- Defining social responsibility
- Corporate citizenship
- Issues in social responsibility
- Social responsibility and stakeholder orientation


[SLIDE 1]

Ethics and social responsibility are not the same thing. Ethics are carefully considered rules of conduct that guide business decisions. On the other hand, social responsibility can be defined as an obligation that an organization has to maximize its positive impact on stakeholders and minimize its negative impact. In other words, social responsibility refers to an obligation or contract a company has with society.


[SLIDE 2]

There are four levels of social responsibility including economic, legal, ethical, and philanthropic.

Economic responsibility is the bottom, most basic, level of responsibility, and refers to maximizing the value of the company's stock.

Legal responsibility refers to a company abiding by all government laws and regulations.

Ethical responsibility refers to a company following standards of acceptable behavior as determined by stakeholders.

Philanthropic responsibility refers to a company "giving back" to the community or society.

As you can see, ethics is actually one of the dimensions of social responsibility.


[SLIDE 3]

Corporate citizenship refers to how well businesses meet the legal, economic, ethical, and philanthropic responsibilities placed on them by stakeholders.

Corporate citizenship has four interrelated dimensions. They include strong sustained economic performance, compliance with laws and regulations, ethical decisions and actions that go beyond what is required by law, and working to advance the organization's reputation and stakeholder commitment.

A company's reputation is how it is perceived by stakeholders and others. Its reputation is one of its greatest assets. How people view a company's image and brand are critical when it comes to sustaining stakeholder relationships. A negative incident could tarnish a company's reputation for many years.


[SLIDE 4]

The four categories of social responsibility issues include social issues, consumer protection, sustainability, and corporate governance.

Social issues involve the common good. The common good is the idea that social rules should benefit the community or an entire society. Examples of social issues include jobs lost through outsourcing, property rights, and access to healthcare.

Consumer protection involves actions taken to protect consumers from deceptive or unfair business practices. These actions often occur in the form of new laws to protect consumers. Areas of concern in consumer protection include environmental hazards, financial practices, deceptive advertising, and product safety.

Sustainability refers to the long-term well-being of the natural environment. It includes all biological lifeforms and how those lifeforms can interact with organizations and individuals in a way that is mutually beneficial. Many companies now realize the importance of sustainability and are taking steps to decrease any negative impact they might have on the environment.

Corporate governance involves the creation of systems of oversight, control, and accountability. When a company has strong corporate governance, employees are less likely to make unethical decisions.


[SLIDE 5]

Studies demonstrate that companies that care about the well-being of stakeholders and have a stakeholder orientation are more profitable. In one study, stakeholders reacted positively to companies that were included in a list of those that are socially responsible. If stakeholders believe a company genuinely cares about their concerns and needs, they will be more likely to do business with that company.