In balancing its responsibilities toward all stakeholders when making legal, economic, ethical and social decisions, ABC Inc. takes an approach to organirational activities called
A corporate social responsibility
B community involvement
C fiduciary responsibility
D corporate ethics
The correct answer and explanation is :
Correct Answer: A) Corporate Social Responsibility
Explanation (300 words):
ABC Inc.’s approach to balancing legal, economic, ethical, and social considerations in its decision-making is best described as Corporate Social Responsibility (CSR).
Corporate Social Responsibility refers to a company’s commitment to operate in an economically, socially, and environmentally sustainable manner while recognizing the interests of its various stakeholders, including shareholders, employees, customers, communities, and the environment. CSR goes beyond mere compliance with the law and profit-making to include voluntary actions that contribute to societal goals.
CSR is typically divided into four main categories:
- Legal Responsibility – Operating within the boundaries of the law.
- Economic Responsibility – Being profitable to sustain business operations and provide returns to shareholders.
- Ethical Responsibility – Doing what is right, just, and fair beyond legal requirements.
- Philanthropic Responsibility – Contributing resources to improve the quality of life in the community and support social causes.
ABC Inc.’s balanced approach shows a commitment to these four pillars. For instance, while ensuring profitability (economic), the company also adheres to regulations (legal), maintains fair labor practices (ethical), and may engage in community programs (social/philanthropic).
Other options do not fully encompass this broad, balanced approach:
- B) Community Involvement is just one aspect of CSR and doesn’t include legal or economic dimensions.
- C) Fiduciary Responsibility pertains specifically to acting in the best financial interest of shareholders, often limited to legal and economic concerns.
- D) Corporate Ethics focuses on moral principles guiding behavior but doesn’t necessarily include social or environmental responsibilities.
Therefore, Corporate Social Responsibility (CSR) is the most accurate and comprehensive term for ABC Inc.’s multifaceted approach to balancing stakeholder needs and societal expectations.
