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CHAPTER 10 • BUSINESS ETHICS/SOCIAL RESPONSIBILITY/ENVIRONMENTAL SUSTAINABILITY 315

a supervisor and a subordinate. Only 4 percent of firms strictly prohibited such relation-
ships, but 39 percent of firms had policies that required individuals to inform their supervi-
sors whenever a romantic relationship begins with a coworker. Only 24 percent of firms
required the two persons to be in different departments.
In Europe, romantic relationships at work are largely viewed as private matters and
most firms have no policies on the practice. However, European firms are increasingly
adopting explicit, American-style sexual harassment laws. The U.S. military strictly bans
officers from dating or having sexual relationships with enlistees. At the World Bank, sex-
ual relations between a supervisor and an employee are considered “a de facto conflict of
interest which must be resolved to avoid favoritism.” World Bank president Paul Wolfowitz
recently was forced to resign due to a relationship he had with a bank staff person.
The United Nations (UN) in mid-2009 was struggling with its own sexual-harassment
complaints as many women employees say the organization’s current system for handling
complaints is arbitrary, unfair, and mired in bureaucracy. Sexual harassment cases at the
UN can take years to adjudicate, and accusers have no access to investigative reports. The
UN plans to “soon” make changes to its internal justice system for handling harassment
complaints; the UN aspires to protect human rights around the world.

Social Responsibility
Some strategists agree with Ralph Nader, who proclaims that organizations have tremen-
dous social obligations. Nader points out, for example, that Exxon/Mobil has more assets
than most countries, and because of this such firms have an obligation to help society cure
its many ills. Other people, however, agree with the economist Milton Friedman, who
asserts that organizations have no obligation to do any more for society than is legally
required. Friedman may contend that it is irresponsible for a firm to give monies to charity.
Do you agree more with Nader or Friedman? Surely we can all agree that the first
social responsibility of any business must be to make enough profit to cover the costs of
the future because if this is not achieved, no other social responsibility can be met. Indeed,
no social need can be met by the firm if the firm fails.
Strategists should examine social problems in terms of potential costs and benefits to
the firm, and focus on social issues that could benefit the firm most. For example, should a
firm avoid laying off employees so as to protect the employees’ livelihood, when that deci-
sion may force the firm to liquidate?

Social Policy
The term social policy embraces managerial philosophy and thinking at the highest level of
the firm, which is why the topic is covered in this textbook. Social policy concerns what
responsibilities the firm has to employees, consumers, environmentalists, minorities,
communities, shareholders, and other groups. After decades of debate, many firms still
struggle to determine appropriate social policies.
The impact of society on business and vice versa is becoming more pronounced each
year. Corporate social policy should be designed and articulated during strategy formula-
tion, set and administered during strategy implementation, and reaffirmed or changed
during strategy evaluation. 7
In 2009, the most admired companies for social responsibility according to Fortune
magazine were as follows:
1. Anheuser-Busch
2. Marriott International
3. Integrys Energy Group
4. Walt Disney
5. Herman Miller
6. Edison
7. Starbucks
8. Steelcase