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BUSINESS
SOCIETY
and
A Strategic Approach to
Social Responsibility & Ethics
Seventh Edition
O. C. Ferrell
Auburn University
Debbie Thorne
Texas State University
Linda Ferrell
Auburn University
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viii Contents
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Contents ix
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x Contents
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Contents xi
Biofuels 365
Hydropower 366
Business Response to Sustainability Issues 366
Supply Chain Issues 367
Green Marketing 367
Greenwashing 368
Strategic Implementation of Environmental Responsibility 368
Recycling Initiatives 369
Stakeholder Assessment 370
Risk Analysis 370
The Strategic Environmental Audit 371
Summary 372
Responsible Business Debate: The Powers That Be: How Sustainable Is Nuclear Energy? 374
Key Terms 375
Discussion Questions 375
Experiential Exercise 375
The “Sustainability” of Sustainability: What Would You Do? 375
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xii Contents
Case 10 If the Shoe Fits: TOMS and the One for One Movement 478
Glossary 531
Notes 539
Index 573
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Preface
T
his edition of Business and Society: A Strategic Approach to Social
Responsibility has been thoroughly updated to capture new challenges
and evolving opportunities. We were one of the first business and society
textbooks to use a strategic framework that integrates business and society
into organizational strategies, and now we are pleased to introduce our seventh
edition. Today in corporate America, social responsibility is a major consideration
in strategic planning. Most boards of directors face issues related to sustain-
ability, legal responsibilities, employee well-being, consumer protection, corporate
governance, philanthropy, as well as emerging social issues. Social responsibility
has been linked to financial performance, and business and society courses are as
important as other functional areas in preparing students for their careers.
In this text, we demonstrate and help the instructor prove that social respon-
sibility is a theoretically grounded yet highly actionable and practical field of
interest. The relationship between business and society is inherently controversial
and complex, yet the intersection of its components, such as corporate governance,
workplace ethics, community needs, and technology, is experienced in every
organization. For this reason, we developed this text to effectively assist decision-
making and inspire the application of social responsibility principles to a variety
of situations and organizations.
Because of this transformation of corporate responsibility, the seventh edition
of Business and Society: A Strategic Approach to Social Responsibility is designed
to fully reflect these changes. We have been diligent in this revision about discuss-
ing the most current knowledge and describing best practices related to social
responsibility. The innovative text, cutting-edge cases, and comprehensive teach-
ing and learning package for Business and Society ensure that business students
understand and appreciate concerns about philanthropy, employee well-being,
corporate governance, consumer protection, social issues, and sustainability.
We also address how technology, including artificial intelligence (AI) and its
enablers, such as blockchain, drones, and robotics, is impacting the world we live
in. AI is rapidly changing business as we know it and raises many ethical concerns
about how the technology is used. For example, without ethical decision-making
abilities and parameters, AI could result in accidental or intentional discrimination.
Businesses must establish checks and balances to make public safety and security
a priority. Additionally, AI is quickly changing the workforce as more automated
tasks are performed by robots and drones. We address all of these advancements
in technology and the benefits and threats they bring.
Business and Society is a highly readable and teachable text that focuses on
the reality of social responsibility in the workplace. We have revised the seventh
edition to be the most practical and applied business and society text available. A
differentiating feature of this book is its focus on the role that social responsibility
takes in strategic business decisions. We demonstrate that studying social responsi-
bility provides knowledge and insights that positively contribute to organizational
performance and professional success. This text prepares students for the social
responsibility challenges and opportunities they will face throughout their careers.
xiii
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xiv Preface
We provide the latest examples, stimulating cases, and unique learning tools that
capture the reality and complexity of social responsibility. Students and instructors
prefer this book because it presents examples, tools, and practices needed to
develop and implement a socially responsible business strategy. Finally, this book
makes the assumption that students will be working in an organization trying to
improve social responsibility and will not be just critics of business.
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Preface xv
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xvi Preface
Features
Chapter Opening Cases and Real Company Examples
Company examples and anecdotes from all over the world are found throughout
the text. The purpose of these tools is to take students through a complete strategic
planning and implementation perspective on business and society concerns by
incorporating an active and team-based learning perspective. Every chapter
opens with a vignette and includes examples that shed more light on how social
responsibility works in today’s business. In this edition, all boxed readings focus
on managerial and global dimensions of social responsibility. Chapter opening
objectives, a chapter summary, boldfaced key terms, and discussion questions at
the end of each chapter help direct students’ attention to key points.
Experiential Exercises
Experiential exercises at the end of each chapter help students apply social responsi-
bility concepts and ideas to business practice. Most of the exercises involve research
on the activities, programs, and philosophies that companies and organizations
are using to implement social responsibility today. These exercises are designed
for higher-level learning and require students to apply, analyze, synthesize, and
evaluate knowledge, concepts, practices, and possibilities for social responsibility.
At the same time, the instructor can generate rich and complex discussions from
student responses to exercises. For example, the experiential exercise for Chapter
1 asks students to examine Fortune magazine’s annual list of the Most Admired
Companies. This exercise sets the stage for a discussion on the broad context in
which stakeholders, business objectives, and responsibilities converge.
“What Would You Do?” exercises depict people in real-world scenarios who
are faced with decisions about social responsibility in the workplace. One exercise
(see Chapter 5) discusses the dilemma faced by a nutritional supplement company
that hired an advertising agency to promote its products. The agency and the
supplement company came under fire of the Federal Trade Commission for making
unsubstantiated claims. At the end of the exercise, students are asked to examine
liability and damage control.
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Preface xvii
A new debate issue is also located at the end of each chapter. The topic of
each debate deals with a real-world company or dilemma that is both current and
controversial. Many students have not had the opportunity to engage in a debate
and to defend a position related to social responsibility. This feature highlights
the complexity of ethical issues by creating a dialog on the advantages and
disadvantages surrounding various issues. The debates also help students develop
their critical thinking, research, and communication skills.
Cases
So that students learn more about specific practices, problems, and opportunities
in social responsibility, 15 cases are provided at the end of the book. The cases
represent a comprehensive collection for examining social responsibility in a
multidimensional way. The 15 cases allow students to consider the effects of
stakeholders and responsibility expectations on larger and well-known businesses.
These cases represent the most up-to-date and compelling issues in social respon-
sibility. All of the cases used in this book are original and have been updated with
all developments that have occurred through 2019. Students will find these cases
to be pivotal to their understanding of the complexity of social responsibility in
practice. The following provides an overview of the 15 cases:
• Case 1: Uber Fuels Controversy. This case discusses the success of Uber
and the regulatory challenges they face as they expand globally. One of the
biggest controversies is the fact that Uber drivers do not always have to be
professionally licensed, unlike taxi company drivers. This has led several
cities worldwide to place bans on certain Uber services. This case also
examines Uber’s new product offerings.
• Case 2: Fixer Upper: Home Depot Works on Stakeholder Relationships.
Although Home Depot faced a decrease in customer satisfaction in the
past, they have implemented a number of initiatives to restore their
ethical reputation with stakeholders. Some major initiatives include their
diversity supplier program, their use of wood certified by the Forest
Stewardship Council, and their philanthropic involvement with Habitat
for Humanity. Above all, Home Depot has adopted a stakeholder
orientation that considers how they can best meet the needs of their
various stakeholders.
• Case 3: Big-Box Retailer Walmart Manages Big Responsibility. This case
examines the ups and downs of retail giant Walmart. Many feel that
Walmart has had a negative impact on many communities by putting small
business owners out of business, a sensation called the “Walmart Effect.”
Additionally, Walmart has faced ongoing criticism for the treatment and
pay of their employees. Additionally, this case explores Walmart’s strides in
sustainability and robotics.
• Case 4: Google Searches for Solutions to Privacy Issues. This case describes
Google’s path to success, their product mix, and their company culture. It
dives deep into the ongoing data privacy concerns Google has created as
well as the legal trouble the company faces worldwide.
• Case 5: CVS Smokes the Competition in Corporate Social Responsibility.
This case examines the corporate social responsibility initiatives of CVS as
well as ethical challenges they have faced. Of particular interest is CVS’s
decision to drop profitable tobacco products from stores to better align
themselves as a health services company.
• Case 6: Volkswagen Charts a New Course: The Road to Sustainability.
This case explores the origin of Volkswagen and the company’s rise in
popularity. This case focuses on the emissions scandal that undermined the
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xviii Preface
firm’s previous reputation for quality and integrity. The case also examines
Volkswagen’s attempts to rebuild their reputation.
• Case 7: Wells Fargo Banks on Recovery. This case discusses what mistakes
Wells Fargo made that led to the creation of more than 3.5 million fake
customer accounts. Wells Fargo employees faced unrealistic goals, which
created a toxic corporate culture that fueled the fraud for years. The case
also explores the company’s struggle to regain the trust of their customers.
• Case 8: A Brew Above the Rest: New Belgium Brewing. This case examines
the background of New Belgium Brewing and their social responsibility
initiatives. The company’s strong emphasis on sustainability and employee
involvement are discussed as examples of how the craft brewery has been
able to maintain their corporate values since their founding.
• Case 9: Starbucks Takes on Coffee Culture. This case examines Starbucks’
foundation for a socially responsible culture. It describes how Starbucks
strives to meet the needs of different stakeholders and how this stakeholder
emphasis has led to the development of successful products and a strong
brand image. This case also explores recent challenges the company has
faced with racial bias.
• Case 10: If the Shoe Fits: TOMS and the One for One Movement. TOMS
Shoes is a for-profit business with a large philanthropic component. This
case examines the One for One model and the movement TOMS created
with their product mix and promotion strategies. This case also explores
how TOMS is evolving both their mission and business model.
• Case 11: Apple Bites into Ethics. This case examines Apple’s early struggles
as a computer company as well as the company’s peak popularity. The case
considers Apple’s continued innovation and efforts to stay ahead of the
pack. This case also explores privacy concerns and antitrust issues faced by
the tech giant.
• Case 12: The Hershey Company’s Bittersweet Success. This case explores
Hershey’s success and considers the inherent ethical conflicts that come from
operating in the cocoa industry. It also examines Hershey’s commitment to
ethics and social responsibility as wells as the challenges the firm faces.
• Case 13: Corporate Social Responsibility from the Outside In at Patagonia.
Patagonia has integrated core beliefs and values into every product they
produce and is known for their innovative designs, exceptional quality, and
environmental ingenuity. This case examines Patagonia’s unique promotion
strategies and how their corporate culture aligns with their values.
• Case 14: Johnson & Johnson Experiences the Pain of Recalls. This case
examines the struggle of Johnson & Johnson, one of the world’s most
admired companies, as they faced multiple product recalls of their Tylenol
product and legal issues with their baby powder.
• Case 15: Herbalife Nutrition: Managing Risks and Achieving Success. This
case considers the accusations levied against Herbalife by activist investor
William Ackman charging Herbalife’s business model as being a pyramid
scheme. It also highlights the difference between a pyramid scheme and a
multilevel marketing compensation model and applies this distinction to
Herbalife’s business model.
Role-Play Exercises
In addition to many examples, end-of-chapter exercises, and the cases, we provide
three role-play exercises in the Instructor’s Manual. The role-play exercises, built
around a fictitious yet plausible scenario or case, support higher-level learning
objectives, require group decision-making skills, and can be used in classes of any
size. Implementation of the exercises can be customized to the time frame, course
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Preface xix
Supplements
The comprehensive Instructor’s Manual includes chapter outlines, answers to the
discussion questions at the end of each chapter, comments on the experiential exer-
cises at the end of each chapter, comments on each case, and a sample syllabus.
The role-play exercises are included in the manual along with specific suggestions
for using and implementing them in class.
The Test Bank provides multiple choice and true-false questions for each
chapter and includes a mix of descriptive and application questions.
A PowerPoint slide program is available for easy downloading and provides a
recap of the highlights in each chapter.
Visit www.chicagobusinesspress.com to request access to the instructor
supplements.
The book is also available with CourseBank, a pre-built online course of assets
and auto-graded assignments that easily integrates with Blackboard, Canvas, D2L,
Moodle, or any other LMS.
Authors’ Website
O. C. Ferrell and Linda Ferrell have established a teaching resource website with
the Center for Ethical Organizational Cultures at Auburn University’s Raymond
J. Harbert College of Business. Their publicly accessible website contains original
cases, debate issues, and role-play simulations on select business and society
topics as well as other resources such as articles on ethics and social responsibil-
ity education. It is possible to access this website at http://harbert.auburn.edu/
research-and-centers/center-for-ethical-organizational-cultures/.
Acknowledgments
A number of individuals provided reviews and suggestions that helped improve
the text and related materials, specifically, Justin Blount at Stephen F. Austin State
University, Martha Broderick at University of Maine, Bienvenido Cortes at Pittsburg
State University, Kathryn Coulter at Mount Mercy University, William Ferris at
Western New England University, David Jacobs at Morgan State University, Ricki
Ann Kaplan at East Tennessee State University, Velvet Landingham at Kent State
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xx Preface
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CHAPTER
1 Social
Responsibility
Framework
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IKEA Puts It All on the Table with Social Responsibility
IKEA is a favorite among customers searching for IKEA has also found that CSR is a powerful recruiting
well-designed products at low prices. IKEA stores tool. Many potential employees look for employers
sell ready-to-assemble furniture, appliances, and who share their values. Through CSR, IKEA can help
household goods. Today the firm is the largest fur- its community while attracting better talent.
niture retailer in the world, with 139,000 employees In 1982, IKEA launched the IKEA Foundation.
operating in 43 countries. Germany is the firm’s Initially, the foundation focused on architecture and
largest market, followed by the United States and interior design, but then it expanded to fight for
France. Its diverse variety of products includes furni- children’s rights and education. Recently, the IKEA
ture, food, large items such as cabinetry, and smaller Foundation awarded a grant of $2.3 million to the
items such as kitchenware, decor, and small plants. World Resources Institute to help bring clean elec-
IKEA also operates restaurants within its stores. tricity to 1 million people in India and East Africa. In
IKEA is highly focused on design, viewing it as these areas, many schools, clinics, and agricultural
a competitive advantage. For instance, IKEA stores facilities are without power. The grant will be used to
have been designed intentionally to what some create a map that shows the demand for electricity
describe as a maze that encourages shoppers to in these areas. Once this map is created, the World
go through the entire store. Some customers find Resources Institute will be able to better identify
themselves lost or retracing their steps. This strategy areas in need of electricity and other resources.
allows shoppers to see a wide variety of IKEA items, Another focus for IKEA is reducing carbon emis-
possibly leading to impulse or add-on purchases. sions. In fact, IKEA’s long-term goal is to become
IKEA was founded in Sweden in 1943 by Ingvar carbon positive, which means they will remove more
Kamprad. The culture of the company heavily carbon dioxide than they create. IKEA is already
reflects Swedish culture, which values hard-working, moving toward this goal by switching to electric
friendly, and helpful people. These values helped delivery trucks. The company plans to switch to
create IKEA’s vision, which is “to create a better only electric trucks in major cities like New York and
everyday life for the many people,” according to the Paris and is committed to completely switching over
company’s website. IKEA aims to accomplish this to electric trucks in every location by 2025. IKEA
Shutterstock/Nut Witchuwatanakorn
not only through selling affordable home furnishing has already invested around $2 billion in renewable
products, but also by helping people around the energy. By 2030, IKEA plans to cut emissions from
world. One way that IKEA hopes to help people is stores by 80 percent and reduce emissions from
by helping the planet, by reducing carbon emis- deliveries and customer travel by 50 percent. These
sions and creating sustainable energy through solar are lofty goals, but the company has invested con-
panels that they sell. siderable resources into becoming carbon positive.
Corporate social responsibility (CSR) is a large For IKEA, CSR is at the very core of its heritage
factor in IKEA’s company culture. IKEA uses CSR to and current culture. IKEA aims to create value for
expose its employees to new challenges. Employees customers by selling stylish, low-cost home furnish-
at IKEA are encouraged to mentor young students, ing products. However, the company doesn’t stop
assist senior citizens, and other altruistic actions. By there. It also feels that to sustain the planet, it must
volunteering for these tasks, employees can learn reduce its environmental impact and encourage its
valuable skills that they can transfer to their jobs. customers to do the same.1
Chapter Objectives
●● Define the concept of social responsibility
●● Trace the development of social responsibility
●● Examine the global nature of social responsibility
●● Discuss the benefits of social responsibility
●● Introduce a framework for understanding social responsibility
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4 Business and Society
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Chapter 1 Social Responsibility Framework 5
were intended to fool regulators. While the cars were undergoing emissions
testing, they ran below their actual emissions performance to meet requirements.
However, when on the road, these same cars emitted 40 times the allowable limit
of emissions in the United States. Perhaps most damaging to the firm is that this
scandal was a clear and deliberate attempt to bypass environmental rules. German
prosecutors launched an investigation to determine whether top executives also
misled investors by failing to inform them about complaints filed against the
company in a timely manner. Overall, recent reports estimate that Volkswagen has
paid $25 billion due to the firm’s unlawful actions in the “dieselgate” scandal.3
The goal is to prevent these negative outcomes in the future.
A large multinational corporation may be faced with protestors who voice
their disdain publicly. More firms realize when their products are used in contro-
versially debated activities, they assume the burden. For example, international
tensions erupted when Caterpillar and Volvo’s bulldozers were scheduled to be
used to destroy a Palestinian village. Activists and humanitarian groups took to
social media to demand a boycott of Caterpillar and Volvo due to their products’
involvement in the planned destruction of Palestinian homes and structures.4
Whether the public attacks are physical or virtual, companies often spend signifi-
cant resources in explaining and defending their business decisions.
Finally, a company engaged in alleged deceptive practices may face formal
investigation by a government agency and spend years defending itself. In many
cases, these strategies have proved unsuccessful and led to significant penalties,
oversight and monitoring agreements, investor lawsuits, and new regulations for
the company’s entire industry. For example, the Federal Trade Commission (FTC)
opened an investigation in 2017 after Equifax disclosed that the firm suffered a
major data breach that affected approximately 143 million Americans by allowing
hackers unfettered access to their social security numbers, birth dates, and home
addresses.5 While the FTC does not always publicly confirm its investigations, the
enormity of Equifax’s data breach and subsequent public outcry led the FTC to
disclose its plan. Members of Equifax’s executive leadership team added insult to
injury when reports surfaced that top managers sold large qualities of stock before
the data breach was disclosed to the public. The Equifax example demonstrates that
governmental agencies will use their full authority to investigate dubious corporate
activities.6
Businesses today are expected to look beyond their self-interest and recognize
that they belong to a larger group, or society, that expects responsible participa-
tion. Therefore, if any group, society, or institution is to function, there must be a
delicate interplay between rights (i.e., what people expect to get) and responsibili-
ties (i.e., what people are expected to contribute) for the common good. Research
indicates that the most ethical and socially responsible companies are the most
profitable.7 Therefore, responsible conduct and policies yield significant benefits
to society, as well as to shareholders and other investors. While the media provide
much coverage of misconduct and illegal activities in business, most businesses try
to act in an ethical and socially responsible manner.
The term social responsibility came into widespread use in the business world
during the 1970s. It has evolved to emphasize seven main areas: social issues,
consumer protection, sustainability, corporate governance, philanthropy, legal
responsibilities, and employee well-being. common good
the development of social
We identify seven issues within social responsibility. First, social issues are
conditions that allow for societal
linked with the idea of common good. The common good is associated with the welfare and fulfillment to be
development of social conditions that allow societal welfare and fulfillment to be achieved
achieved. In other words, social issues involve the ethical responsibilities a firm owes
to society. Equal rights, gender roles, marketing to vulnerable populations, data consumer protection laws
regulations enacted to protect
protection, and internet tracking are examples of social issues common in business. vulnerable members of society
Second, consumer protection laws were enacted to protect vulnerable members with formal safeguards for
of society. Consumer protection laws were necessary because they created consumers
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Another random document with
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yhteenliittyvästä perspektiivistä eikä tulevaisuuden koleasta
sarastuksesta, vaan elävät aurinkoisessa, suloisessa nykyisyydessä.
Eikö minun olisi pitänyt niin tehdä? Onko hän voittanut minut liian
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»Sinä olet viisaampi, kuin muut naiset: sinä et ole toisten naisten
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he ylipäänsä naisia pitävät.
Heinäkuu.
Nyt tapahtui aina, kun iltasin erosimme, että hän kiitti minua
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Tänään on elämäni sammunut, onneni murskaantunut! Hän on
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Hän nousi.
»Minun täytyy mennä: vaadin liikoja, kun pyysin, että nyt jo voisit
antaa minulle anteeksi. — Mutta sano minulle ystävällinen sana
ennen kuin eroamme —». Äänensä oli tuskallinen. »Anna minun
viedä mukaani toisellainen muisto jäähyväisistämme — En saata
nähdä kalpeita kasvojasi ja jähmettynyttä ilmettä sinun ennen niin
lempeissä silmissäsi — —»
Syyskuu.
Voi niitä pitkiä, mustia öitä, jolloin katkera epätoivo ahdisti sydäntä,
jolloin kyyneleet vaan polttivat, tuottamatta apua.
Hän ei rakasta tuota toista; minun kanssani olisi hän voinut tulla
onnelliseksi, ajattelen ensin — mutta sitten:
Ehkä muistelet minua joskus, sillä unohtaa et sinä minua voi, olen
siksi paljon rakastanut sinua.
Tiedän kyllä, että suruni kerran tyyntyy, ehkä piankin; tiedän, että
ihminen unohtaa jo ennenkuin tahtookaan. Tiedän, että elämä tuo
mukanaan monenlaisia velvollisuuksia, monenlaisia hommia, kunnes
vanhuuden tautinen hämäryys viimein päättyy lepoon.
Lokakuu.
Huokausten kuukausi.
En tiedä.
Marraskuu.
Aina kun emme seuraa häntä ulos, jää tuo kunnon pormestari
kotiin ja pitää meille uskollisesti seuraa.
Joulukuu.
Kummallinen maailma!