Corporate Social Responsiveness

The study of corporate social responsiveness, how organizations become aware of and then respond to social issues takes two basic approaches: on the one hand it deals with how individual companies respond to social issues. On the other hand, the theory deals with the forces that determine the social issues in which businesses should respond. These two approaches can be combined to classify the ways in which corporations can and do respond to specific social issues. Robert Ackerman was among the first to suggest that responsiveness, not responsibility should be the goal of corporate social endeavors. Ackerman pointed out that corporate response to social issues has a life cycle, starting with corporate recognition of the problem, continuing through study of the problem and consideration of ways to deal with it, and concluding with implementing of a solution Implementation often comes slowly and at some point a company may lose the initiative as government or public opinion forces it to act. Managers must be responsive to problems early to retain the largest amount of managerial discretion.

For example, it has recently been suggested that women who spend a great deal of time working at video display terminals stand a higher than average chance of having problem pregnancies. The research is confusing and disputed by some investigators. As this issue unfolds, and as more actors and competing interest become involved managers could lose the power to handle the issue at their own discretion. We can easily imagine several studies confirming these early indications and the resulting drama of congressional hearings, work stoppages, lawsuits, and bureaucratic regulation. In a model of social responsiveness, options are developed early in the life cycle of such an issue. It may be in the enlightened self-interest of companies to make the best information available to their employees, encourage them to ask questions, and even give transfers or retraining to workers who request them to ask questions, and even give transfers or retraining workers who request them. Being responsive may well be the best course of action in the long run.

Corporate Social Performance:

Combining the philosophical ideas of social responsibility and social responsiveness, a single theory of corporate social action called corporate social performance can be embarked up on.

According to this theory, the arena of social responsibility debates is shaped by economic, legal and ethical principles. In this country, for example we support free enterprise (an economic principle), the public’s right to a safe workplace (a legal principle), and equal employment opportunity (an ethical principle). Together these principles create a social contract between business and society that permits companies to act as moral agents.

At individual companies, managers try to implement the principles of the social contract in their decision making processes and in their company policies. Their decisions and policies can reflect one of four stances:

1. Reactive — the company responds to a social issue only after it has challenged company goals
2. Defensive – the company acts to ward off a challenge
3. Accommodative — the company brings itself into line with government requirements and public opinion.
4. Proactive – the company anticipates demands that have not yet been made.

Corporate social performance is an important consideration for many investors, who believe that an organization’s good social performance is not only socially responsible but leads to good financial performance. More than dozen social conscience mutual funds exist that choose securities for investment purposes according to the companies records in social responsibility that is, in protecting the environment, helping the community etc. What’s interesting is that each fund uses its own standards in determining which securities are acceptable.

The existence of so many different standards and ideas of social performance means that we must look to the underlying assumptions about organizations and society. Ultimately we have to turn to ethics as the study of the basic underlying values of people, organizations and society. —