Question

Which of the following actions is consistent with social responsibility and is not necessarily inconsistent with stockholder wealth maximization? Group of answer choices Selling a smokestack "scrubber" required by the firm's air pollution policy that is also mandated by law. Dumping effluent discharge into a river, where it ruins the drinking water of the community around the plant. The installation of machinery to treat the effluents is very expensive. Investing in a smokestack filter to reduce sulphur-dioxide emissions to decrease the tax being levied on the firm by the state for pollution it produces each year. Making a large corporate donation to the local community for funding a recreation complex that can be used by the firm's employees only. Consider taking over the competitor's business in an attempt to establish monopoly for its product in the market.

Answer 1

The correct answer is Each of the above actions is consistent with social responsibility and none are necessarily inconsistent with stockholder wealth maximization.

Social responsibility is when companies voluntarily adopt attitudes, behaviors and actions that promote the well-being of their internal and external audiences. It is a voluntary practice as it should not be confused exclusively by compulsory actions imposed by the government or by any external incentives (such as taxes, for example). The concept, in this view, involves the benefit of the community, whether it is related to the internal public (employees, shareholders, etc.) or external actors (community, partners, environment, etc.).

Over time, this conception has given rise to some variations or nuances. Thus, new concepts - often complementary, distinct or redundant - are used to define social responsibility, including Corporate Social Responsibility, Corporate Social Responsibility and Environmental Social Responsibility.