Question

Which one of the following is false as concerns the merits of why acting in a socially responsible manner is "good business"?

a.To the extent that a company's socially responsible behavior wins applause from consumers and fortifies its reputation, a company may win additional patronage.
b.Companies with good reputations for contributing time and money to bettering society are better able to attract and retain employees compared to companies with tarnished reputations.
c.There is a high correlation between socially responsible behavior that addresses social issues and a firm's competitive advantage and financial performance.
d.Operating in a socially responsible manner protects the company from consumer, environmental, and human rights activist groups that are quick to criticize businesses whose behavior they consider to be out of line.

Answer 1

The false statement is that there is a high correlation between socially responsible behavior and a firm's competitive advantage and financial performance; while it can help with reputation and customer retention, the direct financial impact isn't always clear-cut.

Step-by-step explanation:

The question asks which statement is false regarding why acting in a socially responsible manner is considered good for business. The statement that is false is option c: "There is a high correlation between socially responsible behavior that addresses social issues and a firm's competitive advantage and financial performance." While there is a general belief that socially responsible behavior can enhance a company's reputation and endear it to consumers and employees, directly correlating it to a firm's competitive advantage and financial performance is overly simplistic and not always supported by evidence.

Acting in a socially responsible way can indeed foster repeat customers and help build a company's reputation, which are crucial for creating trust among consumers. For instance, a grocery store known for its ethical practices may charge higher prices and retain customers better than a temporary market stall, due to the trust and reputation it has established. Nonetheless, the direct relationship between social responsibility and financial performance can vary greatly depending on numerous factors, including industry, market conditions, and the specific actions taken.