Summarize & answer the following questions above

Reading 3.7 Schools of Thought on Social Responsibility The following excerpt deals with the various schools of thought on social responsibility. These postures can be found across industries and can be used as a framework for ana- lysis of dilemmas. Ethical Postures, Social Responsibility, and Business Practice The ethical perspective of a business often sets the tone for its operations and employees' choices. Historically, the philosophical debate over the role of business in society has evolved into four schools of thought on ethical behavior based on the responses to two questions: (1) Whose interest should a corporation serve? and (2) To whom should a corporation be responsive in order to best serve that interest? There are only two answers to these questions-shareholders only" and "the larger society"--and the com- bination of those answers defines the school of thought. Inherence According to the inherence school of thought, managers answer only to shareholders and act only with shareholders' interests in mind. This type of manager would not become involved in any political or social issues unless it was in the shareholders' best interests to do so, and provided the involvement did not backfire and cost the firm sales. Milton Friedman's philosophy, as previously expressed, is an example of inherence. To illustrate how a business following the inherence school of thought would behave, consider the issue of a proposed increase in residential property taxes for school-funding purposes. A business that subscribes to the inherence school would support a school-tax increase only if the educational issue affected the company's performance and only if such a posi- tion did not offend those who opposed the tax increase Enlightened Self-interest According to this school of thought, the manager is responsible to the shareholders but serves them best by being responsive to the larger society. Enlightened self-interest is based on the view that, in the long run, business value is enhanced if business is respon- sive to the needs of society. In this school, managers are free to speak out on societal issues without the constraint of offending someone, as in inherence. Businesses would anticipate social changes and needs and be early advocates for change. For example, many corporations today have instituted job sharing, child-care facilities, and sick-child care in response to the changing structure of the American family and workforce. This responsiveness to the needs of the larger society should also be beneficial to shareholders because it enables the business to retain a quality workforce. The Invisible Hand The invisible hand school of thought is the opposite of enlightened self-interest. Accord ing to this philosophy, business ought to serve the larger society and it does this best when it serves the shareholders only. Such businesses allow government to set the stan dards and boundaries for appropriate behavior and simply adhere to these governmental constraints as a way of maximizing benefits to their shareholders. They become involved in issues of social responsibility or in political issues only when society lacks sufficient information on an issue to make a decision. Even then, their involvement is limited to presenting data and does not extend to advocating a particular viewpoint or position This school of thought holds that it is best for society to guide itself and that businesses work best when they serve shareholders within those constraints. Social Responsibility In the social responsibility school of thought, the role of business is to serve the larger society, and that is best accomplished by being responsive to the larger society. This view is simply a reflection of the idea that businesses profit by being responsive to society and its needs. A business following this school of thought would advocate full disclosure of product information to consumers in its advertising and would encourage political activism on the part of its managers and employees on all issues, not just those that affect the corporation. These businesses believe that their sense of social responsibil ity contributes to their long-term success. Discussion Questions 1. Does Friedman's position blend across categories? 2 Suppose that a piano company was known for use of mahogany wood in its grand pianos. However, increasingly, in Brazil and Peru, the harvesting of those woods is restricted because of programs to preserve the rain forests What options could the company explore in dealing with this issue? If they voluntarily changed the wood but compromised their customer base and the sound quality, reven- ues would decrease. Should that choice be an option? How would those in the various schools of thought respond? Reading 3.7 Schools of Thought on Social Responsibility The following excerpt deals with the various schools of thought on social responsibility. These postures can be found across industries and can be used as a framework for ana- lysis of dilemmas. Ethical Postures, Social Responsibility, and Business Practice The ethical perspective of a business often sets the tone for its operations and employees' choices. Historically, the philosophical debate over the role of business in society has evolved into four schools of thought on ethical behavior based on the responses to two questions: (1) Whose interest should a corporation serve? and (2) To whom should a corporation be responsive in order to best serve that interest? There are only two answers to these questions-shareholders only" and "the larger society"--and the com- bination of those answers defines the school of thought. Inherence According to the inherence school of thought, managers answer only to shareholders and act only with shareholders' interests in mind. This type of manager would not become involved in any political or social issues unless it was in the shareholders' best interests to do so, and provided the involvement did not backfire and cost the firm sales. Milton Friedman's philosophy, as previously expressed, is an example of inherence. To illustrate how a business following the inherence school of thought would behave, consider the issue of a proposed increase in residential property taxes for school-funding purposes. A business that subscribes to the inherence school would support a school-tax increase only if the educational issue affected the company's performance and only if such a posi- tion did not offend those who opposed the tax increase Enlightened Self-interest According to this school of thought, the manager is responsible to the shareholders but serves them best by being responsive to the larger society. Enlightened self-interest is based on the view that, in the long run, business value is enhanced if business is respon- sive to the needs of society. In this school, managers are free to speak out on societal issues without the constraint of offending someone, as in inherence. Businesses would anticipate social changes and needs and be early advocates for change. For example, many corporations today have instituted job sharing, child-care facilities, and sick-child care in response to the changing structure of the American family and workforce. This responsiveness to the needs of the larger society should also be beneficial to shareholders because it enables the business to retain a quality workforce. The Invisible Hand The invisible hand school of thought is the opposite of enlightened self-interest. Accord ing to this philosophy, business ought to serve the larger society and it does this best when it serves the shareholders only. Such businesses allow government to set the stan dards and boundaries for appropriate behavior and simply adhere to these governmental constraints as a way of maximizing benefits to their shareholders. They become involved in issues of social responsibility or in political issues only when society lacks sufficient information on an issue to make a decision. Even then, their involvement is limited to presenting data and does not extend to advocating a particular viewpoint or position This school of thought holds that it is best for society to guide itself and that businesses work best when they serve shareholders within those constraints. Social Responsibility In the social responsibility school of thought, the role of business is to serve the larger society, and that is best accomplished by being responsive to the larger society. This view is simply a reflection of the idea that businesses profit by being responsive to society and its needs. A business following this school of thought would advocate full disclosure of product information to consumers in its advertising and would encourage political activism on the part of its managers and employees on all issues, not just those that affect the corporation. These businesses believe that their sense of social responsibil ity contributes to their long-term success. Discussion Questions 1. Does Friedman's position blend across categories? 2 Suppose that a piano company was known for use of mahogany wood in its grand pianos. However, increasingly, in Brazil and Peru, the harvesting of those woods is restricted because of programs to preserve the rain forests What options could the company explore in dealing with this issue? If they voluntarily changed the wood but compromised their customer base and the sound quality, reven- ues would decrease. Should that choice be an option? How would those in the various schools of thought respond