Page 104 - Foundations of Marketing

The Marketing Environment, Social Responsibility, and Ethics | Chapter 3 71

Figure 3.2 The Pyramid of Corporate Social Responsibility

RESPONSIBILITIES

Philanthropic
Be a good
corporate citizen
• Contribute resources to the
community; improve quality of life
Ethical
Be ethical
• Obligation to do what is right, just, and fair
• Avoid harm
Legal
Obey the law
• Law is society's codification of right and wrong
• Play by the rules of the game
Economic
Be profitable
• The foundation upon which all others rest

Source: From Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of
Organizational Stakeholders,” adaptation of Figure 3, p. 42. Reprinted from Business Horizons, July/August 1991, by the
Foundation for the School of Business at Indiana University. Reprinted with permission.

allow them to put smaller firms out of business. Consequently, small companies and even
whole communities may resist the efforts of firms such as Walmart, Home Depot, and Best
Buy to open stores in their vicinity. These firms can operate at such low costs that small, local
firms often cannot compete. Such issues create concerns about social responsibility for orga-
nizations, communities, and consumers.

Legal Dimension
Marketers are also expected to obey laws and regulations. The efforts of elected representatives and
special-interest groups to promote responsible corporate behavior have resulted in laws and regula-
tions designed to keep U.S. companies’ actions within the range of acceptable conduct. Although
most of the cases in the news deal with serious misconduct, not all legal cases are a violation of law.
Sometimes, they are an attempt to interpret the law. Laws can be ambiguous, and new situations
arise that create a need for courts to interpret whether the situation should be allowed or regulated.
For instance, Internet tracking and privacy issues have caused lawmakers to consider whether to
develop legislation limiting the types of information marketers can gather over the Internet.
When marketers engage in deceptive practices to advance their own interests over those of oth-
ers, charges of fraud may result. In general, fraud is any purposeful communication that deceives,
manipulates, or conceals facts in order to create a false impression. It is considered a crime, and
convictions may result in fines, imprisonment, or both. In one global business study, nearly one-
third of organizations who were victims of fraud experienced losses of more than $ 500,000 , with
one-fourth facing losses of more than $ 1 million. While asset misappropriation was the most
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common type of fraud cited, financial statement fraud resulted in the highest losses.
When customers, interest groups, or businesses become outraged over what they perceive
as irresponsibility on the part of a marketing organization, they may urge their legislators to

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