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MScBusinessEthicsweek2 FramingBusinessEthicsNB slideswith FYI headingswillnotbediscussedduringthelecture Thesenotesincludeinformationtoadvanceyourstudyfurther Towardsaframeworkforbusinessethics Whatisacorporation Keyfeaturesofacorporation AcorporationisessentiallydefinedintermsoflegalstatusandtheownershipofassetsCorporationsaretypicallyregardedas artificialpersons intheeyesofthelawCorporationsarenotionally owned byshareholders butexistindependentlyofthemManagersanddirectorshavea fiduciary responsibilitytoprotecttheinvestmentofshareholders Canacorporationhavesocialresponsibilities MiltonFriedman1970classicarticle Thesocialresponsibilityofbusinessistoincreaseitsprofits Vigorouslyarguedagainstthenotionofsocialresponsibilitiesforcorporationsbasedonthreemainarguments OnlyhumanbeingshaveamoralresponsibilityfortheiractionsItismanagers responsibilitytoactsolelyintheinterestsofshareholdersSocialissuesandproblemsaretheproperprovinceofthestateratherthancorporatemanagers Canacorporationbemorallyresponsibleforitsactions LongandcomplexdebatebutgenerallysupportfromliteratureforsomedegreeofresponsibilityaccreditedtocorporationsArgumentbasedonEveryorganisationhasacorporateinternaldecisionstructurewhichdirectscorporatedecisionsinlinewithpredeterminedgoals French1979 Allorganisationsmanifestasetofbeliefsandvaluesthatlayoutwhatisgenerallyregardedasrightorwronginthecorporation organizationalculture Moore1999 CorporateSocialResponsibility Whydocorporationshavesocialresponsibilities Businessreasons enlightenedself interest Extraand ormoresatisfiedcustomersEmployeesmaybemoreattracted committedForestalllegislationLong terminvestmentwhichbenefitscorporationMoralreasons CorporationscausesocialproblemsCorporationsshouldusetheirpowerandresourcesresponsiblyAllcorporateactivitieshavesocialimpactsofonesortoranotherCorporationsrelyonthecontributionofawidesetofstakeholdersinsocietyratherthanjustshareholders Whatisthenatureofcorporatesocialresponsibilities Corporatesocialresponsibilityencompassestheeconomic legal ethical andphilanthropicexpectationsplacedonorganizationsbysocietyatagivenpointintime Carroll Buchholtz2000 35 Carroll sfour partmodelofcorporatesocialresponsibility FYI CSRinaEuropeancontext InEuropeconceptofCSRneverbeenquiteasinfluentialasinUSACouldarguethatalllevelsofCSRplayadifferentroleinEuropeEconomicresponsibilityUSAstronglyfocusedresponsibilitytoshareholdersEuropefocusedontheeconomicresponsibilitytoemployeesandlocalcommunitiesaswellLegalresponsibilityProminentroleofstateinregulatingcorporatepracticeinEuropeEthicalresponsibilityEuropeanstendtoexhibitgreatermistrustofmoderncorporationsPhilanthropicresponsibilityInEuropemostlybeenimplementedcompulsorilyviathelegalframeworkratherthanviadiscretionaryactsofsuccessfulcompanies USA FYI CSRandstrategy corporatesocialresponsiveness Corporatesocialresponsivenessreferstothecapacityofacorporationtorespondtosocialpressures Frederick1994 4 philosophies orstrategiesofsocialresponsiveness Carroll1979 ReactionDefenceAccommodationProaction FYI OutcomesofCSR corporatesocialperformance Outcomesdelineatedinthreeconcreteareas SocialpoliciesSocialprogrammesSocialimpacts Stakeholdertheoryofthefirm Stakeholdertheoryofthefirm TheorydevelopedbyEdwardFreeman 1984 Astakeholderinanorganizationis anygrouporindividualwhocanaffect orisaffectedby theachievementoftheorganization sobjectives Freeman1984 46 Principleofcorporaterights thecorporationhastheobligationnottoviolatetherightsofothersPrincipleofcorporateeffect companiesareresponsiblefortheeffectsoftheiractionsonothers Stakeholdertheoryofthefirm Traditionalmanagementmodel Stakeholdertheoryofthefirm Stakeholdertheoryofthefirm Anetworkmodel Whystakeholdersmatter MiltonFriedman businessesshouldonlyberunintheinterestsoftheirownersReasonswhyothergroupsalsohavealegitimateclaimonthecorporationLegalperspectiveLegallybindingcontractsEconomicperspectiveExternalitiesNocontractualrelationsAgencyproblem Anewroleformanagement AccordingtoFreeman thisbroaderviewofresponsibilitytowardsmultiplestakeholdersassignsanewroletomanagement Ratherthansimplybeingagentsofshareholders managementhastotakeintoaccounttherightsandinterestsofalllegitimatestakeholders StakeholderdemocracyCorporategovernance FYI StakeholderthinkinginaEuropeancontext OnecouldarguethatalthoughtheterminologyofstakeholdertheoryisrelativelynewinEurope thegeneralprincipleshaveactuallybeenpractisedforsometime Germansupervisoryboard CovenantApproach inenvironmentalregulationintheNetherlands FYI Differentformsofstakeholdertheory Donaldson Preston 1995 Normativestakeholdertheory attemptstoprovideareasonwhycorporationsshouldtakeintoaccountstakeholderinterestsDescriptivestakeholdertheory attemptstoascertainwhether andhow corporationsactuallydotakeintoaccountstakeholderinterestsInstrumentalstakeholdertheory attemptstoanswerthequestionofwhetheritisbeneficialforthecorporati
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