Discuss the Activities where learning organizations excel
SOURCE: T. L. Wheelen and J. D. Hunger, “Board of Directors’ Continuum,” Copyright © 1994 by Wheelen and Hunger Associates. Reprinted by permission.
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CHAPTER 3 Social Responsibility and Ethics in Strategic Management 73
a business corporation need profits to survive and grow. “Maximizing profits is like maximizing food.” Thus, contends Byron, maximization of profits cannot be the primary obligation of business.2
As shown in Figure 3–1, Archie Carroll proposed that the managers of business organizations have four responsibilities: economic, legal, ethical, and discretionary.3
1. Economic responsibilities of a business organization’s management are to produce goods and services of value to society so that the firm may repay its creditors and increase the wealth of its shareholders.
2. Legal responsibilities are defined by governments in laws that management is expected to obey. For example, U.S. business firms are required to hire and promote people based on their credentials rather than to discriminate on non-job-related characteristics such as race, gender, or religion.
3. Ethical responsibilities of an organization’s management are to follow the generally held beliefs about behavior in a society. For example, society generally expects firms to work with the employees and the community in planning for layoffs, even though no law may require this. The affected people can get very upset if an organization’s management fails to act according to generally prevailing ethical values.
4. Discretionary responsibilities are the purely voluntary obligations a corpora- tion assumes. Examples are philanthropic contributions, training the hard-core unemployed, and providing day-care centers. The difference between ethical and discretionary responsibilities is that few people expect an organization to fulfill discretionary responsibilities, whereas many expect an organization to fulfill ethi- cal ones.4