Making a profit within the ambit of the law and to make decisions that will benefit not only the interest and welfare of society but also that of the organisation Origins of Social Responsibility • Entrepreneurs recognised a responsibility to employees. This refers to an act of paternalism to act in a fatherly way, caring and taking responsibility • Josesph Rowntree – Paternalistic Chief Executive – provide generous medical and dental schemes.
Not possible • Thus there was a necessity to have a separation of ownership and control, with professional managers beginning to run businesses. These managers were less likely to have a paternalistic approach. 3. 2 Contrasting View on Social Responsibility Friedman’s narrow classical view [Make $$$] Bowie’s middleground Mulligan’s broad socioeconomic view [SR] Classical View Management’s only social responsibility is to maximise profits Milton Friedman
Managers’ primary responsibilities is to serve the interests of the stockholders doing ‘social good’ adds to the cost of doing business costs have to be passed on to consumers Christopher Stone & Kenneth Arrow reject Friedman’s articles and argues the utilisation of stable ethical codes to insitutionalise corporate social responsibility Socio-Economic View Businesses are not just economic institutions
Mgt’s SR goes beyond making profits to include protecting and improving society’s welfare Businesses have responsibility to a society that endorses their creation thru laws and regulations, and supports them by buying their products / services More orgs. around the world have increased their SR Bowie & Duska’s Maximalist theory of SR – To do good Middleground View Beauchamp & Bowie believe that just as the duties of citizens need to be realistic, so does the relation between ethics and business 3. 3 Carol’s Four Part Model Why 3.
6 High Profit Disasters • E. gs are Chemical Leak – Union Carbide plant in Bhopal, India and Great ecological disaster in USA – BP oil leak • Pressure why organisations need to behave in a social responsible manner – highly motivated people who run the types of pressure groups mentioned in 3. 5 – the media, government, religious bodies and consumers – their own employees, shareholders, even bankers and consultants also do not wish to be associated with an irresponsible company – high profile disasters – Union Carbide and BP Mexico oil leak.