Solution Manual for Business and Society: Ethics, Sustainability and Stakeholder Management, 10th Edition

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Ch 1,Business & Society, Carroll10eChapter 1The Business and Society RelationshipLEARNING OUTCOMESAfter studying this chapter, you should be able to:1.Describe and explain business and society as foundational concepts. Describe how societyis viewed as the macroenvironment.2.Explain the characteristics of a pluralistic society. Describe pluralism and identify itsattributes, strengths, and weaknesses.3.Definea special-interest society anddescribehow it evolves.4.Identify, discuss, and illustrate the factors leading up to business criticism and corporateresponse. What is the general criticism of business? How may the balance of power andresponsibility be resolved? What is the changing social contract?5.Highlightthe major focuses or themes of the book: managerial approach, business ethics,sustainability, and stakeholder management.TEACHING SUGGESTIONSINTRODUCTION–This chapter introduces some important basic concepts in the business andsociety discussion, including pluralism, special-interest societies, business criticism, corporatepower, corporate social responsibilityto stakeholders,and sustainability.KEY TALKING POINTS–The instructor is likely to find that students have given little or nothought to the role that business plays in our society. Most undergraduates (most people for thatmatter) have never really considered the influence of business in their lives, and so fall victim tothe “is/ought” fallacy. They assume that just because something “is” a certain way,thenit“ought” to be that way. Thus, they assume that because business is the dominant socialinstitution in our society, it should be. One of the main challenges that the instructorfacesin thischapter is simply getting students to reflect on the power that business holds in our society. Mostdon’t realize the influencethatcorporations hold over them because they have never given theidea any thought. The second, and even greater challenge,will be getting studentsto realize andaccept that corporations are dependent on them (the students) for their very existence.Corporations are legal fictions that exist only because we have passed laws that allow them toexist. Thus, the continued existence of the corporation as a legal entity depends on sociallegitimacy granted to corporations by citizens. Most students will rebel at the notion that theyhave any power over whether General Motors or General Electric or General Dynamicscontinues to exist or not (here is a good spot to point out how quickly and easily the students cansee where the power lies). Practically speaking, they will be correct—individuals have preciouslittle power to influence our corporate system. But as Margaret Mead, the famed anthropologist,noted, “Never doubt that a small group of thoughtful citizens can change the world. Indeed, it isthe only thing that ever has.”

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Ch 1,Business & Society, Carroll10ePEDAGOGICAL DEVICES–In this chapter, instructors may utilize a combination of:Cases:1-Wal-Mart-The Main Street Merchant of Doom2-The Body Shop(A)-Pursuing Social and Environmental Change3-The Body Shop(B)-Reputation is Tarnished4-The Body Shop(C)-Into the New Millennium7-Using Ex-Cons to Teach BusinessEthics12-Banned if You Do, Banned if You Don’t19-Should Directors Shine Light on Dark Money?23-McDonald’s Coffee Spill24-The Betaseron Decision (A)25-The Hudson River Cleanup and GE26-Cloud Computing–Earth’s Friend or Foe27-New Belgium Brewing, Defining a Business on Sustainability29-Felony Franks (2), Home of the Misdemeanor Wiener31-Moral Dilemma-Head vs. Heart39-To Take or Not to TakeEthics in Practice Cases:Working for My Cup or the House?Is Business Power Too Great?Spotlight on Sustainability:Sustainability—What Does It Mean?Power Point slides:Visithttp://academic.cengage.com/management/carrollfor slides related to this and otherchapters.LECTURE OUTLINEI.BUSINESS AND SOCIETYA.Business: DefinedB.Society: DefinedII.SOCIETY AS THE MACROENVIRONMENTIII.APLURALISTIC SOCIETYA.Pluralism Has Strengths and WeaknessesB.Multiple Publics, Systems, andStakeholdersIV.ASPECIAL-INTEREST SOCIETYV.BUSINESS CRITICISM AND CORPORATE RESPONSE

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Ch 1,Business & Society, Carroll10eA.Factors in the Social Environment1.Affluence and Education2.Awareness through Television, Movies,theInternet, and Social Mediaa.24/7News and Investigative Programsb.Prime-Time Television Programsc.Commercialsd.Moviese.Social Media3.Revolution of Rising Expectations4.Entitlement Mentality5.Rights Movement6.Victimization PhilosophyB.AGeneralCriticismof Business: Use and Abuse of Power1.Levels of Power2.Spheres of PowerC.Balancing Power with Responsibility1.Iron Law of ResponsibilityD.Business’s Response: Concern and a Changing Social Contract1.Social ContractVI.FOCUS OF THE BOOKA.Managerial Approach1.UrgentversusEnduring IssuesB.Business Ethics ThemeC.Sustainability ThemeD.Stakeholder Management ThemeVII.STRUCTURE OF THE BOOKVIII.SUMMARYSUGGESTED ANSWERS TO DISCUSSION QUESTIONSStudents should recognize that their answers to these discussion questions should be wellreasoned and supported with evidence. Although some answers will be more correct than others,students should be aware that simplistic answers to complex questions, problems, or issues suchas these will never be “good” answers.1.Question:In discussion of business and society, why is there a tendency to focus onlarge-sized rather than small-or medium-sized firms? Have the corporate ethics scandals of thepast decade affected small-and medium-sized firms? If so, in what ways have these firmsbeen affected?Answer:We tend to focus on large firms when discussing business and society for anumber of reasons. Large firms are more visible, their products and services are morewidely known, and we generally equate size with power. All of these factors contribute tothe fact that large firms are more susceptible to public scrutiny. It is debatable whether the

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Ch 1,Business & Society, Carroll10eethics scandals of thefirst decade of the2000s have had a significant impact on small andmedium-sized firms. On the one hand, the scandals may have caused a general increase inthe level of distrust of business. This had a chilling effect on stock prices and made itmore difficult for smaller firms to raise money, especially through initial public offerings(IPOs).Furthermore, small and medium-sized firms that are not publicly-traded may feelpressure to adhere to the costly provisions of the Sarbanes-Oxley Act, as lenders,investorsand competitorscontinueto stress that SOX provisions are the “best practices” by whichallfirms are measured.On the other hand, as stated above, the public tends to focus moreon larger firms, so the scandals may not have “trickled down” to smaller firms on thoseoccasions when members of society actually do think about them.2.Question:What is theonegreatest strength of a pluralistic society? What is theonegreatest weakness? Do these characteristics work for or against business?Answer:The textbook lists several strengths (prevents power from being concentrated,maximizes freedom of expression, allegiance of individuals to groups is dispersed, createsa diversified set of loyalties to many organizations, and provides a set of checks andbalances) and weaknesses (no unified direction to align individual pursuits, proliferatinggroups have overlapping goals, and promotes conflicts among groups). Students couldconceivably make a case for any of these as the greatest strength and weakness. In myopinion, pluralism can prevent power from being too concentrated by providing a systemof checks and balances, so that may be its greatest strength. However, students shouldrecognize that power is still not evenly distributed, even in a pluralistic society. Someindividuals and groups have more power than others—concentration is a matter of degree,not an either/or situation. The greatest weakness seems to lie in the fact that pluralismengenders conflicts of interest among groups with differing goals, thus leading to special-interest groups. There will hardly ever be a consensus among competing groups, whichcould lead to inaction or ineffective compromise.3.Question:Identify and explain the major factors in the social environment that create anatmosphere in which business criticism takes place and prospers. Provide examples. Howare the factors related to one another? Has the revolution of rising expectations run itscourse?Or is it still a reality among young people today?Answer:Many factors contribute to an atmosphere conducive to criticism of business.Affluence, or the level of wealth, allows people the luxury of being critical of socialinstitutions (as Amartya Sen and John Kenneth Galbraith have both noted, people inpoverty are primarily concerned with finding enough to eat, not the cause or cure for socialills). In addition, affluence often leads to rising expectations. People generally expecteach succeeding generation to have higher standards of living and become dissatisfied ifthat does not occur.While the recent economic recession may moderate risingexpectations in the short-run, the general trend of rising expectations may continue. Suchexpectations are likely to outpace business’s ability to respond, especially during arecession.Higher levels of education also contribute to a climate of criticism, becausepeople expect more from life, are more aware of ills caused by business, and they are betterequipped to research and analyze the causes of socialproblems. The mass media,particularly television, moviesand the internet,oftenprovidesnegativeinformation aboutbusiness to the public, which increases the public’s distrust and unfavorable perception of

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Ch 1,Business & Society, Carroll10ebusiness.Observers of society have also noted three related trends that contribute tocriticism of business, an entitlement mentality, the movement for equal rights, and avictimization philosophy. These trends can also be associated with increased levels ofeducation and affluence, and in some ways, are examples of rising expectations.Thesetrends also may be influenced and exacerbated by the media.4.Question:Give an example of each of the four levels of power discussed in this chapter.Also,give an example of each of the spheres of business power.Answer:Dr. Epstein identified four levels of corporate power—macro, intermediate,micro, and individual. The macro level encompasses the entire corporate system. This canbe seen inbusiness’s ability to effectively lobby Congress to pass laws that enhancecorporations’ ability to operate profitably, the fact that nearly half of the largest economiesin the world are corporate, not national, or in the profound effects that business has onindividuals’ lives. The intermediate level of power resides within particular groups ofcorporations acting in concert. This type of power is often associated with industries, suchas the auto manufacturers, insurance companiesor financial services firms.Anexample ofthe intermediate level of corporate poweristhe military-industrialcomplex that influencesdefense spending. The micro level of corporate power is wielded by an individual firm.The best example of this level is Microsoft, with its dominance of the computer operatingsystem market. Finally, the individual level of corporate power is vested in individualcorporate leaders. Jack Welsh, retired CEO of General Electric, Bill Gates, founder ofMicrosoft,Warren Buffett, the CEO of Berkshire Hathaway,andMartha Stewart, founderof Martha Stewart Living Omnimedia,are good examples of people who exercise theindividual level of corporate power.Spheres of power include economic, political, social/cultural, technological,environmental, and power over the individual. The fact that corporations control billionsof dollars in assets and sales shows their economic power. Nearly half of the largesteconomies in the world are corporations, not nations. Corporate lobbying efforts, politicalaction committees (PACs), and direct influence on elected officials (e.g.,formerVicePresident Cheney’s “secret” energy policy meetings with corporate leaders) all show thepolitical power enjoyed by corporations. Virtually all new technology is manufactured anddistributed by corporations, and much of it is invented in corporate R&D labs—such ascellular telephones, medical treatment, and hybrid automobiles. Corporations producevehicles that are the number one source of air pollution in the world, and determine thefashions that teens wear and the movies that we watch. Because most people work forcorporations and buy most of their products from corporations, corporate power over theindividual is undeniable.5.Question:Explain in your own words the Iron Law of Responsibility and the socialcontract. Give an example of a shared understanding between you as a consumer or anemployee and a firm with which you do business or for which you work.Answer:The iron law of responsibility basically says that there is a balance requiredbetween power and responsibility to others. The more power anorganization has, themore responsibilities that same entity will have. This concept is actually one that mostchildren learn in one form or another. “To whom much is given, much is expected.”

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Ch 1,Business & Society, Carroll10e“Rights bear responsibilities.” A social contract is an implicit agreement between twoparties or social institutions that states the rights and duties of each party. As consumers,wehave a right to expect that the productswebuywill work properly and not subjectustounreasonable risks.This right extends to financial services products.Abusive practiceswith credit cards and other predatory practicesshowed that thissocialcontract was beingviolated on a regular basis by some corporations.Certain businesses have exploitedconsumers’ financial circumstances, lack of education or general naivety to bind them tounconscionable contracts. As a result, these consumers may find themselves in situationswhere they cannot realistically meet their debt obligations. To the extent that thesebusinesses use unfair or predatory practices in selling their financial products, regulation isnecessary to protect consumers.As a result, the federal governmentisjustified increatingnew regulations to meet this need.GROUP ACTIVITYThis group activity focuses onbusinesscriticism and thecorporateresponse.Divide studentsinto groups of fourtofive students. Distribute the latest edition of national, regional and localnewspapers among different groups in the class. Have the group identify the number of articlesthatcriticize business or an employer-related decision. Have the group identify the number ofarticles that paint business in a favorable light. Ask students to pick a negative article and apositive article for a more in depth analysis. Students should consider the following questionsfor each article:•Is the business practice or decision accurately portrayed?•What is the intended audience of the newspaper? Do you think the affluence, education,expectations and mentality of the intended audience impacts the newspaper’s portrayal ofthe business decision? If so, how?•How should the business in question respond to this situation?Once students have had an opportunity to discuss the review questions in their group, ask eachgroup toreportthe number of negativeversuspositive articles and to summarize their answers tothe review questions for the class. Look for trends or discrepancies to discuss with the class as awhole. For example, ask students to consider whether they believe business is treated differentlyby national, regional and local papers based on the responses of each group. Further, askstudents to contemplate whether the affluence, education, expectations and mentality of theintended audience affects the way a particular newspaper reports on the actions of business.Finally, encourage students to explore the range of corporate responses to negative and positivemedia.INDIVIDUAL ASSIGNMENTDistribute the following instructions to each student:Select a company and research recent news items that have been released regarding thecompany. In a written response, note whether the articles were positive or negative for thecompany. Describe how the company’s actions may impact an individual’s perception of

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Ch 1,Business & Society, Carroll10ebusiness in the United States. Identify responsibilities that the company has to variousstakeholder groupsmentionedin the articles. Finally, note any sustainability issues that confrontthe company and provide suggestions for how the company should handle these issues.

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Ch 2,Business & Society, Carroll10eChapter 2Corporate Social Responsibility, Citizenship, and SustainabilityLEARNING OUTCOMESAfter studying this chapter, you should be able to:1.Describe some early views of corporate social responsibility (CSR). Explain how CSRevolved andencompasseseconomic, legal, ethical, and philanthropic components. Explainthe Pyramid of CSR.2.Articulate the traditional arguments both against and for CSR. Explain how the businesscase for CSR has strengthened the concept’s acceptance.3.Describe how the concept of corporate socialresponsivenessdiffers from CSR.4.Summarize how corporate socialperformance(CSP) became more popular. Describe howit is different than CSR. Elaborate on how it differs from corporate socialresponsiveness.5.Describe how corporate citizenship is a valuable way of thinking about CSR. Explain itsbroad and narrow views. Explain how corporate citizenship develops and proceeds instages.6.Summarize the three perspectives on the relationship between corporate socialperformance (CSP) and corporate financial performance (CFP).7.Explain how sustainability is a broad concept that embraces profits, people, and the planet.Describe how the triple bottom line is a vehicle for implementing sustainability.8.Elaborate on the ages and stages of CSR. Define CSR Greenwashing and how it may leadto misleading reputational profiles of companies.9.Describe and characterize the socially responsible investing movement. Differentiatebetween negative and positive screens that are used in investment decisions.TEACHING SUGGESTIONSINTRODUCTION–This chapter explores several different aspects of the CSR topic andprovides some insights into what CSR means and how businesses are carrying it out. An entirechapter is devoted to CSR concepts because it is a core idea that underlies most of the material inthe textbook.This chapter also focuses on the concept of corporate citizenship.KEY TALKING POINTS–In some ways this maybea difficult chapter to teach,sincetheinstructor will be laying the foundation for future discussions that will more directly involveanalyzing and evaluating corporate social performance. The current chapter focuses on theanalytical tools we will be using rather than actually using those tools. In some ways thisdistinction can be likened to a teenager learning how the steering wheel, brake, and acceleratorwork in a car, rather than actually getting behind the wheel and driving. Of course, everyonewould want a new driver to understand what the steering wheel does and which pedal to usewhen she needs to slow down. But that fact alone does not mean that the new driver doesn’twant to skip the lesson on how to use the tools and just go drive.This is compounded by the factthat many students may have heard of or discussed the terms introduced in this chapter in otherbusiness courses, specifically corporate social responsibility, but they maynot grasp thatCSR

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Ch 2,Business & Society, Carroll10erequires the simultaneous execution of economic, legal, ethical and philanthropicresponsibilities. Many students may struggle with the concept that these responsibilities need tobe addressed concurrently by firms, since previous exposure to the concept may have focused onthe idea that CSR is the culmination of the ethical and/or philanthropic activities of firms ratherthan the culmination of all four responsibilities. Consequently,students in your class may not beas anxious to delve into the intricacies ofcorporate citizenship, including corporate socialresponsibility, corporate social responsiveness and corporate social performancewhen theycould be discussing a juicy corporate scandal. But it is important that students have better toolsto help them dissect corporate citizenship than just their gut feelingsas they will encounterbusiness colleagues who will argue against and resist implementation of activities that emphasizecorporate citizenship.This chapter alsoisa goodstarting point forstudentstobegin to focus on what they, as citizens,want from the business sector. Do they want corporations to simplyrecognize their variousresponsibilities to society, do they want them to make improvements, do they demand evidencethat corporations are making improvements, or do they have more general concerns about therole business plays in society (corporate citizenship)? As they begin to contemplate theimplications of their expectations of business, they alsoshouldbegin to see why this topic hasevolved and how the different models can inform their understanding of business’s impact onsociety.PEDAGOGICAL DEVICES–In this chapter, instructors may utilize a combination of:Cases:1-Wal-Mart-The Main Street Merchant of Doom2-The Body Shop (A)-Pursuing Social and Environmental Change3-The Body Shop (B)-Reputation is Tarnished4-The Body Shop (C)-Into the New Millennium7-Using Ex-Cons to Teach Business Ethics12-Banned if You Do, Banned if You Don’t19-Should Directors Shine Light on Dark Money?23-McDonald’s Coffee Spill24-The Betaseron Decision (A)25-The Hudson River Cleanup and GE26-Cloud Computing–Earth’s Friend or Foe27-New Belgium Brewing, Defining a Business on Sustainability29-Felony Franks (2), Home of the Misdemeanor Wiener31-Moral Dilemma-Head vs. Heart39-To Take or Not to TakeEthics in Practice Cases:The Socially Responsible Shoe CompanyBurgers with a Soul—Fresh, Local,SustainableSpotlight on Sustainability:Sustainability’s Stock is Rising

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Ch 2,Business & Society, Carroll10eMythsabout SustainabilityPower Point slides:Visithttp://academic.cengage.com/management/carrollfor slides related to this and otherchapters.LECTURE OUTLINEI.CORPORATE SOCIAL RESPONSIBILITY(CSR) AS ACONCEPTA.Historical Perspective on CSRB.Adaptationsof the Economic ModelC.EvolvingMeanings of CSRD.A Four-Part Definition of CSR1.Economic Responsibilities2.Legal Responsibilities3.Ethical Responsibilities4.Philanthropic ResponsibilitiesE.The Pyramid of Corporate Social Responsibility1.Pyramid as a Unified Whole2.CSR Pyramid Is a Dynamic, Sustainable Stakeholder Model3.Ethics Permeates and Global ApplicationsF.CSR in Practice1.Activities ofSocially Responsible Firms2.Rise of CSR Exemplar FirmsII.TRADITIONALARGUMENTS AGAINST AND FOR CSRA.Argumentsagainst CSRB.Argumentsin Support ofCSRC.The Business Case for CSRIII.AGES AND STAGES OF CSRIV.CSR GREENWASHINGV.POLITICAL CSRVI.CORPORATE SOCIALRESPONSIVENESSVII.CORPORATE SOCIALPERFORMANCEA.Carroll’s CSP ModelVIII.CORPORATE CITIZENSHIPA.Broad and Narrow ViewsB.Stages of Corporate CitizensC.Global Corporate CitizenshipD.CSR and Corporate Citizenship Awards by Business Media

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Ch 2,Business & Society, Carroll10eIX.THESOCIAL PERFORMANCE AND FINANCIAL PERFORMANCE RELATIONSHIPA.Three Perspectives on the Social-Financial-Reputation Relationship1.Perspective 1:Socially responsible firms are more financially profitable.2.Perspective 2:Afirm’s financial performance is a driver of its socialperformance.3.Perspective 3:There is an interactive relationship between and among socialperformance, financial performance, and corporate reputation.X.SUSTAINABILITY—PROFITS, PEOPLE, PLANETA.Creating Shared Value and ConsciousCapitalismXI.SOCIALLY RESPONSIBLE, SUSTAINABLE, ETHICAL INVESTINGXII.SUMMARYSUGGESTED ANSWERS TO DISCUSSION QUESTIONSStudents should recognize that their answers to these discussion questions should be wellreasoned and supported with evidence. Although some answers will be more correct than others,students should be aware that simplistic answers to complex questions, problems, or issues suchas these will never be “good” answers.1.Question:Explain the Pyramid of Corporate Social Responsibility> Provide severalexamples of each “layer” of the pyramid. Identify and discuss some of the tensions amongthe layers or components.In what sense do the different layers of the pyramid “overlap”with each other?Answer:The Pyramid of Corporate Social Responsibility is a graphic representation ofCarroll’s four-part definition of CSR. According to Carroll, society has four expectationsof a corporation—economic, legal, ethical, and philanthropic. The pyramid shows theeconomic responsibility at the bottom, because it is the foundation upon which all othersrest. Society’s first expectation of a corporation is that it will be profitable.This isconsistent with classical economic thought, which provides that management mustmaximize the profits of its owners.Companies that repeatedly do not show a profit willsee falling stock prices and eventual bankruptcyand may find it more difficult (if notimpossible) to meet their legal, ethical and philanthropic responsibilities.Severalcompanies in both the automotiveand airline industriesstruggled to meet their economicresponsibilities and landed in bankruptcy as a result.The second level is legal, becausesociety requires corporations to follow the law, just asthey are required to make a profit.Companies can receive stiff penalties for breaking the law.In the last decade, hundreds ofpublicly-traded companieswereinvestigatedby federal regulatory agencies for abusivepractices related to stock option grants andweresubjected to penalties due to faultyaccounting and public disclosures. The third level is the ethical responsibility—societyexpects ethical behavior of companies. The corporate scandalsthat shaped the beginningof thiscenturypointed outthat society expects honest and fair reporting of financialoperations by executives. If this expectation is violated, the executives can face criminal

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Ch 2,Business & Society, Carroll10echarges, as Martha Stewart and several Enron officials discovered.More recently,executivesin financial services firmshave found themselves subject to public scrutiny forarguably unethical practicesrelated to aggressive lending practices.On the other hand,companies may find themselves recognized for their ethical activities. Starbucks and theTimberland Company are often recognized for their ethical practices.At the top is thephilanthropic responsibility. Society desires this of corporations, but the company hasdiscretion in whether it performs at this level or not.WalmartandAT&Tare two firmsthat are widely praised for theirphilanthropic endeavors, especially their charitable cashcontributions.While the economic responsibility is the base of the pyramid, a CSR orstakeholder perspective would focus on the pyramid as a unified whole. Companies areexpected to fulfill their economic, legal, ethical and philanthropicresponsibilitiessimultaneously, meaning that companies need to concurrently (1) make a profit, (2) obeythe law, (3) be ethical and (4) be a good corporate citizen. While the simultaneousfulfillment of all four responsibilities can be challenging, the best moral managers will usemoral imagination to develop solutions to corporate dilemmas that meet all fourresponsibilities at the same time.2.Question:In your view, what is the single strongest argumentagainstthe idea of corporatesocial responsibility? What is the single strongest argumentforcorporate socialresponsibility? Briefly explain.Answer:There are few, if any, legitimate arguments against CSR. The closest one couldcome to making a logical argument is that corporations should not be required to “fill thegaps” in social policy. That is, corporations should not be held responsible for providingfunds and services for things that governments should be doing (e.g., school funding orsocial safety nets).Theprimary argument for CSR is that corporations are recognized as“persons” and receive as many, if not more, rights and privileges than do actual persons. Ifcorporations are to benefit from such “citizenship,” they should be expected to contributeto society, just like actual persons are.TheWall Street Journalrecently reexamined thisdebate in an August 2010 story entitled “The Case Against Corporate SocialResponsibility.” In this article, Dr. Aneel Karnani, aProfessor of Strategy at theUniversity of Michigan's Stephen M.Ross School of Business, argues that “in cases whereprivate profits and public interests are aligned, the idea of corporate social responsibility isirrelevant: Companies that simply do everything they can to boost profits will end upincreasing social welfare. In circumstances in which profits and social welfare are in directopposition, an appeal to corporate social responsibility will almost always be ineffective,because executives are unlikely to act voluntarily in the public interest and againstshareholder interests.” This article certainly has prompted many in the pro-CSR camp torespond. In aBusinessEthics.comarticle entitled “Opinion: The Case Against the CaseAgainst CSR,” Tim Mohin, the director of corporate responsibility at AMD, contends thatCSR is a win-win situation for companies and that smart companies take a long view andbuild brand value and investment with CSR.3.Question:Differentiate between corporate social responsibility and corporate socialresponsiveness. Give an example of each. How does corporate social performance relateto these terms? Where do corporate citizenship and sustainability fit in?

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Ch 2,Business & Society, Carroll10eAnswer:Carroll’s four-part definition of corporate social responsibility is “The socialresponsibility of business encompasses the economic, legal, ethical, and discretionary(philanthropic) expectations that society has of organizations at a given point in time.”The concept of corporate social responsibility has been criticized because its focus is onaccountability or obligation to meet certain minimum duties. Corporate socialresponsiveness is a more proactive and action oriented concept, wherein business firmsanticipate social expectations and meet them before they are imposed as a newresponsibility on the company. A corporation that obeys existing laws is displayingcorporate social responsibility. An example of corporate social responsiveness would be afirm providing child care benefits to its working parents, thus responding to the reality ofissues faced by workingfamilies.Corporate social performance focuses on what firms areactually able to accomplish–specifically, the outcomes or results of their acceptance ofcorporate social responsibility and implementation of corporate social responsiveness.Corporate social performance includes a recognition of the four corporate responsibilitiesidentified by Carroll and measures the success of the firm’s responsiveness to theseresponsibilities.4.Question:Analyze how the triple bottom line and the Pyramid of CSR aresimilar anddifferent. Draw a schematic that shows how the two concepts relate to one another.Answer:The Triple Bottom Line provides results of operations in three inter-relatedfields—economic, social, and environmental. The overriding theme in the Triple BottomLine is sustainability of the firm’s operations, its stakeholders’ lives, and the environment.The CSR Pyramid recognizes four levels of responsibility—economic, legal, ethical, andphilanthropic. Both models recognize the economic sphere. The Triple Bottom Line’ssocial and environmental concepts could include elements of the legal, ethical, andphilanthropic levels of responsibility in the CSR Pyramid.5.Question:Compare and contrast the socially oriented concepts: CSR, corporatecitizenship, sustainability, creating shared value, and conscious capitalism. Do theserepresent different forms of the business and society relationship or do they represent howand why companies respond in a socially conscious manner?Answer:Corporate Social Responsibility (CSR) can be boiled down to a company’sactions and how they affect society. This is a more board concept whereas the others are abit more specific. Corporate citizenship is the concept that a company should give back toa community simply because it is a member of that community. This is a philanthropicexpectation. Sustainability has three different parts for a company:1)Economicsustainability, which is looking out foritsprofits;2)Social sustainability,which focuseson the quality of people’s lives and equality between people, communities and nations; 3)Environmental sustainability concerns protecting the environment, focusing on the planet.The people and planet aspects make sustainability more of an ethicalexpectation. Creatingshared value speaks to the economic sustainability focus—the profits. Though shared valueis about economic success for the company, the companyalsocreatesopportunity foreconomic success in other areas of the community,in a sense sharing the wealth.Conscious capitalism is another broad concept. It focuses on the interdependence ofbusiness, and working toward higher purpose, stakeholder orientation, consciousleadership and conscious culture. If everything, including people, environment, profit,is

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Ch 2,Business & Society, Carroll10eintertwined,to succeeda company must be conscious ofitseffect on each part. Theseconcepts outline how and why companies respond in a socially conscious manner.Asmany of the concepts mention, social consciousness is linked to profits. Without thoseprofits, companies no longer exist.6.Question:Does socially responsible, sustainable, or ethical investing seem to you to be alegitimate way in which theaveragecitizen might demonstrate her or his concern forCSR?Why is it also called impact investing?Discuss.Answer:On the one hand, socially responsible investing seems to send the message thatthe investor is concerned about the firm’s CSP. However, the fact that returns on ethicalinvesting approximate market returns seems to downplay this view. If the investor is trulyconcerned with the firm’s CSP, he or she should be willing to accept a lower rate of returnon the investment. In addition, the vast majority of investments never reach the firm.Unless the firm is offering a new issue of stock, the proceeds of the sale go to the previousowner of the securities, not to the firm.It is called impact investing because it considersenvironmental, social, and corporate governance criteria aimed at generating long-termcompetitive financial returns and positive societal impact.GROUPACTIVITYHave students establish the parameters for a social screen for investments. Specifically, askstudents to identify the criteria for socially responsible investments. Once the class establishesthe “social screen”as a group, divide the students into groups offour to fivestudents.Each group will be given a theoretical account with $500 to invest in firms that meet the criteriaestablished by the entire class. Each group should be given a week to research firms for potentialinvestment. Each group should provide a summary sheet to the instructor allocating the $500among socially responsible investments that meet the class criteria. Each group should track thereturn on their investments through the end of the semester and report the value of their portfolioat that time. Opportunity should be given to discuss why certain investments were made.Instructors may want to provide some type of reward for the group with the greatest return oninvestment. Groups that select companies that do not meet the class social screen should bedisqualified.INDIVIDUAL ASSIGNMENTHave students read theJune 14, 2012Wall Street Journalarticleentitled “The Case AgainstCorporate Social Responsibility,”by Dr. Aneel Karnani (seehttp://online.wsj.com/article/SB10001424052748703338004575230112664504890.html). Askstudents to independently research academic and business responses to this article.Studentsshould summarize the arguments for and against Corporate Social Responsibilitybased upontheirreview of Dr. Karnani’s article and their own independent research. Students then shouldstate which argument thatthey findmost persuasive and why.

Solution Manual for Business and Society: Ethics, Sustainability and Stakeholder Management, 10th Edition - Page 16 preview image

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Ch 3,Business & Society, Carroll10eChapter 3The Stakeholder Approach to Business, Society, and EthicsLEARNING OUTCOMESAfter studying this chapter, you should be able to:1.Identify origins of the stakeholder concept by explaining what a stake is and what astakeholder is.2.Explain who business’s stakeholders are in primary and secondary terms.3.Differentiate among the three stakeholder approaches—strategic, multifiduciary, andsynthesis.4.Identify and explain the three values of the stakeholder model.5.Name and describe the five key questions that capture the essence of stakeholdermanagement.6.Explain major concepts in effective stakeholder management to include stakeholderthinking, stakeholder culture, stakeholder management capability, and stakeholderengagement.7.Describe the three strategic steps toward global stakeholder management.TEACHING SUGGESTIONSINTRODUCTION–In the face of increasingly complex business environments and operations,the models by which businesses are managed are also becoming more complex. Perhaps theprinciple reason for this increasing complexity is the fact that business organizations are nolonger viewed as the sole property or interest of the owners. Recognition of variousstakeholders’ interests in the firm requires management models that are capable of identifyingand addressing those interests. The stakeholder concept is one such model.KEY TALKING POINTS–The primacy of ownership interest in business organizations is stillvery much the norm in the United States. When students are asked why shareholders shouldnormatively receive the profits of a business, their standard answer is that the shareholders ownthe company. The idea that an ownership position entitles privileged treatment is almostuniversal among U. S. residents. Realization that other groups also have legitimate claims on thecorporation is a nearly foreign conceptfor some students. Introduction of the stakeholder modelof the firm is an excellent opportunity to make a significant difference in how students thinkabout the firm and its responsibilities. Students should begin to think of the corporation in adifferent light, with claims on it from many different constituencies. In addition to introducingstakeholder theory, the instructor should be able to make many connections with the previouschapter on corporate social responsibility, responsiveness, and performance. The concepts arevirtually opposite sides of the same coin—stakeholder theory shows that there are many groupswith legitimate claims on the firm, and corporate social responsibility makes the case why thefirm has obligations to those groups.A key element in stakeholder theory that should probablybe emphasized more in the chapter is the question of what stakeholder management truly means.If it is interpreted to mean managing the various stakeholder groups to the advantage of the firm

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