Download ORGANIZATIONAL ENVIRONMENTS Social Responsibility

MODULE 5
SOCIAL RESPONSIBILITY AND
GOVERNANCE
“Organizations have ethics, too”
•
What should we know about organizational environments and social
responsibility?
• What are current issues in corporate governance?
SOCIAL RESPONSIBILITY AND GOVERNANCE
Organizational Environments And Social
Responsibility
MODULE GUIDE 5.1
 Organizations operate within conditions set by the general
environment.
 The specific environment includes an organization’s
stakeholders.
 Social responsibility is an organization’s obligation to best
serve society.
 Social performance by organizations can be evaluated in
different ways.
 Scholars argue cases for and against corporate social
responsibility.
 Organizations follow different social responsibility strategies.
 Failures of ethics and social responsibility prompt calls for
stronger governance.
ORGANIZATIONAL ENVIORNMENTS AND SOCIAL RESPONSIBILITY
Organizational Environments
General Environment
Consists of cultural, economic, legal, political
and educational conditions
Specific Environment
Consists of the people and groups with
which an organization interacts
Stakeholders
People and Institutions most directly affected
by an organization’s performance
ORGANIZATIONAL ENVIRONMENTS
General Environment
 Economic
 Health of the economy in terms of inflation, income levels, gross domestic
product, unemployment, and job outlook
 Sociocultural
 Norms, customs, and social values on such matters as human rights, trends in
education and related social institutions, as well as demographic patterns in
society
 Legal-political
 Prevailing philosophy and objectives of the political party or parties running the
government, as well as laws and government regulations
 Technological
 Development and availability of technology, including scientific advancements
 Natural
 Nature and conditions of the natural environment, including levels of public
concern expressed through environmentalism
ORGANIZATIONAL ENVIRONMENTS
Specific Environment
Specific Environment :
The people and groups with whom an organization
interacts.
ORGANIZATIONAL ENVIRONMENTS
Social Responsibility
Corporate Social Responsibility
The obligation of an organization to serve its
own interest and those of its stakeholders
Social Responsibility Audit
Assesses an organization’s performance in
the area of social responsibility
ORGANIZATIONAL ENVIRONMENTS
Social Responsibility
ORGANIZATIONAL ENVIRONMENTS
Social Responsibility
 The Case “In Favor
Of” Corporate Social
Responsibility
 Responsibility Increases
long-run profits
 Improves public image
 Helps avoid government
regulation
 Businesses have
resources and ethical
obligations to act
responsibly
 The Case “Against”
Corporate Social
Responsibility
 Reduces business
profits Creates higher
business costs
 Dilutes business
purpose Gives too
much social power to
business
ORGANIZATIONAL ENVIRONMENTS
Social Responsibility
Strategies
SOCIAL RESPONSIBILITY AND GOVERNANCE
Corporate Governance
MODULE GUIDE 5.2
Failures of ethics and social
responsibility prompt calls for
stronger governance.
Weak corporate governance can result
in more government regulation.
Moral management builds capacities
for self-governance in organizations.
CORPORATE GOVERNANCE
Corporate Governance
Corporate Governance
The oversight of top management by a
board of directors
Weak corporate governance leads to
government regulation
Boeing
WorldCom
Enron
CORPORATE GOVERNANCE
Corporate Governance
CORPORATE GOVERNANCE
Government Regulations
 Government Regulations
 Sarbanes-Oxley Act – 2002
 Goal is to see that top CEO’s oversee the financial conduct
of their organizations
 Occupational and Safety Act (OSHA) – 1970
 Goal is to protect employees from workplace injuries
 Equal Opportunity Act (EEO) – 1972
 Goal is to protect minorities against discrimination
 Consumer Product Safety Act – 1972
 Goal is to protect consumers from harmful products
CORPORATE GOVERNANCE
Moral management
Moral Management
Moral Manager
Considers ethical behavior as a personal goal
Amoral Manager
Is unethical but unintentionally
Immoral Manager
Chooses to behave unethically
CORPORATE GOVERNANCE
Moral Management
CORPORATE GOVERNANCE
Ethics Mindfulness
Ethics Mindfulness
Enriched awareness that leads to consistent
ethical behavior
MANAGEMENT TIPS
 A social responsibility audit assesses an
organization’s accomplishments in areas of
social responsibility.
 Discretionary Responsibility:
 Contribute to Community
 Ethical Responsibility:
 Do What Is Right
 Legal Responsibility:
 Obey the Law
 Economic Responsibility:
 Be Profitable