Question

what is social contract and stakeholder theories of Corporate Social Responsibility (CSR) andexpalin use the social demandingness, social activist and stakeholder theories of corporate social responsibility in order to discuss the case study below.

Answer 1

Three Approaches to Corporate Responsibility:

            According to the traditional view of the corporation it exists primarily to mate the profits. From this money-centered perspective insofar as business ethics are important. They apply to moral dilemmas arising as the struggle for profit proceeds. These dilemmas include, what obligations do organizations have to ensure that individuals seeking employment or promotion are treated fairly. How should conflicts of interest be handled? and what kind of advertising strategy should be purpued?

           While these dilemmas continue to be important throughout the economic world, when businesses are conceived as holding a wide range of economic and civic responsibilities as part of their daily operation. The field of business ethics expands correspondingly. Now there are large sets of issues that need to be confronted and managed outside of and independent of the struggle for money. Broadly there are three theoretical approaches to these new responsibilities.

1. Corporate social responsibility(CSR)

2.The triple bottom line

3.Stakeholder theory

1.Corporate Social Responsibility(CSR):

        The title corporate social responsibility has two meanings. First its a general name for any theory of the corporation that emphasizes both the responsibility to make money and the responsibility to interact ethically with the surrounding community. Second, corporate social responsibility to profit while playing a role in broader questions of community welfare.

       As a specific theory of the way corporation interact with the surrounding community and large world, corporate social responsibility (CSR) is composed of four obligations.

i) The economic responsibility to make money. Required by simple economics this obligation is the business version of the human survival instinct. Companies that don't make profits are in a modern market economy- doomed to perish. For the vast majority of operations, however, there have to be profits. Without them there's no business and no business ethics.

ii) The large responsibility to adhere to rules and regulations. The laws aren't boundaries that enterprises skirt and cross over if the penalty is low, instead responsible organizations accept the rules as a social good and make good faith efforts to obey not just the letter but also thespirit of the limits. In concrete terms, this is the difference between the driver who stays under the speed limit because he can't afford a traffic ticket, and one who obeys because society as a whole is served when we all agree to respect the sign and stoplights and limits.

iii) The ethical responsibility to do whats right even when not required by the letter or spirit of the law. This is the theory's keystone obligation, and it depends on a coherent corporate culture that views the business itself as acitizen in society, with the kind of obligations that citizenship normally entails. When someone is racing their porsche along a country road on a freezing winter's night and encounters another driver stopped on the roadside with a flat, there's a social obligation to do something through not a legal one. The same logic can work in the corporate world.

iv) The philanthropic responsibility to contribute to society's projects even when they're independent of the particular business. A lawyer driving home from work may spot the local children gathered around a makeshift lemonate stand and sense an obligation to buy a drink to contribute to the neighborhood project. Similarly, a law firm may volunteer access to their offices for an afternoon every year so some local schoolchildren may take a field trip to discover what lawyers do all day. Instead, these public acts of generosity represent a view that businesses,like everyone in the world, have some obligation to support the general welfare in ways determined by the needs of the surrounding community.

2. The Triple Bottom Line:

    The triple bottom line is a form of corporate social responsibility dictating that corporate leaders tabulate bottom-line results not only in economic terms but also in terms of company effects in the social realm and with respect to the environment. There are two keys to this idea. First the three columns of responsibility must be kept seperate, with results reported independently for each. Second, in all three of these areas, the company should obtain sustainable results.

   * Economic sustainability values long-term financial solidity over more volatile, short-term profits, no matter how high. According to the triple-bottom-line model, largr corporations have a responsibility to create business plans allowing stable and prolonged action.That bias in favor of duration should make companies hesitant about investing in things like dot-coms.

   * Social sustainability values balance in people's lives and the way we live. A world in which a few Fortune 500 executives are hauling down millions a year, while millions of people elsewhere in the world are living on pennies a day can't go on forver. As the imbalances grow, as the rich get richer and the poor get both poorer and more numerous, the chances that cociety itself will collapse in anger and revolution increase.

    * The fair trade movement fits this ethical imperative to shared opportunity and wealth. Social sustainability requires that corporations as citizens in a specific community of people maintain a healthy relationship with those people.

3. Stakeholder Theory:

     Stakeholder theory, which has been described by Edward Freeman and others in the mirror image of corporate social responsibility. Instead of starting with a business and looking out into the world to see what ethical obligations are there, stakeholder theory starts in the world. It lists and ddescribes those individuals and groups who will be affected by ( or affect) the company's actions and asks, what are their legitimate claims on the business? what rights do they have with respect to the company's actions? In a single sentence, stakeholder theory affirms that those whose lives are touched by a corporation hold a right and obligation to participate in directing it.

   As a single example, when a factory produces industrial waste, a CSR perspective attaches a responsibility directly to factory owners to dispose of the waste safety. By contrast, a stakeholder theorist begins with those living in the surrounding communuty who may find their environment poisoned, and begins to talk about business ethics by insisting that they have a right to clear air and water. Therefore, they're stakeholders in the company and their voices must contribute to corporate decisions. It's true that they may own no stock, but they have a moral claim to participate in decisionmaking process.

   This is a very important, at least in theoretical form, those affected by a company's actions actually become something like shareholders and owners.Because they're touched by a company's actions, they have a right to participate in managing it If the enterprise produces chemicals for industrial use and is located in a small Massachusetts town, the stakeholders include,

* Company owners, whether a private individual or shareholders

* Company workers

* Customers and potential customers of the company

* Suppliers and potential suppliers to the company

* Everyone living in the town who may be affected by contamination from workplace operations

* Creditors whose money or loaned goods are mixed into the company's actions

* Government entities involved in regulation and taxation

* Local businesses that cater to company employees

* Other companies in the same line of work competing for market share

* Other companies that may find themselves subjected to new and potentially burdensome regulations because of contamination at that one Massachusetts plant.