As it affects the living of staff very much when delay in pay-cheques; This will also affect their consuming power so as to weaken the economy. Therefore, the corporate might indirectly receive the negative result because of the persistence of delayed wages. .
Legal Responsibility.
Legal responsibility defines the boundaries that businesses are expected to fulfill their economic goals within the legal frame work. For example, corporate should follow the tax system; Intentionally manufacturing defective products and fraud are illegal.
Ethical Responsibility.
Ethical responsibility refers to behaviours that are not stated into law and these behaviours may not direct benefit to the corporation. Quality control is an good example: manufacturer should focus on its quality control in order to provide high standard products; Moreover, pay-rise and double paid for staff are not codified into law. However, when corporate is positive in net profit, it is a good idea to make the staff delighted.
Discretionary Responsibility.
Discretionary responsibility refers to behaviours that go beyond the economics, law and ethics in order to make social contribution. This decision is totally up to the corporate and its management. Like food bank and donation to charity are good examples. .
Executing these social responsibilities has short and long term effects: In short term, it would lead to a decrease in cash flow and an increase in production cost. Nevertheless, it will definitely benefit the organization in terms of long term effects.
Ethical decisions made by management are also known as Managerial ethics. Four factors are concerned: Utilitarian, Right view, Fairness, Impartiality.
These four types of responsibility are related to organizations responding to social demands as follows:.
Responsibilities and social demand.
Economic responsibility is concerned as whether one project is profitable (Positive Net Present Value).
