Which of the following statements is true about the stakeholder theory of corporate social responsibility?
a. It states that companies should only focus on increasing shareholder wealth.
b. It states that social responsibility is best carried out by government agencies.
c. It states that a company owes a duty to be a good citizen in its community.
d. It states that employees and not the top management should be involved in corporate social responsibility.
ANSWER: c
Stakeholder theory says that social responsibility is paying attention to the interest of every affected stakeholder in every aspect of a firm's operation. The local community, through its government, grants the firm the right to build facilities. The firm is expected to be a good citizen by paying a fair wage, not polluting the environment, and so forth.
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