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BUSINESS ETHICS AND SOCIAL RESPONSIBILITY

Self-Learning Home Task
2nd Semester, Quarter 2 – Week 2

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 GENERAL INSTRUCTIONS:

 Write your NAME and your Grade and Section on the space provided on the upper part of the
answer sheet. DON’T FORGET.
(Isulat ang imong NGALAN og Grade og Section sa mga blanko nga makita sa taas
nga bahin sa answer sheet. AYAW KALIMOT.)

 Answer all the exercises in Exercise 1, Exercise 2, and Assessment found in this Self-Learning
Home Task.
(Tubaga ang tanang exercises nga naa sa Exercise 1, Exercise 2, og Assessment niining
maong Self-Learning Home Task.)

 Copy and Answer the EXERCISES ,Assessments , and OUTPUTS.

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School: SANTANDER NATIONAL HIGH SCHOOL Date:
Grade/Section: ABM12-Athena Subject Area: Business Ethics and Social
Responsibility

Week 3

I. MELC/s: 1.Describe the different models and frameworks of social responsibility. (ABM_ESR12-IVi-l-3.4)

II. Subject Matter: Different Models and Frameworks of Social Responsibility

III. References:

IV. Procedure
A. Readings
Corporate Social Responsibility (CSR) means firm’s obligation to protect and improve
welfare of the society and its organization, now as well as in future, through its various business and
social actions, and ensures that it generates equitable and sustainable benefits for the various
stakeholders. As such CSR can serve as an effective marketing tool to compete and sustain
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competitive advantage in the present fast changing, hyper competitive environment.
This learning material will equip you with the most significant information and activities that will
greatly help you to describe and comprehend the different types of models and frameworks that guide
the social responsibilities of a business.
CSR Models
1. Ackerman Model (1976) - Even before the concept of modeling CSR initiatives according to
priorities or liabilities or even responsibilities came into the picture. Ackerman proposed his
model that was laid down in three phases: The first phase was about the top managers
recognizing a social problem, the second phase was an intensive study of the problem
and finding out solutions by hiring experts and the last phase was implementation of the
proposed solutions. It is obvious that this model, rather a plan, merely provides strategies to
deal with problems having social implications. Other parameters and constraints of CSR
activities did not come under the purview of this model.
The model has emphasized on the internal policy goals & their relation to the CSR.
Four Stages involved in CSR by Ackerman:
a. Managers of the company get to know the most common social problem & then express a
willingness to take a particular project which will solve some social problems.
b. Intensive study of the problem by hiring experts & getting their suggestions to make it
operational.
c. Managers take up the project actively & work hard.
d. Evaluating of the project by addressing the issues.

2. Friedman Model (1962-1973) - Milton Friedman argued vehemently

against spending shareholder's money for anything that does not
directly contribute to increasing shareholder wealth. He took the
Kantian view that directors must look after the interests of
shareholders, which seek wealth maximization. As socially responsible
activities, in the opinion of Friedman, reduce wealth, companies
should not engage in any charitable activities. Another principle
expressed by Milton Friedman is the need to stay within the rules of
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the game, explicitly avoiding deception and fraud. This principle is further clarified when he writes: “A
corporate executive … has direct responsibility to conduct business in accordance with[shareholder]
desires …[i.e.] to make as much money as possible while conforming to their basic rules of the
society, both those embodied in law and those embodied in ethical custom.”
This quotation implies that Friedman does not proclaim that directors can act in any way to
maximize profit as they have to abide by the law and follow ethical custom. He, however, excludes
explicitly charitable activities as they do not directly contribute to profit. A good corporation in Milton
Friedman's view is not one that undertakes activities only because they are ethically sound, but
because they are economically viable. One of Friedman's main arguments for excluding Corporate
Social Responsibility from business stems from his views on the ethical spending:
• Your money on yourself—spent wisely;
• Your money on others—spend wisely but challenging;
• People's money on yourself—little incentive to economize;
• People's money on other people— the role of government and Corporate Social
Responsibility programs.
3. Carroll Model (1991) - Carroll's CSR Pyramid is a simple framework that helps argue how and
why organizations should meet their social responsibilities.
The key features of Carroll's CSR Pyramid are that:
• CSR is built on the foundation of profit – profit must come first
• Then comes the need for a business to ensure it complies with all laws & regulations
• Before a business considers its philanthropic options, it also needs to meet its ethical
duties

Economic responsibilities
As a fundamental condition or requirement of existence, businesses have an economic
responsibility to the society that permitted them to be created and sustained. At first, it may seem
unusual to think about an economic expectation as a social responsibility, but this is what it is

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because society expects, indeed requires, business organizations to be able to sustain themselves
and the only way this is possible is by being profitable and able to incentivize owners or shareholders
to invest and have enough resources to continue in operation.
Virtually all economic systems of the world recognize the vital importance to the societies of
businesses making profits. While thinking about its’ economic responsibilities, businesses employ
many business concepts that are directed towards financial effectiveness – attention to revenues,
cost-effectiveness, investments, marketing, strategies, operations, and a host of professional
concepts focused on augmenting the long-term financial success of the organization.
Legal responsibilities
Society has not only sanctioned businesses as economic entities, but it has also established
the minimal ground rules under which businesses are expected to operate and function. Businesses
are expected and required to comply with these laws and regulations as a condition of operating. It is
not an accident that compliance officers now occupy an important and high level position in company
organization charts. While meeting these legal responsibilities, important expectations of business
include their:
• Performing in a manner consistent with expectations of government and law.
• Complying with various federal, state, and local regulations.
• Conducting themselves as law-abiding corporate citizens.
• Fulfilling all their legal obligations to societal stakeholders.
• Providing goods and services that at least meet minimal legal requirements.
Ethical responsibilities
The normative expectations of most societies hold that laws are essential but not sufficient. In
addition to what is required by laws and regulations, society expects businesses to operate and
conduct their affairs in an ethical fashion. Legal expectations certainly are based on ethical premises.
But, ethical expectations carry these further. In essence, then, both contain a strong ethical
dimension or character and the difference hinges upon the mandate society has given business
through legal codification. While meeting these ethical responsibilities, important expectations of
business include their:
• Performing in a manner consistent with expectations of societal mores and ethical norms.
• Recognizing and respecting new or evolving ethical/moral norms adopted by society.
• Preventing ethical norms from being compromised in order to achieve business goals.
• Being good corporate citizens by doing what is expected morally or ethically
• Recognizing that business integrity and ethical behavior go beyond mere compliance with
laws and regulations (Carroll 1991).
Philanthropic responsibilities
Corporate philanthropy includes all forms of business giving. Corporate philanthropy embraces
business’s voluntary or discretionary activities. Philanthropy or business giving may not be a
responsibility in a literal sense, but it is normally expected by businesses today and is a part of the
everyday expectations of the public. Having said that, some businesses do give partially out of an

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ethical motivation. That is, they want to do what is right for society. The public does have a sense that
businesses will “give back,” and this constitutes the “expectation” aspect of the responsibility.
In summary, the four part CSR definition forms a conceptual framework that includes the
economic, legal, ethical, and philanthropic or discretionary expectations that society places on
businesses at a given point in time. And, in terms of understanding each type of responsibility, it could
be said that the economic responsibility is “required” of business by society; the legal responsibility
also is “required” of business by society; the ethical responsibility is “expected” of business by society;
and the philanthropic responsibility is “expected/desired” of business by society (Carroll 1979, 1991).
Also, as time passes what exactly each of these four categories means may change or evolve as well.

4. Environmental Integrity and Community Health Model - Redman’s model called “Environmental
integrity and community health model” is very famous amount US corporations. It focuses
more on environmental integrity and human health. Whereas Ackerman Model 1967, focuses
more on internal policy goals and their relation to these responsibilities. The highlights of this
model are:
• Corporate contribution towards environmental integrity & human health, there will be greater
expansion opportunities.
• Healthy people can work more & earn more.
• CSR is beneficial for the corporate sector.
• CSR in a particular form is welcome.

5. Corporate Citizenship Model - Companies go through different stages during the process of
developing corporate citizenship. Companies rise to the higher stages of corporate citizenship
based on their capacity and credibility when supporting community activities, a strong
understanding of community needs, and their dedication to incorporate citizenship within the
culture and structure of their company.
The Development of Corporate Citizenship

In the elementary stage, a company’s citizenship activities are basic and undefined because
there are scant corporate awareness and little to no senior management involvement. Small
businesses, in particular, tend to linger in this stage. They are able to comply with the standard health,
safety, and environmental laws, but they do not have the time nor the resources to fully develop
greater community involvement.
In the engagement stage, companies will often develop policies that promote the involvement
of employees and managers in activities that exceed rudimentary compliance to basic laws.
Citizenship policies become more comprehensive in the innovative stage, with increased meetings
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and consultations with shareholders and through participation in forums and other outlets that
promote innovative corporate citizenship policies.
In the integrated stage, citizenship activities are formalized and blend in fluidly with the
company’s regular operations. Performance in community activities is monitored, and these activities
are driven into the lines of business. Once companies reach the transforming stage, they understand
that corporate citizenship plays a strategic part in fueling sales growth and expansion to new markets.
Economic and social involvement is a regular part of a company’s daily operations in this stage.

6. Stockholders and Stakeholders Model

Shareholder Theory - The shareholder theory was originally proposed by Milton Friedman and it
states that the sole responsibility of business is to increase profits. It is based on the premise that
management is hired as the agent of the shareholders to run the company for their benefit, and
therefore they are legally and morally obligated to serve their interests. The only qualification on the
rule to make as much money as possible is “conformity to the basic rules of the society, both those
embodied in law and those embodied in ethical custom.”
The shareholder theory is now seen as the historic way of doing business with companies
realizing that there are disadvantages to concentrating solely on the interests of shareholders. A
focus on short term strategy and greater risk taking are just two of the inherent dangers involved.
Stakeholder Theory - Stakeholder theory, on the other hand, states that a company owes a
responsibility to a wider group of stakeholders, other than just shareholders. A stakeholder is defined
as any person/group which can affect/be affected by the actions of a business. It includes employees,
customers, suppliers, creditors and even the wider community and competitors.
Edward Freeman, the original proposer of the stakeholder theory, recognized it as an
important element of Corporate Social Responsibility (CSR), a concept which recognizes the
responsibilities of corporations in the world today, whether they be economic, legal, ethical or even
philanthropic. Nowadays, some of the world’s largest corporations claim to have CSR at the center of
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their corporate strategy. Whilst there are many genuine cases of companies with a “conscience”,
many others exploit CSR as a good means of PR to improve their image and reputation but ultimately
fail to put their words into action.

B. Exercises
Exercise 1 CSR Crossword
Copy and Answer on a whole sheet of paper

Directions. Answer and complete the crossword puzzle on your answer sheet about the different
topics on business CSR.

Across:
5. States that a company owes a responsibility to a wider group of people not just shareholders
6. “Do what is required by the stakeholders”
7. He does not proclaim that directors can act in a way to maximize profit
9. On this stage of the corporate citizenship, activities are basic and undefined because there are
scant corporate awareness
Down:
1. These are responsibilities that expects business to conduct more than legal fashion
2. This model has four levels with Philanthropic responsibility as the highest
3. Created the Environmental Integrity and Community Health Model
4. Defined as the self-regulating business model that aids a company to be socially accountable
5. It states that sole responsibility of business is to increase profits.
8. This model emphasizes on the internal policy goals and their relation to the CSR.
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Exercise 2 Social Responsibility Models
Copy and Answer on a whole sheet of paper

Directions: Match Column A to Column B. Write the letter of the correct answer on your answer
sheet.

C. Assessment
Directions: Read carefully each item. Write the letter of the correct answer on your answer sheet.

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