J. Brooke Hamilton, III, PhD, MBA

Management 400 - Business and Society - Spring 1998

MW 3:00-4:15 FGM278

LEARNING OBJECTIVES

Chapter One: Managing Responsibly in A Complex Environment

1. Explain why businesses and managers are powerful social actors (financial, political and social power) with many responsibilities.
2. Explain the sense in which the environment in which the manager works is complex, turbulent and global.
3. Explain why the old model of business as internal/external environments or as input/output needs to be modified by recognizing permeability, uniqueness and choice as features of the business environment.
4. Explain the five sectors of the SEPTEmber model and why the model is a good management tool for understanding the external environment of business.

Chapter Two: The Challenges of Global Business

1. Be able to distinguish among the levels of international involvement: domestic, international, multinational or transnational, and global.
2. *Be familiar with the facts in the case, "Selling Infant Formula," in order to use it for examples of the points discussed in these chapters.

Chapter Three: Business and Society: Historical Dimensions

1. *Describe the role of business in society in the past four periods of Western history: feudalism, mercantilism, industrialism and the information age.
2. *What were the major SEPTEmber factors which brought about the transition from the age of industrialism to the information age?
3. *Explain what we retain today in our conception of business-society relationships from feudalism, mercantilism and industrialism. Show how these ideas sometimes conflict with one another in contemporary attempts to decide on the proper relationship of business and society.
4. Does the fact that conceptions of business-society relationships originated in a prior period of history in itself make them wrong or outdated? What is the proper role of historical understanding for managers?

Peter F. Drucker: "The Age of Social Transformation."

1. *Describe the two major transformations in the social structure of the U.S. that Drucker maintains have occured in the 20th century. How does his account of the business-society relationships in this century compare with Wood's account?
2. *Explain why the rise and the fall of industrial workers in the U.S. has been relatively peaceful?
3. *How will knowledge workers differ from industrial workers?
4. How do your future work plans fit into the social changes Drucker predicts? What strategies can you use to improve your chances for a good life in the knowledge society?

Milton Friedman: "The Social Responsibility of Business is to Increase Its Profits."

• *Explain why Friedman thinks that corporations should not engage in social responsibility projects. That is, what are the various arguments he gives? Why is the situation different for managers who own their own business? What is wrong with Friedman's arguments?

Albert Carr: "Is Business Bluffing Ethical?"

1. *What question is Carr asking in this article--what problem is he trying to address? How does the article fit into the questions we are asking in this course?
2. *How does Carr answer the question? That is, what position does he take in the article and what arguments does he give to support his position?
3. In terms of the relationship of business and society, which historical era does Carr's position reflect?
4. *What is right in Carr's argument and what is wrong? Be prepared to use your critique of Carr to discuss cases in which business interacts with society.

Chapter Four: Corporate Social Performance

1. *Be able to distinguish among and give examples of each of the elements of the Corporate Social Performance Model (p. 122): Principles of Social Responsibility, Process of Social Responsiveness and Outcomes of Behavior. In other words, be able to explain what each of these categories is for.
2. *Explain the three principles of Corporate Social Responsibility (Exhibit 4.4): Legitimacy, Public Responsibility, and Managerial Discretion, paying particular attention to the level of application and the value of each principle in giving your explanation (Summary p.137 is also helpful.) Give examples of each of these principles in action.
3. Be prepared to use the difference between Collateral Systems and Interpenetrating Systems to explain the role of businesses in society.
4. *Explain why, according the Principle of Public Responsibility, businesses are not responsible for all of society's problems but for those which relate to the areas of their involvement with society (see Summary p.137 for help with this answer). Be prepared to give several examples of corporate programs which fulfilled this principle and to analyze examples to see whether they did or did not follow this principle.
5. In discussing the Principle of Managerial Discretion, why does Wood turn Carroll's Model on its head (Exhibit 4.6)? That is, how can Wood think that an individual business' economic function of providing goods and services and making a profit comes only after fulfilling the other three responsibilities? Would most business persons agree?
6. *Explain each of Pava & Krausz' four criteria for evaluating the legitimacy of corporate projects which seek to fulfill the corporation's social responsibilities. How does the last criteria, Financial Performance, relate to the other three? Where do these principles fit in Wood's Corporate Social Performance Model? Be prepared to apply these criteria to specific cases.
7. Briefly outline Ackerman's account of how Corporate Social Responsiveness takes place in an organization. What three key management functions are part of responsiveness?
8. Briefly explain the three most important categories of Outcomes of Corporate Actions.
9. *Be familiar with the facts in the case, "League General's Car Seat Benefit," in order to use it for examples of the points discussed in these chapters.

Concept Map

*Be prepared to draw a concept map of all the components from this unit, including the articles on reserve.

Cases for Exam Practice

The exam will have one or two cases for analysis using the concepts we have developed in this unit. The starred (*) questions will indicate which concepts are most important. Here are some cases for exam practice:

Carseat Questions
League General's carseat program provided child restraint seats to all eligible policy holders.

1. How would this program be looked at from the business-society perspective of the industrial age? What would Carr's position be on this program? What criticisms could you make of Carr's position?
2. Where does the program fit in Carroll's and Wood's Pyramid of Corporate Social Responsibility and why?
3. Comment briefly on the reasons the company could use to justify giving away car seats, using the Wood's principles of legitimacy, responsibility and discretion and Pava and Krausz four principles: local knowledge, level of responsibility, shared consensus, and financial performance. Based on each of these two sets of criteria, do you think the company should have undertaken the program?

A Request for Boeing
Boeing Aircraft Company, a Fortune 500 company, is the world leader in commercial aircraft manufacturing and the largest employer in the Seattle, Washington area. Aircraft sales have been strong in the last several years and Boeing seems to be in a strong growth cycle, with new orders not yet peaking. Begun as a family owned business by the Boeing family, the publicly held company has continued the family's tradition of strong ties to the Seattle community and strong support for community institutions which benefit the employees and their families. Support for the University of Washington, located in the city, has been concentrated on building up the School of Engineering and additional support has gone for recreation and sports activities which the employees' families enjoy.

As Public Affairs Officer for the company, you are now faced with a problem. The President of the University has requested that the Boeing Company join in a capital campaign to raise money to move the struggling Seattle Symphony into the University's School of Music and the Performing Arts. A national decline in younger audience interest in classical music has threatened the existence of the orchestra and the University President sees this move as a way to save the orchestra and strengthen the University. Boeing is being asked for a "seed" grant of one million dollars to be matched by Microsoft and several other major local industries. "A great city needs a great orchestra." is what the President tells you. Your problem is what to recommend to the Board of Directors of the Company at its next meeting in regard to the University's request.

Use (a.) Wood's Principles of Corporate Social Responsibility, legitimacy, responsibility and discretion (25%)

and (b.) Pava and Krausz' four Principles for Evaluating the Legitimacy of Corporate Social Responsibility Projects, local knowledge, level of responsibility, shared consensus, and financial performance (25%) to make your recommendation to the Board.

Merk & Company--responsible to ameliorate damage caused by river blindness? (a), (b) and (c) above

Nestles' responsibility to LDC people and governments for harm done to infants by improperly used formula? (a), (b) and (c) above

Chapter Five: Stakeholders and Social Issues

1. *Explain the differences between the Market Model of Capitalism and the Managerial or Stakeholder Model. Focus on the differences between the roles in each model for managers, stockholders, employees, suppliers, customers and other stakeholders such as financiers, local communities and the society at large. What will happen in the Market Model if managers devote too much time and energy to fulfilling "corporate social performance" issues (what is the importance of the "market for control")?
2. *Explain the problems with the Market Model of Capitalism.
3. Explain for the stakeholder model what a "stakeholder" is and how this term relates to "stockholder". What is the point of using this new term (see Freeman quote, p.166-67)?
4. What is the importance of the two types of "legitimacy" of stakeholder demands which Freeman points out? (p.166-67)
5. *Explain the limitations for managers of the "for us or against us" analysis or stakeholder interests. Discuss other dimensions which should be included by managers in addressing stakeholder interests and give examples. Why is it important to consider relations among stakeholders (mapping their relations) rather than simply looking at how each relates to the firm?
6. *Using the concepts of "power" and "stake," pointed out by Freeman and Reed, be prepared to map the real world relationships between stakeholders and firms (Exhibit 5.5).
7. *Explain Freeman and Reed's suggestions for developing stakeholder management processes (Exhibit 5.6).
8. *Be prepared to trace the life cycle of a social issue and explain the main outlines of the process of issues management (see material on reserve).
9. *Explain the two factors which, according to Baron, determine the amount of press coverage and the type of treatment the press will give to an issue (see material on reserve).
10. *Be prepared to use the conceptual tools in the questions above to discuss issues management for the Nestles' case and the Dolphins & Tuna case. The tools are as follows:
1. a comprehensive issue set (see Exhibit 5.8)
2. map of issue life cycle, combining Wood's & Baron's models (ex. 5.7 & material on reserve)
3. likelihood of press coverage and why (handout & material on reserve)
4. map of stakeholders covering information in ex.5.4 and pp. 174 & 175.
5. map of stakeholders's power and stake, using real world grid (ex. 5.5)
6. plan for stakeholder management process for this issue (ex.5.6).