CHAPTER 3 – Social Responsibility and Ethics in Strategic Management 6/8/11

3.1 Social Responsibilities of Strategic Decision Makers:
1. The concept of social responsibility proposes that a private corporation has responsibilities to society that extend beyond making a profit. A. As shown in Figure 3-1, Archie Carroll proposes that the managers of business organizations have four responsibilities: economic, legal, ethical, and discretionary. 1. Economic responsibilities of a business organization’s management are to produce goods and services of value to society so that the firm may repay its creditors and shareholders. 2. Legal responsibilities are defined by governments in laws that management is expected to obey. (ie: U.S. business firms are required to hire and promote people based on their credentials rather than to discriminate on non-job-related characteristics such as race, gender, or religion). 3. Ethical responsibilities of an organization’s management are to follow the generally held beliefs about behavior in a society. (society generally expects firms to work with the employees and the community in planning for layoffs, even though no law may require this; because the affected people can get upset if an organization’s management fails to act according to generally prevailing ethical values). 4. Discretionary responsibilities are the purely voluntary obligations a corporation assumes. (such as philanthropic ontributions, training the hard-core unemployed, and providing day-care centers; the difference between ethical and discretionary responsibilities, is that few people expect an organization to fulfill discretionary responsibilities, whereas many expect an