Social responsibility is the expectation of the business to go beyond there self- interest and recognize that they belong to the community and they are obliged to provide responsible participation. Thus the company should be able to balance between the profit-making and doing what is they are expected to do.
The social responsibility is viewed in such a way that all four dimensions are considered as related. Due to this companies can manifest the various degree of social duties at a different time. They range from minimal to a strategic focus. Minimum focus sees firms concentrate on the shareholders and the cost of operation while imperative operates on a legal perspective.
The introduction of charters which were issued by the government states, and acted as a “License of Operation” and they specified the internal structure of the firms and which allowed ease of monitoring their actions. In the 1900s and 1800s profit and responsibilities of the stakeholders become a significant corporate goal.
In the 1950s, 130 largest companies in the US provided more than half of the country’s manufacturing output. Top 500 accounted for more than 2/3 of the country non-agricultural economic activity.
During 1950 and 1960s companies contributed to the charities, the arts, culture, and other activities that were both beneficial to the company and the society. They provided many of the services that are now being offered by the US government. The roles of these corporations were by Economic turmoil during the 1970s and 1980s.
The 1980s and 1990s brought focus on profitability and economy of scales. Efficiency and productivity become the primary objective of the business which led to restructuring and left a lot of people without financial security. In 1990s corporate responsibilities were renewed. The organization becomes ready to take more responsibilities and acceptable practices.
In 2007 and 2008 there was the housing boom which led to the collapse and thus setting off a financial crisis. This led to the house owner being unable to pay their mortgages.
In 2010 Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. They were meant to protect the economy from the financial crisis in the future by creating more transparency in the financial industries.
It enhances the stakeholders’ relationships, improves performance. It increases efficiency in daily operations, greater employee commitment, higher product quality, improved decision making, increased customer loyalty, and improved financial performance.
Corruption reduces the economic performance, due to the increase of transactions, cost of uncertainty, inefficient investments, and misallocation of production factors.
Social responsibility is an important business concept and should involve significant planning and implementation. This because it requires a formal commitment and a way of communicating the company social responsibility philosophy the same way the company talk about its goals and objectives
The stakeholder orientation means that the organization is focused on the stakeholders’ concern. The companies should be socially responsible as they probably affect society even much more in terms of monetary, or financial conditions.
To the investors, they get to get more income as the customers are loyal and this leads to increased profit.
The customers get to get good quality products due to the employee’s commitment to wearing.
Employees get to enjoy increas4ed productivity which means there is increased profit.
Questions Chapter 2
In the stakeholder interaction model there are two ways relationship between the firm and the host of stakeholders.
Primary stakeholders- those who have a continued association with the organization and is vital for its survival.
Secondary stakeholder- do not typically engage in the direct transaction with a company and thus not essential for its survival
Reputation management is the process of building and sustaining a company’s good name and generation positive feedback from stakeholders. The components include organizational identity, image, performance, and reputation.