1. MODULE 5 SOCIAL RESPONSIBILITY AND GOVERNANCE
“Organizations have ethics, too”
Organizations are made up of people who have ethical standards; some good, some not so good as we will see.
What should we know about organizational environments and social responsibility?
What are current issues in corporate governance?

2. The specific environment includes an organization’s stakeholders.
SOCIAL RESPONSIBILITY AND GOVERNANCE Organizational Environments And Social Responsibility MODULE GUIDE 5.1
Organizations operate within conditions set by the general environment.
The specific environment includes an organization’s stakeholders.
Social responsibility is an organization’s obligation to best serve society.
Social performance by organizations can be evaluated in different ways.
Scholars argue cases for and against corporate social responsibility.
Organizations follow different social responsibility strategies.
Failures of ethics and social responsibility prompt calls for stronger governance.
In this module, we will look at how organizations are impacted by their environment and how they, in turn, impact their environment.

3. General Environment Specific Environment Stakeholders
ORGANIZATIONAL ENVIORNMENTS AND SOCIAL RESPONSIBILITY Organizational Environments
General Environment
Consists of cultural, economic, legal, political and educational conditions
Specific Environment
Consists of the people and groups with which an organization interacts
Stakeholders
People and Institutions most directly affected by an organization’s performance
An organization’s control over its environment can be viewed as general and specific. The more general the environment, the less control. The more specific, the more control. There is very little over which an organization has total control. Even employees are not in total control.

4. ORGANIZATIONAL ENVIRONMENTS General Environment
Economic
Health of the economy in terms of inflation, income levels, gross domestic product, unemployment, and job outlook
Sociocultural
Norms, customs, and social values on such matters as human rights, trends in education and related social institutions, as well as demographic patterns in society
Legal-political
Prevailing philosophy and objectives of the political party or parties running the government, as well as laws and government regulations
Technological
Development and availability of technology, including scientific advancements
Natural
Nature and conditions of the natural environment, including levels of public concern expressed through environmentalism
These are generally accepted as making up the General environment. Natural is a more recent category.

5. ORGANIZATIONAL ENVIRONMENTS Specific Environment
The people and groups with whom an organization interacts.
As you can see, organizations interact and affect many different groups. The larger the organization, the greater the effect.

6. ORGANIZATIONAL ENVIRONMENTS Social Responsibility
Corporate Social Responsibility
The obligation of an organization to serve its own interest and those of its stakeholders
Social Responsibility Audit
Assesses an organization’s performance in the area of social responsibility
Corporate social responsibility is a long standing point of discussion and contention as we will see.

7. ORGANIZATIONAL ENVIRONMENTS Social Responsibility
Social responsibility typically focuses on for profit corporations. The degree of responsibility depends on the corporation’s management and financial condition.

8. ORGANIZATIONAL ENVIRONMENTS Social Responsibility
The Case “In Favor Of” Corporate Social Responsibility
Responsibility Increases long-run profits
Improves public image
Helps avoid government regulation
Businesses have resources and ethical obligations to act responsibly
The Case “Against” Corporate Social Responsibility
Reduces business profits Creates higher business costs
Dilutes business purpose Gives too much social power to business
There is a wide rang of beliefs regarding social responsibility depending on the type, size and position of the organization. For example, few would argue that a for profit corporation that is losing money is going to be able to do much in the way of social responsibility.

9. ORGANIZATIONAL ENVIRONMENTS Social Responsibility
Strategies
Corporate strategy depends on corporate objectives and the people that set them.

10. Weak corporate governance can result in more government regulation.
SOCIAL RESPONSIBILITY AND GOVERNANCE Corporate Governance MODULE GUIDE 5.2
Failures of ethics and social responsibility prompt calls for stronger governance.
Weak corporate governance can result in more government regulation.
Moral management builds capacities for self-governance in organizations.
Remember, corporate governance is the task of the Board of Directors or Trustees of the organization.

11. CORPORATE GOVERNANCE Corporate Governance
The oversight of top management by a board of directors
Weak corporate governance leads to government regulation
Boeing
WorldCom
Enron
Weak corporate governance may lead to more government regulation but not always. Remember, corporations also contribute substantial amounts to political funds.

12. CORPORATE GOVERNANCE Corporate Governance
This is a typical structure for profit and non profit organizations. One of the problems facing corporations is finding qualified boards of directors. Why? Increasing legal liability.

13. CORPORATE GOVERNANCE Government Regulations
Sarbanes-Oxley Act – 2002
Goal is to see that top CEO’s oversee the financial conduct of their organizations
Occupational and Safety Act (OSHA) – 1970
Goal is to protect employees from workplace injuries
Equal Opportunity Act (EEO) – 1972
Goal is to protect minorities against discrimination
Consumer Product Safety Act – 1972
Goal is to protect consumers from harmful products
There are many government regulations. The main problem is not regulations but the ability or desire to enforce them.

14. CORPORATE GOVERNANCE Moral management
Moral Manager
Considers ethical behavior as a personal goal
Amoral Manager
Is unethical but unintentionally
Immoral Manager
Chooses to behave unethically
All three types exist. An amoral manager cannot remain in that state before becoming an immoral manager.

15. CORPORATE GOVERNANCE Moral Management
All three types exist. An amoral manager cannot remain in that state before becoming an immoral manager.

16. CORPORATE GOVERNANCE Ethics Mindfulness
Enriched awareness that leads to consistent ethical behavior
Senior manager have the greatest impact on corporate culture and ethical behavior.

17. MANAGEMENT TIPS
A social responsibility audit assesses an organization’s accomplishments in areas of social responsibility.
Discretionary Responsibility:
Contribute to Community
Ethical Responsibility:
Do What Is Right
Legal Responsibility:
Obey the Law
Economic Responsibility:
Be Profitable
A social responsibility adult can be a useful benchmark in determining the corporation’s position in this area.