Question

The president at Protector's Insurance takes pride in the fact that his organization strives to behave legally and ethically. The company advocates an approach that tries to balance the interests of different stakeholders in relation to the claims of other stakeholders. What approach to social responsibility is the organization implementing?

Answer 1

Protector's Insurance is implementing stakeholder theory, valuing the interests of all stakeholders over just maximizing shareholder wealth. This ethical approach is reflective of OSHA standards, pension guarantees, and historical policies like the 'Square Deal' emphasizing balanced corporate social responsibility.

Step-by-step explanation:

The approach to social responsibility that the Protector's Insurance company is implementing is the stakeholder theory. This theory suggests that a corporation should balance the interests of various stakeholders, not just focus on maximizing shareholder wealth. Stakeholders include anyone with a 'stake' in the firm, such as shareholders, employees, customers, and the community at large. Unlike shareholder primacy, which holds the wealth of shareholders as the principal obligation, stakeholder theory embodies a broader perspective on corporate responsibility.

Corporations in the United States operate within a legal and ethical framework that often seeks to balance individual civil liberties with the needs of the community. Initiatives like the Occupational Safety and Health Administration (OSHA) standards and the Pension Benefit Guarantee Corporation exemplify the efforts made to protect stakeholders' interests. Moreover, the notion of balancing the interests of diverse groups is a contemporary interpretation of corporate social responsibility that aligns with historical concepts such as President Theodore Roosevelt's 'Square Deal', which regarded the federal government as a steward of the public's interests.