Entine and Jennings vs Friedman and Freeman

Social responsibility is another level of ethics showing responsibility of the organization to its community. According to the Business Dictionary, social responsibility is “the obligation of an organization’s management towards the welfare and interests of the society in which it operates” (2015,para.1).What does it mean that the business has the responsibility? Looking at Entine and Jennings point of view in contrast to Friedman and Freeman perspective reveals some range of perception of social responsibility.

Friedman argues that a business have no responsibilities. “Only people can have responsibilities. A corporation is an artificial person and in this sense many have artificial responsibilities, but “business” as a whole cannot be said to have responsibilities” (Jennings, 2012, p.91). He also believes that the only social responsibility a business has is to be connected in activities that will increase profits as long as it stays free of deception and fraud (Jennings, p.95). Freeman also believes that social responsibility is not in the business.  Freeman also believes that the social responsibility cannot be linked to business. He is known for a Stakeholder Theory. His approach is toward organizational management. He argues that individual interest rest with the manager and stakeholder. Business relationship may be better understood if managerial capitalism is seen as managers having a fiduciary duty to stakeholders (Jennings, 2012, p.96). According to him stakeholders are those individuals that have a claim in the firm.

On the other hand, Entine and Jennings concept is different than Friedman and Freeman concept of social responsibility. Entine and Jennings argue that business ethics is more complicated than breeziness of social responsibility.  They believe that no company is perfect and just because Brand Name Company took a stand of being responsible does not mean that employee, clients, and stakeholders can trust company without examining company’s day to day operations. Moreover, they state that companies soul is more complicated and complex than those of the individual. They believe in order to examine corporate social responsibility (CSR) the company’s soul needs to be determined. In order to achieve that they used eight question approach (Jennings, 2012. p.104).

                                                                    References

Business Dictionary. (2015). Social responsibility. Retrieved on March 9, 2015 from http://www.businessdictionary.com/definition/social-responsibility.html

Jennings, M. (2012). Business ethics: Case studies and selected readings. 7th ed. Mason, OH South-Western Cengage Learning.

Entine and Jennings Eight Questions vs. Traditional Measures of Social Responsibility

The difference between Entine and Jennings eight questions with the traditional measures of social responsibility is in the application. Entine and Jennings eight questions rely on organization and corporation, where traditional measure of social responsibility relies on individuals rather than the organization. Traditional measures of social responsibility refer to ethical behavior of individuals. Entine and Jennings are considering organization to be a legal person who will do business globally and locally.

Traditional measures of social responsibility approach ethical conducts for individual perspective, unlike Entine and Jennings eight questions. For example, traditional measures of social responsibility replicate that individual have commitment to community including social, ecological or cultural, which is driven by individual’s moral principles and ethics. Enitne and Jennings support the theory that the person carries his/her developed behavior to the workplace, both positive and negative. Also, if an individual is ethical he/she will have the same behavior both personal and on work. Therefore, manager’s decision process can be impaired by his/her obtain behavior. Moreover, if an individual develop good behavior early in life than a person will carry out that behavior to other places.

Entine and Jennings believe that the company should treat their employees fairly. In turn, they will have the opportunity to built their reputation and name and avoid potential lawsuits. Also, they suggest that companies should be involved with charity and help the community.

Furthermore, Entine and Jennings argue that every organization should be compliant with the law and should promote ethical practice. They will have an impact on community and society if they uphold integrity and honesty. Also, they should have their financials publicly in order to avoid stakeholders’ speculations. These eight questions address every characteristic of the organization if the company is complying with the law, fair with employees, charitable, honest and how does it work under pressure.  Regardless of the answers, if these questions are answered truthfully, it will provide the true picture of a company with regard to its social responsibility. Also, it will allow the company with tools for growth and development. Entine and Jennings made those questions in order for the organization to look at the aspects that they never looked before. 

Fannie Mae

Fannie Mae was created in 1938 during Roosevelt administration to increase affordable housing and to draw investment toward the housing market (Jennings, 2012, p.121). It was initially federal funded, but it was redirected to shareholder ownership in order to obtain capital from the private market. Fannie Mae was one of the most ethical organizations in the United States. Today, according to Fannie Mae website,  “Fannie Mae is supporting today's economic recovery and helping to build a sustainable housing finance system. We exist to provide reliable, large-scale access to affordable mortgage credit in  all communities across the country at all times so people can buy, refinance, or rent homes” (Fannie Mae, 2015,para.1).

Based on my reading, I cannot consider Fannie Mae honest company even thought it was recognized as a good corporate citizen because there were undetected issues that went on for nearly a decade (Jennings, 2012, p.123). Although, they achieved double digit growth in earnings, portfolio grew five times, total profit 24 billion; they used a questionable discretion in determining the accounting treatment of buying and selling mortgage assets.  By doing that it gave executives a way to smooth earning grow and gave them generous pay.

Fannie Mae was only looking to make a profit without thinking about the impact they may have on the community with faulty mortgages. They knew that people never had a mortgage before; still they gave them mortgage. Honest company would not allow its customers to max out and would go the extra mile to help customers. Most of those borrowers did not know what they are signing. Risky borrowers are very easy target. Fannie Mae let the stakeholders down by not practicing ethical behavior.  Moreover, those in charge were not held accountable for the devastation that they caused. I could agree that Government policy makers failed to see potential risk with the financing, but the manner in which the industry leaders prevented their liability is hard to overlook. They played system and won, and they ones that stayed behind were American honest people with good credit scores.

                                                            References

Fannie Mae. (2015). Who is Fannie Mae today? Retrieved March 10, 2015 from http://www.fanniemae.com/portal/about-us/company-overview/about-fm.html

Jennings, M. (2012). Business ethics: Case studies and selected readings. 7th ed. Mason, OH South-Western Cengage Learning.