Social Responsibility

Let’s take a look at social responsibility in management. Social responsibility is a business’s obligation to pursue policies, make decisions, and take actions that benefit society. Because there are strong disagreements over to whom and for what in society organizations are responsible, it can be difficult for managers to know what is or will be perceived as socially responsible corporate behavior.

There are two perspectives regarding to whom organizations are socially responsible: the shareholder model and the stakeholder model. According to the late Nobel Prize-winning economist Milton Friedman, the only social responsibility that organizations have is to satisfy their owners, that is, company shareholders. By contrast, under the stakeholder model, management’s most important responsibility is the firm’s long-term survival (not just maximizing profits), which is achieved by satisfying the interests of multiple corporate stakeholders (not just shareholders).

Historically, economic responsibility, or making a profit by producing a product or service valued by society, has been a business’s most basic social responsibility. Legal responsibility is a company’s social responsibility to obey society’s laws and regulations as it tries to meet its economic responsibilities. Discretionary responsibilities pertain to the social roles that businesses play in society beyond their economic, legal, and ethical responsibilities.

Carrying out discretionary responsibilities such as these is voluntary. Companies are not considered unethical if they don’t perform them. Today, how-ever, corporate stakeholders expect companies to do much more than in the past to meet their discretionary responsibilities.

[juliusbonner]

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[Atharva]

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[mariagordon]

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