined (cont.)
Fulfills societal expectations
Provides a return on investment for owners
Obeys the law and regulatory agencies
Acts in a just, fair, and correct manner
Promotes human welfare and good will

6. Pyramid of Social Responsibility

7. Social Responsibility Defined (cont.)
Economic
Maintain profitability
Legal
Abide by legal and regulatory influence
Ethical
Ensure just and fair behavior in the workplace
Philanthropic
Promote human welfare and goodwill

8. Strategic Management of Stakeholder Relationships
Social Responsibility and Business
FERRELL • THORNE • FERRELL
4TH EDITION
CHAPTER 2
Strategic Management of Stakeholder Relationships

9. Stakeholders
Those constituents who have a stake in, or claim on, some aspect of a company’s products, operations, markets, industry, and outcomes
Companies that operate with a stakeholder orientation recognize that business and society are interpenetrating systems, in that each affects and is affected by the other.

10. Primary Stakeholders
Groups fundamental to a company’s operation and survival
Customers
Employees
Shareholders
Investors
Suppliers
Government
Community
Balancing the needs and perspectives of primary stakeholders is a strategic imperative.

11. Secondary Stakeholders
Groups that may influence and/or be affected by the company, but are not engaged in economic exchanges with the firm:
Media
Special interest groups
General public
These groups are not fundamental to an organization’s daily survival.
They can place significant pressure on a business and therefore, cannot be ignored.

12. Development of Stakeholder Relationships
Relationships are founded on principles of:
Trust
Commitment
Communication
They are also associated with a degree of:
Time
Interaction
Shared expectations
Companies are searching for ways to develop long-term and collaborative relationships with their customers and business partners.

13. Social Capital
An asset, which resides in relationships, that is characterized by mutual goals and trust
Facilitates smooth internal and external transactions and processes

14. The Reactive-Defensive-Accommodative-Proactive Scale

15. Corporate Governance Social Responsibility and Business CHAPTER 3
FERRELL • THORNE • FERRELL
4TH EDITION
CHAPTER 3
Corporate Governance

16. Corporate Governance
Corporate governance is the formal system of oversight, accountability, and control for organizational decisions and resources.
Major issues:
Shareholder rights
Executive compensation
Organizational ethics programs
Board composition and structure
Auditing, control and risk management
CEO selection and executive succession plans

17. Models of Corporate Governance
Shareholder model
Maximizes wealth for investors and owners
Develops and improves the formal system of performance accountability between management and the firm’s shareholders
Makes decisions based on what is ultimately best for investors
Focuses on aligning investor and management interests

18. Models of Corporate Governance (cont.)
Stakeholder model
Considers the interests of employees, suppliers, government agencies, communities, and other groups with which the firm interacts
Assumes a collaborative and relational approach to business
Focuses on continuous improvement, accountability, and engagement with internal and external constituents

19. Issues in Corporate Governance Systems
Boards of directors
Independence
Quality and experience
Performance
Shareholders and investors
Shareholder activism
Social investing
Investor confidence

20. Issues in Corporate Governance Systems (cont.)
Internal control and risk management
Internal and external audits
Control systems
Risk management
Financial misconduct
Executive compensation

21. Legal, Regulatory, and Political Issues
Social Responsibility and Business
FERRELL • THORNE • FERRELL
4TH EDITION
CHAPTER 4
Legal, Regulatory, and Political Issues

22. Government’s Influence on Business
Laws are enforced through the judicial system.
Settles disputes and punishes criminals
Corporations have the same legal status as a person.
Can sue
Can be sued
Can be held liable for debt

23. The Rationale for Regulation
Preventing trusts and monopolies from using their market dominance to negatively manipulate output, pricing, and quality
Eliminating unfair competition and anti-competitive practices
Supporting environmental initiatives, equality in the workplace, and product safety
Protecting consumers and business in e-commerce activities

24. Global Regulation Import barriers Tariffs and quotas
Minimum price levels
Port-of-entry taxes
Product quality, safety, distribution, sales, and advertising regulation
North American Free Trade Agreement (NAFTA)
Eliminates virtually all tariffs on goods produced and traded between the U.S., Canada, and Mexico
European Union (EU)
Promotes free trade between member nations

25. Benefits of Regulation
Greater equality in the workplace
Safer workplaces
Resources for disadvantaged societal members
Safer products
More information about products
Greater product variety
Cleaner air and water
Preservation of wildlife

26. Deregulation Removal of all regulatory authority
Belief that less government intervention allows business markets to work more effectively
Many industries have been deregulated.
Trucking
Airlines
Telecommunications
Electric utilities
Critics of deregulation cite higher prices and poorer service/quality.

27. Corporate Approaches to Influencing Government
Lobbying
Process of persuading public and/or government officials to favor a particular position in decision making
Takes place directly or through trade organizations
Political Action Committees
Organizations that solicit donations from individuals and then contribute to candidates running for political office
Campaign Contributions
Corporate donations

28. Seven Steps to Effective Compliance and Ethics Program
Establish a code of ethics.
Appoint a high-level compliance manager, usually an ethics officer.
Take care in delegation of authority.
Institute a training program and communication system.
Monitor and audit for misconduct.
Enforce and discipline.
Revise program as needed.

29. Business Ethics and Ethical Decision Making
Social Responsibility and Business
FERRELL • THORNE • FERRELL
4TH EDITION
CHAPTER 5
Business Ethics and Ethical Decision Making

30. Ethical Issues in Business
An ethical issue is a problem, situation, or opportunity requiring an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical.
Ethical issues:
Honesty and fairness
Conflict of interest
Fraud
Discrimination
Information technology

31. Personal Misconduct in the Workplace

32. Moral Philosophies Consequentialism Egoism Utilitarianism
A decision is right or acceptable if it helps achieve the desired results
Egoism
Maximizing one’s own self-interest
Utilitarianism
Greatest good for the greatest number of people
Ethical formalism
Focuses on the rights of the individual
Justice theory
Evaluations of fairness

33. Kohlberg’s Model People progress through the previous six stages.
Cognitive moral development should be viewed as a continuum.
People’s moral beliefs and behavior change as they gain education and experience.
There are universal values by which people in the highest level of moral development abide.

35. Social Needs that Motivate Ethical/Unethical Behavior
Need for achievement
Preference for goals that are well defined and moderately challenging
Need for affiliation
Inclination to work with others in the organization rather than alone
Need for power
Desire to influence and control others

36. Creating an Ethical Climate
Top managers, employees, and stakeholders must support the philosophy that all organizations have responsibilities that extend beyond legal and economic obligations.
Members of the organization must be willing to share their values about workplace ethics.

37. Creating an Ethical Climate (cont.)
Ethical concerns should be incorporated into strategic planning.
Management must develop a mechanism for assessing its progress in making ethical decisions that contribute to social responsibility.