Margolis, Walsh (2003)

Question 1

Two central concerns of social responsibility:

Answer 1

Misappropriation & Misallocation
- So, not giving the money to the ‘rightful’ shareholders
- Use resources for the wrong thing

Question 2

Three types of stakeholder theory:

Answer 2

1. Descriptive (describe): to what extent managers do in fact attend to various stakeholders and act in accordance with their interests
2. Normative (explore how): explores whether manager ought to attend to stakeholders other than shareholders, and if so, on what grounds these various stakeholders have justifiable claims on the firm?
3. Instrumental (effects of): delineates and investigates the consequences that follow from attending to a range of stakeholder

Question 3

Normative: what are the reasons to respect stakeholders?

Answer 3

• Employee dignity and self-efficacy
• Principles of fairness and reciprocity
• Fundamental rights
• Respect for the intrinsic worth of human beings

Question 4

Old view why Firms should not be bothered with social responsibility:

Answer 4

• Only free elected governments are legitimate actors (Jensen, 2002) to ameliorate social misery.
• If shareholder wealth is maximized then social welfare is maximized as well
• The market will ultimately sort out whether it is the best use of a firms resources

Question 5

Five areas of inquiry:

Answer 5

1. Appraising the stimuli: what issues gain attention of firms?
2. Generating response options: how do they create response options?
   a. (behavioral or cognitive)
3. Evaluating options: how do they evaluate these options?
4. Implementation: how do they implement?
   a. Equivocal, ambivalent or ambidextrous response, or make, buy, ally
5. Consequences: how do these efforts effect society?

Question 6

Misleading types of response

Answer 6

Equivocal: can be interpreted in different ways, intended to mislead
Ambivalent: well yes and no
Ambidextrous: two different types of response

Question 7

Antinomy of (paradox) to profit vs to serve:

Answer 7

Two ways,
either invalidate, so try to find out which is best
or do both (reconcilliation

Question 8

Inductive approach to normative theory:

Answer 8

• How should I act?
• Begins with set of considerations- objectives, duties and concerns- that arise in trying to answer that question
• Identifying a core set of considerations and comparing them
• Framework for action: specifying what is obligatory, permissible and prohibited.

Question 9

A company should respond when:

Answer 9

• It contributes to the conditions that require a response
• It benefits from unjust conditions
• Duty of beneficence: don’t need to do more than in a situation where everybody would help

Question 10

How a company should respond relies on:

Answer 10

• The problem (depth & breadth)
• The company (contribution)
• The company’s relation
• The impact the response would have