SH1717

Social Responsibility of Entrepreneurs

Responsibilities and Accountabilities of Entrepreneurs (as cited in Jerusalem, Palencia, &
Palencia, 2017)

A. Responsibilities and Accountabilities to the Employees

1. Pay Wages and Taxes
Entrepreneurs have the responsibility to pay their employees of their business at least the
minimum hourly wage in their locality and to pay each employee money owed from working
per pay period, including overtime, sick leave, and vacation wages. Paychecks should always
be on time and without delay so the workers can meet individual financial obligations. The
government also requires entrepreneurs to pay PhilHealth, Social Security, taxes out of
employee wages for each employee working their business.
2. Create and Maintain a Safe Workplace
The government requires businesses to create and maintain a safe working environment for
their employees as per standards. Entrepreneurs must also make employees aware of areas in
their business that have a high risk for injury and train their employees in safety procedures
to minimize the risk of injury. Continual inspection of their facilities and employee
knowledge of safety standards is necessary to make certain their workplace remains as safe
as possible.
3. Facilitate Workers’ Compensation Insurance
Despite business owners’ best efforts to maintain a safe working environment, accidents will
happen. When injuries occur through no fault of their employees, it’s their responsibility to
file a claim with their workers’ compensation insurance provider. This coverage provides for
medical care and wage replacement for their injured employee. Businesses must treat their
injured employee with respect and file the claim without attempting to cause a delay in
processing or attempt to defer the worker from filing a claim at all. This is illegal and can
cost the business hefty fines and possible jail time if the entrepreneur refuses to honor their
commitment and requirements as a business owner.
4. Enforce Anti-Discrimination Law
It is illegal to discriminate against anyone according to their culture. This means not only
race, religion, and country, but also age, gender, sexual preference, disability, a way of life
and beliefs. “EEO” stands for “Equal Employment Opportunity”, which means that
employees cannot be disadvantaged, dismissed, or not given employment for any of these
reasons. It is the employer’s responsibility to ensure that all staff is trained and aware of their
obligations under anti-discrimination laws.
5. Create and Maintain a Favorable Working Environment
As an entrepreneur and employer, you should try to provide a healthy working environment,
which respects each person and their opinion is considered. Listen to all your collaborators
and worry about their welfare. Remember that they are working for your company exists and
is profitable and that as better feel, the better they will do their job.
6. Respect Human Rights
The Mitsubishi Electric Group understands that its business operations are interrelated with a
wide range of peoples and societies throughout the world, and implements and enforces a
code of conduct that fosters respect for human rights.

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7. Support Career Development

Mitsubishi Electric provides a human resources development system that supports the careers
of employees, a self-development support program, and transfer opportunities for willing
employees.
8. Train and Educate Employees
Promoting knowledge is important in changing the business environment. Acquisition of new
knowledge and skills through the professional and personal development of employees is a
prerequisite and a guarantee of business success.
9. Manage Performance
"What gets measured gets done" is an expression you will often hear when talking about
performance management and the simple meaning behind this statement is the key to our
philosophy of rewarding and managing performance. We want all our employees to have
clearly defined goals, which they defined themselves with their managers, on the basis of
business goals, through three main performance areas profit, process, and people.
10. Give Rewards and Benefits
We reward our employees fairly and attractively, in line with the prevailing conditions on the
local market. We gather data from the labor market on a regular basis, ensuring that our
reward structures remain competitive. Our reward system is well structured and transparent
in its application. It:
• Allocates appropriate people to appropriate job positions
• Set requirements and standards, outcomes and measures
• Provides effective orientation, education, and training
• Provides ongoing coaching and feedback
• Designs a foundation for effective systems that reward people for their contributions
• Provides promotional/career development opportunities for employees

B. Responsibilities and Accountabilities to the Government

In any country, the government tries to preserve the community and improve its conditions.
In that respect, the business has to extend its cooperation to the government. If the business
discharges its responsibilities the government sincerely and effectively, the government can
function more efficiently.
1. Observe Laws, Rules, and Regulations
A number of legislative are formed from time to time by the government for proper
regulation and control of the business. Businessmen should comply with all legal
requirements, execute government contracts, pay taxes honestly and in time, make services
of executives available for government, suggest measures and send proposals to enact new
laws for the business.
2. Pay Taxes
Businesses must pay taxes and fees to the government in the course of carrying out their
operations. These can include taxes on revenues, tariffs on imported products, and a number
of administrative fees necessary to register the business. Withholding these payments,
particularly taxes, is considered a crime.
3. Follow Environmental Regulations
Many companies, particularly those in the industrial and manufacturing sectors, face heavy
regulations regarding the number and variety of pollutants that they are allowed to emit.

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Some companies, feeling a "social responsibility" toward the common good, may seek to
limit their pollution more than the law requires.
4. Abide by Labor Laws
Businesses that hire employees must abide by a slew of laws relating to how they treat their
employees. These include laws related to how much an employee can be paid, how many
hours he may work, and the criteria under which he can be hired and fired.
5. Avoid Restrictive Trade Practices
Companies are forbidden from engaging in certain kinds of restrictive trade practices that
limit competition. For example, most companies may not develop monopolies within a
particular sector or provide substantial barriers for new companies to compete with them.
Restrictive trade practices of this kind can often reduce the quality of products available to
consumers and drive up prices.
6. Disclose Financial Statements
Companies must disclose a number of financial statements to the government in the form of
tax returns, and, if the company makes ownership of shares of stock commonly available, to
the public as well. This financial transparency helps to ensure that the company is not
violating any laws, such as withholding taxes and to aid the public in deciding whether to
invest in the company.
7. Avoid Corruption
The commercial organization should not take any type of favor from government officials by
bribing or influencing them.
8. Assist in Implementing Socio-Economic Policies
The government expects co-operation and help from the business sector to help in
implementing programs and policies relating to social and economic development.
9. Help Earn Foreign Exchange
The government also expects from a business organization that it will earn foreign currency
by exporting goods in the foreign market. The government requires this foreign currency for
importing valuable and important products.
10. Advise the Government
The business organization has to provide timely advice to the government in respect of
framing important policies such as Industrial policy, Import & Export policy, Licensing
policy, etc.
11. Contribute to Government Treasury
The commercial organization must contribute the funds to the government during
emergencies and natural calamities like floods, earthquakes, etc.
12. Contribute to Political Stability
The commercial organizations should work towards the political stability of the country. The
stable government often brings more return and peace in a democratic country.

C. Responsibilities and Accountabilities to the Creditors

1. Give Correct Information
Shareholders who are the owners of the business should be provided with correct information
about the company to enable them to decide about further investments.
2. Provide Fair Return on Investment
The company should provide a fair return on the investment made by shareholders. If
shareholders do not get the proper dividend, then they will hesitate to invest additional funds.

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Shareholders should be kept fully informed about the working of the company for healthy
growth of the business. The Companies Act 1956 also requires the company to give full
disclosure in the published statements.
3. Strengthen Share Prices
The company should strengthen the share prices by its growth, innovation, and
diversification. At the same time, shareholders should also offer wholehearted support and
co-operation to the company to protect their own interests.

D. Responsibilities and Accountabilities to the Suppliers

In strict business structure, the suppliers are primarily responsible for providing or delivering
the raw materials and resources that a company needs in the production.
Suppliers indirectly affect marketing and business aspects such as product quality, price, and
production of goods. Good quality raw materials also mean quality-made final products and
fair market price. Availability of supplies determines production workload and quantity.
1. Practice Fair Pricing and Licensing
Companies must seek fairness and truthfulness in all dealings with suppliers especially
pricing and licensing.
2. Avoid Coercion and Litigation
Companies should make certain that any business transaction with suppliers must be free
from any form of coercion and unnecessary litigation.
3. Maintain Stability
Firms must promote long-term stability in their relationship with the suppliers to pay back
the good value, quality, and reliability they gained.
4. Maintain Confidentiality
Dealing with suppliers properly means sharing information with them and making them part
of the planning processes. They must keep their clients and purchasers abreast of any new
information on new technology and latest raw materials. Confidentiality must be strictly
practiced. This means no unnecessary disclosure of information shared by the company and
its activities.
5. Pay on Time
One of the best ways to deal with suppliers is to be responsible for making timely payments
according to the agreed terms and conditions of the trade.
6. Select Suppliers with discernment
A business that aims at succeeding must have a good discernment in selecting suppliers.
There are three fundamental requirements every company must need from their suppliers:
legal compliance, quality control, and environmental conservation.

E. Responsibilities and Accountabilities to the Consumers

A business cannot work without the consumer. The survival and growth of a business depend
on consumer satisfaction, service, and support. The commercial organization should win the
confidence of the customers. This is possible by following a positive attitude towards
customers and fulfilling following social responsibilities towards them.
1. Ensure Quality of Products and Services
Your responsibility is to offer customers the highest quality in your products and services
provide the best care and never lie to get a sale. A good entrepreneur is honest and gives a
good price/ benefit. Never use marketing to deceive or sell false expectations.

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Quality goods should be produced and supplied. Distribution system should make goods
easily available "to avoid artificial scarcities and after-sales service should be prompt.
Buying capacity and consumer preferences should be taken into consideration while deciding
the manufacturing policies.
2. Ensure Consumer’s Health and Safety
A key consumer issue is the quality and safety of products. Customers need clear instructions
for safe product use, including assembly and maintenance. To avoid customer harm and
danger, anticipate potential risks of your product and services in the design stage and
throughout the product lifecycle, from R & D to manufacturing, storage, and distribution, use
and disposal, reuse and recycling. Whether or not legal safety regulations exist, products
should be safe for their intended use and if mi used in a way that can be foreseen.
3. Provide Free Training
The commercial organization should arrange to train the customers either free or for a fee. It
must be in the case of computers, etc.
4. Be Fair with Prices
The customers should not be cheated by charging high prices. It is not possible to fool the
customer at all the time. Thus, fair price converts a customer into a permanent customer.
5. Be Honest in Advertising and Marketing
The customers want to know the facts, features, advantages, side-effects, etc, of the product.
The advertisement conveys this information. Thus, the company must see that the
advertisement is not being misleading and it must be done by providing the true and actual
information.
6. Be Honest in Dealings
Never lie to your customers. It is foolish to cook false stories. You will be caught. In today's
world, where information is just a click away, everyone does his/her thorough research
before purchasing something. Unnecessarily you will lose your respect in front of them. If
you can't deliver something, please mention it clearly. They might not invest in that
particular product but believe me, would definitely come back to you in near future just
because you were honest, and guided them correctly. It is pointless to badmouth your
competitors.
7. Attend to Complaints
The consumer complaints must be attended immediately. When major issues occur, employ a
system for making quick and accurate decisions on steps and measures to take while placing
top priority on not inconveniencing the customers.
8. Service Even After Sales
The company is expected to provide after sale service for maintenance of goods during the
period of warranty. Efficient and effective after sale service helps to establish a good
relationship between the customers and the company.
9. Respect Customers’ Time
Respect your customer's time. Do not decide the time and venue as per your availability and
comfort. If the customer wants to meet you at 6 in the evening, make sure you are there on
time. Neither arrives too early nor too late. Do not keep your customers waiting. Do not
forget that there are several options available in the market. Your loss is someone else's gain.
10. Treat Customers well
Treat your customers as kings and do not think of them only when you have a pressure to
meet your targets within the stipulated time frame. Understand that a customer buys your

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products or services only when he/she trusts your brand and most importantly believes in
you. Understand the needs and requirements of your clients. Find out as to why they need a
particular product and how your product would benefit them. You need to build a strong
relationship with your customers for them not only to remain your loyal clients but also bring
more people along with them. It is the responsibility of the organization to give correct
suggestions and feedbacks to customers. Avoid making fake promises and commitments
which you yourself know are difficult to fulfill.

F. Responsibilities and Accountabilities to the General Public

To maintain a positive public image and attract new clients, a company must understand its
corporate responsibilities to the public. Ultimately, any business that encounters the public
has responsibilities.
1. Be Fiscally Responsible
One of the actions that prompted failure of companies such as Enron and Adelphia occurred
when executives gave themselves loans using company funds, according to RR Donnelley.
While it can be disappointing to consumers that companies need legislation to be fiscally
responsible, it would be naive to allow company executives to keep raiding corporate bank
accounts for their own needs. When a company is caught up in a scandal caused by executive
greed, it can be fiscally fatal for that company. That is why a company needs to enact and
enforce guidelines of its own that agree with the law but also apply specifically to the
company, to avoid misuse of company funds. There is a bond of trust between a consumer
and a company that is broken when fiscal fraud occurs. This goes for public or private
companies.
2. Consider Public Input
A company should be able to operate under its own rules and ideals, but a company should
also take into account the input of its customers to remain competitive, according to the
World Bank Institute's report titled "Public Policy for Corporate Social Responsibility."
A company should reach out to its customers and benefit from the insight of what customers
are looking for in product improvements. A company that creates an advisory board of a
cross-section of its target audience gathers recommendations on how to keep in touch with
the customer base and how to improve the company's public image. It is the responsibility of
the company to remain accountable to its customers; otherwise, the company will lose its
customers and cease to exist.
3. Take Care of the Community
A company exists because of the customers it serves and the community in which it is
located. The community provides most of the employees for the company, and the
community provides all the public services the company enjoys, such as electricity and
firefighting protection. In some cases, companies are given breaks on their utilities and taxes
in order to entice them to establish a location within the community. The company has a
responsibility to give back to the community that supports it with tax breaks and a labor
force. When there is a community event, the company should contribute volunteers, money,
or something that would support the event. The company should use local suppliers as much
as it can to help support local businesses.

G. Responsibilities and Accountabilities to the Environment

1. Comply with Environmental Legislation
There is a range of environment rules your business may have to follow:
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• Comply with legislation regarding emissions into the air.

• Store waste safely and securely, make sure it is treated appropriately, ensure it is collected
by an authorized organization and complete a waste transfer note or consignment note
when waste is handed over.
• Manage your business waste for recycling by separating paper, card, plastic, metals, and
glass prior to collection.
• Join an approved compliance scheme if you handle more than 50 tons of packaging.
• Make sure that you comply with restrictions on the storage and use the hazardous
substances.
2. Dispose Waste Properly
Appropriate steps should be taken to prevent environmental pollution and to preserve
ecological balance. The industrial waste should be disposed of carefully or if possible can be
recycled to minimize pollution. The toxic wastes, excessive noise, chemical pesticides,
automobile exhaust etc. need to be checked from time to time.
3. Recycle
Businesses are required to separate the following forms of commercial waste for recycling:
paper, card, plastic, metals, and glass.
If your business processes prepare or distribute food and produce over 50kg of food waste
per week, you are required to separate food waste. It is illegal to dispose of food waste
directly or indirectly into a public drain or sewer.
4. Conserve and Protect Biodiversity
Biodiversity refers to all species of plants and animals, including any genetic variations
within those species, and the complex ecosystems they live in.
The world is losing b10diversity at an ever-increasing rate as a result of human activity. All
types of business operating near protected areas should be aware of their responsibilities for
conservation and protect biodiversity. This doesn't just apply to land-based industries such as
forestry or farming, but to all offices, factories and other business activities based on or near
these areas.

Protected areas include:

• Local nature reserves - places with wildlife or geological features that are of special
interest locally.
• National scenic areas - areas of particular natural beauty in need of conservation.
• National parks - tracts of the countryside that have been given protection for the
conservation and enhancement of their special qualities.
• National nature reserves - important areas of wildlife habitat.
• Sites of special scientific interest - good examples of the natural heritage of wildlife
habitats, geological features, and landforms.
• Special areas of conservation - strictly protected sites for habitat types and species that
are considered to be most in need of conservation at a European level.
• Special protection areas - strictly protected sites classified for rare and vulnerable birds.
• Wetlands
• UNESCO biospheres - areas of terrestrial and coastal/marine ecosystems which are
internationally recognized under UNESCO's Man and the Biosphere program.

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5. Prevent and remedy damages to environment

Every year there are thousands of cases of damage to the environment covering:
• damage to species and habitats
• damage to water
• risks to human health from contamination of land
If you are responsible 'operator' of the activity that causes or threatens the damage you must
take the immediate action to prevent or remedy this.
6. Report an incident
You should report incidents such as:
• damage or danger to the natural environment
• pollution to water or land
• poaching or illegal fishing
• fish in distress or dead fish
• watercourse blocked by a vehicle or fallen tree causing risk of flooding
• illegal dumping of special (hazardous) waste or large amounts of industrial waste
• incidents at waste sites
• illegal abstraction from watercourses
• unusual drops in river flow
• collapsed or badly damaged river or canal banks
You should report incidents such as gas leaks, burst water mains, or domestic odors, noise,
waste or pest nuisances to your local authority or utility company. Business should protect
the environment which has acquired great importance all over the world.
7. Use Scarce Natural Resources Sparingly
Scarce natural resources should be used very carefully as these are depleting at a very fast
rate. The alternative sources can also be found out to save natural resources like to save
forests alternative to wood and pulp can be found, the use of coal can be reduced by an
alternative source of energy.
Start by recycling paper, making the most of digital way and reusing the recording sheets.
Separate garbage dumps and avoids using disposable plates, especially Styrofoam.
Implement energy saving systems such as LED lighting, and invite your team to tum off
lights and equipment when not in use. Encourage the use of bicycles and car-pooling. In
addition, invite them to perform activities such as planting trees.

Major Ethical Issues in Entrepreneurship (as cited in Jerusalem, Palencia, & Palencia, 2017)

A. Basic Fairness – Ethical decision-making processes should center on protecting employee

and customer rights, making sure all business operations are fair and just, protecting the
common good and making sure individual values and beliefs of workers are protected.
1. Partners – Suppose you are a partner in a business and see a great deal of profitability on the
horizon. You don't believe that your partner deserves to profit from the business' future
success because you don't like his personality. You may wonder if you could simply take his
name off the bank accounts, change the locks, and continue without him. If you proceed with
this course of action, you would likely be in violation of your ethical and legal obligation to

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act in good faith concerning your partner. The better course of action may be to simply buy
out his interest in the business.
2. Gross Negligence – Suppose you are on the board of directors for a publicly traded
corporation. You and your fellow board members, in hopes of heading off early for the
holidays, rush through the investigatory process involved in a much-anticipated merger. As a
board member, you have a duty to exercise the utmost care respecting decisions that affect
the corporation and its shareholders. Failing to properly investigate a matter that affects their
interests could be viewed as gross negligence supporting a breach of your ethical and legal
duty of care.

B. Personnel and Customer Relations

1. Mistreating Employees – Every year, lawsuits are filed against employers who are accused of
sexual harassment or discrimination against their employees. Some employers have been
sued for threatening or firing whistle-blowers, or employees who point out illegal practices or
safety violations in the workplace.
2. Discrimination and Harassment in the Workplace – Maintaining professional workplace
relationships between employees is a continuing challenge for employers regardless of the
industry. This challenge can become more difficult when the image companies choose to
project has a significant sexual charge. There’s never an excuse or a justifiable reason for
harassment of any kind in any workplace.
If a supervisor discriminated against an employee based on her gender, religion, or ethnicity
when making recommendations for a promotion, legal action could be sought.
3. Family-Run Businesses – In the area of small business, some major ethical result from hiring,
firing, and dealing with employees. For example, conflicts of interest may cause ethical
issues in small business, especially if they are family run. When personal family issues
interfere with business decisions, this is a conflict of interest and an ethical concern.
4. Employee Behavior – From large corporations to small business, individuals involved in all
types of business often face ethical issues stemming from employee behavior.
For example, whether an employee can spend work time checking personal email accounts,
how a manager deals with claims of harassment and to what extent manager can “groom” a
certain employee for a promotion are all examples of ethical issues regarding employee
behavior. There are legal consequences for some unethical employee behavior.
5. Employee Working Conditions – Employers must be aware of the safety of their work
environment and if they have compensated employees for all the time they have worked.
They must also consider if they have required an employee to work an unreasonably long
period of time or if they have him doing an unusually difficult task.
6. Side Deals and Sub-Standard Work – When dealing with customers or clients, business
people must ensure that they use their information correctly, do not falsely advertise a
product or service and do not intentionally do sub-standard work.

C. Distribution dilemmas – Ethics is a prime concern in marketing, and the areas of price,
placement, and promotion are no exception. Pricing refers to the way in which prices are set
for consumers considering the cost of inputs, distribution, and overhead. Placement involves
the strategic positioning of products within retail stores. Promotions involve short-term price

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discounts or giveaways. Each of these areas presents its own set of ethical dilemmas,
challenges, and legal guidelines to navigate.
1. Pricing Strategy Ethics – Price collisions can be a major source of ethical pressure in many
industries, and artificial price-fixing is illegal in a wide range of countries. Price collusion
exists when a number of competitors agree to set prices at a certain level, bypassing the
natural market forces of supply and demand and creating an unfair advantage over
consumers.
2. Product Placement Ethics – End-caps, point-of-sale displays, and demo kiosks are all
examples of positioning techniques that are inherently harmless, but which can be used in
arguably unethical ways.
3. Ethics and Promotions – Promotions are designed to boost short-term sales by providing
irresistible value propositions to consumers. Coupons, holiday sales events, mail-in rebates,
and giveaways all fall under the promotions category. The “bail and switch” tactic is widely
considered unethical, yet many companies still practice this promotions technique.

D. Fraud – in business takes up so many forms and sizes. It can be in the form of financial
misconduct or misrepresentation.
Examples of financial misconduct include price-fixing, or an illegal agreement between
industry competitors to “fix” the price of a product at an artificially inflated level; physicians
who refuse to treat non-insured patients, or perform unnecessary procedures to make more
money; tax evasion; tax fraud; and “cooking the books” to make the company look more
profitable than it is.

Corporate misrepresentation can take many forms. It can be as simple as a salesman who lies
about his company’s products, or it can be false or misleading advertising. Misrepresentation
can involve a cover-up of illegal workplace conditions or transactions; falsified data in a
shareholder report; lying to a union about corporate profits, or hiding or denying safety
problems with a product.

E. Unfair Competition – or distortion of completion is a situation in which competitors

compete on unequal terms because favorable or disadvantageous conditions are applied to
some competitors but not to others.
The concept can also refer to situations in which the actions of some competitors actively
harm the positions of others with respect to their ability to compete on equal and fair terms.
1. Antitrust Law or Competition Law – when one competitor attempts to force others out of the
market or prevent others from entering the market, through tactics such as predatory pricing
or obtaining exclusive purchase rights to raw materials needed to make a competing product.
2. Trademark Infringement – when the maker of a product uses a name, logo, or other
identifying characteristics to deceive consumers into thinking that they are buying the
product of a competitor.
3. Misappropriation of Trade Secrets – when one competitor uses espionage, bribery, or
outright theft to obtain economically advantageous information in the possession of another.
4. Trade Libel – is the spreading of false information about the quality or characteristics of
competitor’s products.

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5. Tortious Interference – when one competitor convinces a party having a relationship with
another competitor to breach a contract with, or duty to the other competitor.
6. Anti-competitive practices – prevent or reduce competition in a market.
7. Dumping – Foreign countries often use dumping as a competitive threat, selling products at
prices lower than their normal value. This can lead to problems in domestic markets. It
becomes difficult for these markets to compete with the pricing set by foreign markets,
leading to local producers and the local economy to suffer a result.
8. Exclusive dealing – A retailer or wholesaler is obliged by contract to only purchase from the
contracted supplier.
9. Price fixing – companies collude to set prices, effectively dismantling the free market.
10. Refusal to deal – two companies agree not to use a certain vendor.
11. Dividing territories – an agreement by two (2) companies to stay out of each other’s way
and reduce competition in the agreed-upon territories.
12. Limit pricing – is set by a monopolist at a level intended to discourage entry into a market.
13. Tying – products that aren’t naturally related must be purchased together.
14. Resale price maintenance – resellers are not allowed to set prices independently.
15. Religious/minority group doctrine – business must apply tribute to a significant normally
religious part of the community in order to engage in trade with that community.

F. Unfair Communication
Here are some examples of unfair communication in business practices.
1. Matthias Rath is a vitamin entrepreneur who used to be a doctor and is considered to be the
most powerful of all “crackpots”. He recommends vitamin pills to cure even serious
ailments. In UK ads, he claimed that 90% of cancer patients die within several months of
starting chemo, arguing that corporations let them die for profit. Yet, he uses his lies to sell
an HIV/AIDS “miracle cure”, saying that HIV doesn’t cause AIDS and antiretroviral drugs
won’t work, leading to the spread of infections in South Africa.
2. Johnson & Johnson to pay $417m in cancer lawsuit - A Los Angeles jury ordered Johnson
& Johnson to pay a record $417 million to Echevarria, a hospitalized woman who claimed
in a lawsuit that the talc in the company's iconic baby powder causes ovarian cancer when
applied regularly for feminine hygiene.

G. Non-respect of Agreements – is a breach of contract. A breach of contract is a legal cause

of action in which a binding agreement or bargained for exchange is not honored by one or
more of the parties to the contract by non-performance or interference with the other party’s
performance.
H. Environmental Degradation – is the deterioration of the environment through depletion of
resources such as air, water, and soil; the destruction of ecosystems and the extinction of
wildlife.
I. Contractualization – or labor contractualization is the replacing of regular workers with
temporary workers who receive lower wages with no or fewer benefits. These temporary
workers are also known as sometimes called contractures, trainees, apprentices, helpers,
casuals, piece raters, agency-hired, and project employees among others. They do the work
of regular workers for a specified and limited period of time, usually less than six months.

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Models and Framework of Social Responsibility in the Practice of Sound Business

A. Models of Socially Responsible Business

Accessibility Partners Gift of Happiness Pedigree Whole Foods
Altered Seasons Google People Water Xerox
Ben & Jerry’s Headbands of Hope Rainbow Light
Burt’s Bees Juntos Shoes Starbucks Coffee
Children Inspire Design Kenneth Cole Target
Do Good Buy Us Krochet Kids The Body Shop
Fashion Project Method Toms Shoes
General Electric Out of Africa Twillory

B. Framework of Socially Responsible Businesses

1. Top 100 Socially Responsible Businesses
Reputation Institute (RI) has announced the company’s annual Global RepTrak® 100 rankings.
Based on over 170,000 ratings collected in the first quarter of 2017, the survey by the provider
of stakeholder measurement, membership, and management services is the largest corporate
reputation study of its kind. It includes comparative ratings, trends by demographic cuts, and
unique insights into which companies are best regarded by stakeholders as well as what drives
trust and supportive behaviors such as willingness to purchase a company’s products
recommends the brand, invests in or even work for the company.

The top 10 companies in RI’s 2017 Global RepTrak® 100 are

1. Rolex
2. LEGO Group
3. The Walt Disney Company
4. Canon
5. Google
6. Bosch
7. Sony
8. Intel
9. Rolls-Royce
10. Adidas

“The annual Global RepTrak® 100 spotlights the companies that truly understand what they
stand for and how to reinforce the emotional bond with their stakeholders across all the markets
they serve”, said Michele Tesoro-Tess, RI executive partner. “This year’s Top 10 companies
come from different sectors: reputation is a cross-industry asset and companies continuously
invest on it because their leadership finally recognized its impact on business performance.”

RI’s RepTrak® System measures the general public’s perception of the world’s top companies
on seven key rational dimensions of reputation: products and services, innovation, workplace,
governance, citizenship, leadership, and performance. An “Excellent” reputation is represented
by an overall RepTrak® Pulse score of 80 or higher. For the first time, the company with the
highest rating and the top spot (Rolex) falls into the “Excellent” range. A RepTrak® Pulse score

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of 70-79 is considered “Strong,” while 60-69 is “Average.” None of the companies in 2017
RepTrak® Top 100 scored below 64.

Regarding specific stakeholder expectations, respondents identified Rolex as the global leader
in products and services, and LEGO Group as best in governance, while, Google was perceived
as leading in 5 dimensions: innovation, workplace, citizenship, leadership, and performance.

Key trends by industry

In terms of trends, 2017 saw the rise of heritage luxury brands like Rolex and Rolls-Royce,
while consumer products took seven of the top ten spots in this year’s survey, with LEGO
Group jumping four spots to 2nd, and Adidas moving into the top 10.

In the tech sector, Intel returned to the top 10 (to 8th place) in 2017 after a one-year absence.
Meanwhile, Google (5th place) fell two spots, Microsoft fell out of the top 10 to 11th, and
Apple slipped 10 spots to 20th place with a drop of 1.7 points. Samsung posted the most notable
decline with its RepTrak® Pulse score dropping 4.0 points vs. 2016 and is now in 70th place
overall.

Among automakers, both BMW Group (12th place) and Daimler (27th place) both fell out the
top 10, while Toyota, Honda, Ford and GM all showed modest gains vs. 2016. Meanwhile,
Volkswagen, who continues to deal with the aftermath of its emissions scandal nonetheless
returned to the top 100 (in 100th place) and saw its RepTrak® Pulse score recover by 3.4 points
to 64.73 – one of the largest increases in 2017.

“For brands looking to benchmark how their reputation compares to industry peers, our Global
RepTrak® 100 is the place to start”, said Allen Bonde, RI chief marketing officer.

“Looking at top performers, it’s clear that offering high-quality products, standing behind them,
and meeting customer needs is foundational to delivering on the brand promise. But our data
also shows that companies with a strong sense of purpose who are committed to improving on
all dimensions of reputation – especially governance and citizenship – tend to be the most
highly regarded.

2. Google’s CSR Framework

Google’s stakeholders are diverse because of the company’s wide array of products. The
company’s diversification includes its original products, such as Google Search, as well as recent
products like Google Glass and Google Fiber Internet and cable television service. The firm’s
stakeholders come from different groups impacted through these varied businesses. To maintain
its leadership as an innovative technology firm, Google must address the interests of its
stakeholders through suitable corporate social responsibility (CSR) policies. The company’s
current CSR efforts are comprehensive and satisfactory, based on international standards and
expectations. Still, there is room to improve these CSR efforts to make Google a stronger
contender in the international arena.

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Google’s Stakeholder Groups

Google has many stakeholders, but they can be grouped based on shared interests. Many of the
company’s CSR programs are directed toward these stakeholder groups. Google considers the
following as the most significant stakeholders:

1. Users
2. Employees
3. Advertisers and other customers
4. Investors
5. Governments
6. Communities

The list above is arranged to indicate the priority or importance of the stakeholders based on
Google’s CSR efforts. These stakeholders affect the company by pushing for the satisfaction of
their interests. Google considers users as the most significant in terms of their effect on the firm.

A. Users: Google’s Top-Priority Stakeholders

Users are individuals and organizations that use Google’s products. In general, these
stakeholders do not necessarily pay the company. For example, users include people who use
Google’s search engine and Chrome. This stakeholder group is interested in the usefulness of the
company’s products. These stakeholders are important because their behaviors define the
company’s popularity. Google’s popularity corresponds to the firm’s business value.
In Google’s business philosophy, users are the top priority in its CSR efforts. The company’s
philosophy states: Focus on the user and all else will follow. Thus, users are the core
stakeholders in Google’s business. Every product is developed with the users’ needs in mind. In
this way, the firm’s CSR efforts effectively address the stakeholder group of users.

B. Employees
Employees are the second priority among Google’s stakeholders. Employees are interested in
proper compensation and a rewarding experience in working for the company. For example,
many workers want to work for Google because the company is perceived as one of the best
firms to work for. This stakeholder group is important because they define the company’s
capabilities, such as the capability to innovate rapidly.
Google’s CSR efforts address the interests of its employees as a major stakeholder group through
competitive compensation and a fun workplace design. The company’s compensation strategy
includes high salaries and various incentives and benefits, such as free meals and flexible
workflows. Google’s facilities are also fun workplaces where workers can exercise, play games
and enjoy sharing ideas with each other. Also, the company indirectly addresses the working
conditions of suppliers’ employees through the Google Supplier Code of Conduct, which covers
concerns on employment practices and occupational health and safety. Thus, Google’s CSR
efforts effectively satisfy the interests of employees as stakeholders in the business.

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C. Advertisers and Other Customers

Google’s success is based on the ability of the firm’s CSR efforts to satisfy the needs of
advertisers and other customers as a stakeholder group. Advertisers are the main source of the
company’s revenues. These stakeholders are interested in getting effective services, such as
effective online advertising campaigns. Advertisers and other customers are an important
stakeholder group because they directly determine Google’s financial performance.
Google’s CSR efforts address the interests of advertisers and customers based on the firm’s
popularity. As noted, the prioritization of the stakeholder group of users makes the company
popular. In turn, this popularity increases the firm’s market reach and effectiveness. Thus,
advertisers and other customers benefit more from the firm’s services. Google’s holistic CSR
efforts satisfy the interests of the stakeholder group of advertisers and other customers.

D. Investors
Since it went public in 2004, Google now considers investors as a major stakeholder group
influencing CSR activities. Investors are interested in ensuring that Google grows its profits.
Investors are important stakeholders because they determine the availability of capital that the
company uses in its business.
Google’s CSR efforts generally focus on providing useful products. While these efforts satisfy
stakeholders like users and advertisers or customers, they also satisfy Google’s investors. The
usefulness of these products makes them popular, widely used, and profitable. In addition,
Google’s research and development strategies can be considered as part of the firm’s holistic
approach to its corporate social responsibilities. These R&D strategies aim to provide useful
products that are profitable.

E. Governments
Governments are a major stakeholder group. They affect Google through regulations. The
company deals with many governments because its business is global. As stakeholders,
governments are interested in ensuring Google’s regulatory compliance. These stakeholders are
important because they can approve or prohibit Google’s business operations in their
jurisdictions.
Google’s holistic CSR approach involves an emphasis on following the law. The company’s
business philosophy states: You can make money without doing evil. To follow this philosophy,
the firm ensures that all of its business activities comply with regulatory requirements. Thus,
Google’s CSR policies satisfy the interests of governments as stakeholders.

F. Communities
Communities are also stakeholders in Google’s business. Communities are interested in direct or
indirect benefits that they get from the company. Theoretically, firms can benefit communities
through charity programs, philanthropy, and related activities. Communities are important
stakeholders because they can affect customers’ perception and response to Google’s products.
Google’s CSR efforts include charity programs through Google.org, which has already provided
more than $100 million in grants and investments. Google.org aims to address climate change,
global public health, and global poverty. In addition, to address the stakeholder group of
communities, Google also includes international environmental standards and ethics in its
Supplier Code of Conduct. These efforts also relate to the firm’s philosophy: You can make

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money without doing evil. Thus, the company’s CSR efforts have considerable effectiveness in
satisfying the interests of the stakeholder group of communities.

3. Total Corporate Social Responsibility Framework

Here is a model for evaluating an organization’s social performance. The model indicates that
total corporate social responsibility can be subdivided into four criteria economic, legal, ethical,
and discretionary responsibilities.

These responsibilities are ordered from bottom to top in the following illustration.

a. Economic responsibilities:
The first criterion of social responsibility is economic responsibility. The business institution is,
above all, the basic economic unit of society. Its responsibility is to produce goods and services
that a society wants and to maximize profit for its owners and shareholders. Economic
responsibilities, carried to the extreme, are called profit maximizing view; it was advocated by
Nobel economist Milton Friedman. This view argued that a company should be operated on a
profit-oriented basis, with its sole mission to increase its profits so long as stay within the rule of
the game.
b. Legal responsibilities
All modem societies lay down ground rules, laws and regulations that businesses are expected to
follow. A legal responsibility defines what society deems as important with respect to
appropriate corporate behavior. Businesses are expected to fulfill their economic goals within the
legal framework. Legal requirements are imposed by local councils, state and federal
governments and their regulating agencies. Organizations that knowingly break the law are poor
performers in this category. Intentionally manufacturing defective goods or billing a client for
work not done is illegal. Legal sanctions may include embarrassing public apologies or corporate
'confessions'.
c. Ethical responsibilities
Ethical responsibility includes behavior that is not necessarily codified into law and may not
serve the organization's direct economic interests. To be ethical, organization's decision makers
should act with equity, fairness, and impartiality, respect the rights of individuals and provide
different treatments of individual only when differences between them are relevant to the

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organization's goals and tasks. Unethical behavior occurs when decisions enable an individual or
organization to gain expense of society.

d. Discretionary responsibilities
Discretionary responsibility is purely voluntary and guided by an organization's desire to make
social contributions not mandated by economics, laws, or ethics. Discretionary activities include
generous philanthropic contributions that offer no payback to the organization and are not
expected. Discretionary responsibility is the highest criterion of soda' responsibility because it
goes beyond societal expectations to contribute to the community’s welfare.

Reference:
Jerusalem, V., Palencia M, & Palencia J. (2017). Business ethics and social responsibility:
concepts, principles, & practices of ethical standards. Manila, Philippines:
FASTBOOKS Educational Supply, Inc.
Orjalo, V. & Frias S. (2016). Business ethics and social responsibility: principles, policies,
programs, and practices. Quezon City, Philippines: The Phoenix Publishing House, Inc.
Cortez, F. (2016). Business ethics and social responsibility. Quezon City, Philippines: Vibal
Group, Inc.

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