•Would the model mean that Fannie Mae could be labeled an “honest” company? Why or why not?

In reference to the latest U.S. financial crisis, no. The company did not comply with the law. Fannie Mae was created to ensure more housing for Americans with less focus on profits and a desire to improve the quality of life of citizens after the great depression. As mentioned in the class text, politics in general change with time (Jennings, 2012). Historically Fannie Mae was a part of The Big Deal and was essential to grow the economy of the US for generations. There have been moments in history that the role of the company might place it as socially responsible (Frame, 2015). But past performance does not always guarantee that businesses are/have/will maintain/ing/ed the same level of social and ethical behavior. Organizations change leadership and with this their internal and external strategies. Let’s provide an answer to each of the questions in Entine and Jenning’s model below based on the facts stated in the text book (Jennings, 2012):

The character of Fannie Mae’s soul around the time of the 2008 US financial crisis:

•   Does the company comply with the law?

    -Accounting practices violated GAAP regulations

    -High risk investing not reported

•   Does the company have a sense of propriety?

     -Company was very profit oriented which put its goods at risk

•   How honestly do product claims match with reality?

    -Credit offerings were not adequate to clientele

     -Media image prior to unveiling mal-practice of the company was distorted and did not reflect its wrongdoings

•   How forthcoming is the company with information?

      -The company reported false high profits

      -The company was not fully cooperative in parts of the investigation

•   How does the company treat its employees?

     -Employees complains about mismanagements were not attended

•   How does the company handle third-party ethics issues?

   

      -The company co-participated with banks to allocate inadequate  mortgage credit

      -The company lobbied strongly providing or removing support to politicians to influence legislative activities that would affect their business

•   How charitable is the company?

            -N/A

•   How does the company react when faced with negative disclosures?

            -N/A

            Even though I did not provide an answer or source for the last two questions all of the other six questions show a negative answer. According to the model Fannie Mae lost its soul.

Works cited

            Frame, W. S., Fuster, A., Tracy, J., & Vickery, J. (2015). The rescue of Fannie Mae and freddie mac†. Journal Of Economic Perspectives, 29(2), 25-52. doi:10.1257/jep.29.2.25

            Jennings, M. (2012). Business ethics: case studies and selected readings. 7th ed. Mason, OH South-Western Cengage Learning.

ISBN: 9780538473538

•What is the difference between Entine and Jennings’ eight questions and traditional measures of social responsibility?

         Traditional measures of social responsibility are subjective and are open to interpretation on many factors (historical, socioeconomic, religious, cultural, and etcetera). As a symbol these measures (honesty, dignity, humility and etcetera) are essential for human kind. Still, Entine and Jennings’ eight questions do not question these measures, but are a foundation to evaluate in an objective fashion the behavior of organizations. The authors’ objective is to eliminate the influence of political issues. Companies, as individuals, need a deeper look to be described. These questions do not only focus on a virtue such as a feature of a product or a charity supported by a company to enhance its image, but it questions its relationship with the law, their possessions, the ways they display their products or services and their interactions with internal and external stakeholders (Jennings, 2012; Salam, 2009). I see these eight questions as a tool to be able to distinguish between individual behavior and organizational behavior. It is possible to create a social responsibility fingerprint for a company when information is available to respond to each of these questions accurately. Furthermore, the model also assists in questioning if, at a certain point, laws or other type of norms that affect the behavior of firms need to be adapted to what the communities might require.

         This model can also be a guide for organizations to understand their role in society and its successful application would mostly depend on the ethical profile of the employees (Jennings, 2012; Salam, 2009). At all levels of a company employees should be aware that they represent an entity and either their personal choices or their management directives might create ethical dilemmas. Even though traditional measures and the model are distinct concepts to evaluate individuals and organization they are interdependent. Companies create policies and their employees have an obligation to question their integrity and apply them correctly. Traditional measures and the model can assist balancing out the objective of business, which is to create quality products and profits and the objective of most societies, which is to exist in harmony. These eight questions and the traditional measures of social responsibility must reflect on the mission, values and credo of individuals and organizations not only on paper, but in action and strategy.

Works cited

            Jennings, M. (2012). Business ethics: case studies and selected readings. 7th ed. Mason, OH South-Western Cengage Learning.

ISBN: 9780538473538

            Salam, M. (2009). Corporate social responsibility in purchasing and supply chain. Journal Of Business Ethics, 85355-370. doi:10.1007/s10551-008-9733-0

•Contrast the Entine and Jennings’ views with those of Friedman and Freeman, found within your text.

Based on the three readings in chapter 3A of the textbook, each author focuses major social responsibilities on different actors (Jennings, 2012). In my opinion, Friedman places these on employees since he claims that organizations are “artificial persons”; therefore, “artificial responsibilities” are created and get in the way of regulation and direct responsibility. I support part of his argument since individuals ultimately decide what path a business will take based on their decisions. If these decisions benefit companies, but not the communities where they are imbedded, an artificial person or a group of artificial individuals will not be able to pay their responsibility. While they can claim success in the business, they should also claim responsibility for their actions in representation of a business. The part of this argument I don’t agree with is that focusing on the employees. This tenet is ultimately placing the stakeholder in a position of greater power and control in which stakeholders hold less accountability for the consequences of their company’s actions.

            In the case of the work of Freeman, stakeholders are recognized as a more integral part of the ethical repercussions of business activities. They are not only an entity that employees want to only deliver great results to (Jennings, 2012). What I mean by this is that Freeman recognizes the influence of stakeholders on employee relationships and behaviors and includes a bigger picture of their influence on the ethical profile of organizations to a greater extent. Ultimately, business are mostly successful via contributions of all shareholders (including employees). In my understanding, he views companies a teams, in which leadership has the greater influence, but actions are collective. Therefore, their social responsibility is shared. Still, this theory recognizes that the influence of business in society is such that they enable a lot of factors that lead to the functioning of communities via employment, products and other forms of social and economic activity. The inclusion of all actors in business is very important. Still, Freeman refers to competition and government as non-shareholders. This is a correct assumption, I concur, but limited (recognized by the author himself). These two factors are essential ingredients of the strategic planning of companies and affect their day-to-day operations.

            The work of Entine and Jennings gives a “soul” to an organization. In this case, the concept refers to the interactions and perceptions of these interactions in society. Individuals have an opinion, a feeling, or a reaction to a business (Jennings, 2012). Good or bad, realistic or unrealistic, voluntarily or involuntarily and convenient or inconvenient; organizations work to reach out and interact with people in many different ways (direct transactions, environmentally, through media, marketing and etcetera). This thinking brings in the individual role of all stakeholders and their collective effect in society and gives an organization the concept of a real entity that as such has to manage its workers and its image via corporate social responsibility. The authors also recognize that there are limits to the ethical correctness of organization. For example, Exxon was mentioned in this manuscript and compared to other companies that can claim “green marketing strategies” without being viewed as a lack of honesty (or sort of sarcastic to a point). Such companies (those in fossil energy sources) recognize that is a challenge not to fall in contradictions when claiming some sort of environmental benefit to their products. Is better for them to operate their image strategies focusing on other aspects of their field. Entine and Jenning’s approach integrates the role of stakeholders and society in business and how the organizations are seen as “conscious entities”.

            I think it is interesting to see how each manuscript brings in important points on how individuals and corporations ethically interact. This chapter has raised a series of questions for me. If the concept of businesses has evolved to the point that as humans we can conceptualize them as having a “soul” or a consciousness per say, what do individuals and governments need to do modernize their interaction with organizations to that same level? Is that even happening or has that happened? More to think about as part of this class.

Works cited

            Jennings, M. (2012). Business ethics: case studies and selected readings. 7th ed. Mason, OH South-Western Cengage Learning.

ISBN: 9780538473538