Academic journal article International Journal of Business and Society

Socially Responsible Investing: Attitudes and Behaviors of Mid Level Managers

Academic journal article International Journal of Business and Society

Socially Responsible Investing: Attitudes and Behaviors of Mid Level Managers

Article excerpt

ABSTRACT

The expectations of society have grown exponentially over the past thirty years regarding corporate management responsibility. With over $2 trillion invested in socially responsible investments (SRI) the market for these types of investments is growing and attitudes of the public and management are changing throughout the world. This study surveyed a cluster of middle to upper level managers working in surrounding areas in Southeastern United States of America. These managers believed that ethical behavior was not confined to the top tier of the company and individuals were responsible for their own actions. The study attempted to connect the relationship of personal attitudes and potential investment in SRI's. The survey also showed that the tolerance for reduction in profitability was small for investment in more ethical behavior and more socially responsible firms. The study also showed that these managers believed that good moral management leads to ethical decisions which would make the company more attractive to SRI investors.

Keywords: Corporate Governance, Corporate Responsibility, Socially Responsible Investments (SRI), Social Investing, Management Responsibility, Ethical Behavior

I. INTRODUCTION

The perspective that corporate management is responsible for the social impact of its activities, as well as, for its economic and financial results, is well entrenched. However, the history of the relationship between corporations and society has a long, complex and frustrating history. Notwithstanding this history, society has increasingly come to expect, and to demand, that corporations manage their assets in a socially responsible manner. These expectations have grown exponentially over the past three decades because stakeholders experience the results of corporate behavior; influence the standards by which that behavior is judged; and evaluate how well companies and managers perform according to those standards (Lamb, 1994; Wood and Jones, 1995). The public and private sectors want to know whether specific social actions are adequate and acceptable.

Although, society has for centuries expected organizations to recognize the rights of individuals and of other organizations, the primary focus was on stockholders and profit. Fifty years ago, properly responding to economic market forces were essentially all companies had to do to be successful. This is definitely not so in the current global business environment. In today's society there are non-market forces, which exert powerful influences on every aspect of business operations to which managers respond. By responding in a legitimate and timely manner to societal expectations, businesses accrue more credibility in the debate about, and reaction to, the premise that a healthy society is impossible without healthy institutions.

A greater percentage of the population now owns stock in corporations - either as individuals or as institutional investors. The demographics of the massive Baby Boom Generation reflect a population which is interested in both the financial and social effects of its choices. Many of these constituents have integrated personal values and social, political and/or environmental concerns into their investment decisions. These recent societal trends have sparked a dramatic increase in the steady rise and growing influence of socially responsible investment, where financial stakeholders make investments according to social, political and/or environmental values. This phenomenon signals a paradigm shift in the corporate/stakeholder relationship. In fact, a recent study (Greider, 2003) stated that socially responsible investing represents the bow wave for deep change in societal awareness. The most successful businesses will be those that are able to maintain sustainable competitive advantage in a global environment increasingly focused on social and environmental concerns.

The relationship of social investments and corporate awareness of social responsibility is shown in Figure 1. …

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