Entry #2: Jennings and Entine 8 Questions vs. Traditional Measures of Social Responsibility

Jennings and Entine, (1998) note that there are eight questions that should be answered about a company to determine the character of its soul.  A comparison between these eight questions and the traditional measures of social responsibility shows a notable difference.  The eight questions are designed for a business to run a broad assessment of whether they operate in an honest and ethical manner; whereas, the traditional measures of social responsibility are focused on the individual and their honesty and integrity as an individual. The standard of measurement for the Jennings and Entine, (1998) eight questions on whether a company is socially responsible is based on service to its shareholders which does not consider the traditional measures of social responsibility.  The traditional measures require a morality component that the eight questions do not include.  Social responsibility is really an act of individuals and their choices to “do good things”.  As Friedman (1970) wrote, a company has a social responsibility to increase profits.  A company has primary responsibility to its shareholders, with a secondary focus to its customers and its employees.

Review the eight questions yourself and compare them to what might be considered traditional measures of social responsibility.  Here are the eight questions:

1.      Does the company comply with the law?

Ethical firms are required to conform by the law; therefore, each decision made should be aligned to the legal framework guiding the industry.  Therefore, complying with the law is an indication of a firm being ethical.  However, some firms do not comply with the law. Acting against the law is unethical and certainly not socially responsible; malpractices and acceptance of bribes are thus unethical (Gruble, 2011).

2.      Does the company have a sense of propriety? 

Ethics require firms to have a sense of propriety. Ethical firms need to be concerned about the welfare of the society and should not use their power for greedy purposes. Propriety differs from law compliance. Propriety revolves around giving back to the community.  Most firms do not have a genuine sense of propriety but rather a desire to garner goodwill within the community.

3.      How honestly do product claims match with reality? 

Ethically, firms are required to be honest about products; however, due to greediness and selfishness of the shareholders, many product claims do not meet the reality. Firms give false information about the composition of raw materials used and sometimes they may offer faulty products to consumers in efforts to earn revenue unethically.

4.      How forthcoming is the company with information? 

Most firms do not disclose much information to the public. The information provided is vague and incomplete, and thus, it cannot be used as a reliable source of information. They offer information which suites their interests and are not honest to the public on sensitive information.

5.      How does the company treat its employees?

Most employees are treated fairly but many are not. Some are offered meager wages, overworked, and work in unhealthy working conditions. For instance, if a firm hires foreign nationals and there is huge wage difference between the wages of the locals and the wages of the foreign nationals, even when employees are performing similar tasks, then that is a form of discrimination which is common in developing economies where corruption is widespread (Fernando, 2009).

6.      How does the company handle third-party ethics issues?

Third parties are often treated unethically due to some firms being focused on the firm’s own interests. For instance, their wages do not conform to the international standards or the quality of most products is compromised while the suppliers are paid meager pay for their supplies or sometimes, they also alter their financial statements in order to avoid paying taxes.

7.      How charitable is the company?

Although there are many firms that are unethical, many firms are genuinely charitable. Those that are not genuinely charitable pretend to be charitable in efforts to conceal their dishonest practices. Their malpractices revolve around non-payment of state taxes, overworking employees, and offering products at unusual high prices, among others.

8.      How does the company react when faced with negative disclosures?

Upon being faced with the negative disclosures, many companies end up refuting the claims rather than accepting responsibility. However, there are ethical firms that respond appropriately, as was revealed by Toyota when they realized they had manufactured faulty vehicles.

References

Fernando, A. C. (2009). Business ethics: An Indian perspective. Panchsheel Park, New Delhi: Pearson Education.

Friedman, M. (1970, September). The Social responsibility of business is to increase its profits. The New York Times Magazine. pp. 32-33, 122-124.

Gruble, C. (2011). Defining business ethics. Business Ethics Review. Retrieved from http://businessethicsreview.wordpress.com/2011/06/21/defining-business-ethics/

Jennings, M., & Entine, J. (1998). Business with a soul: A Reexamination of what counts in business ethics. Hamline Journal Of Public Law & Policy20(1), 1-88.

James E. Burroughs, Jr., MBA, Northcentral University, (480) 748-9534.

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