September 30, 2018

MANA201
CH4

Ethics, social responsibility and sustainability

Ethics: sets standards of good or bad, right or wrong in one’s conduct.

Alternative views of ethics

1. Utilitarian view: Implications of the consequences; greatest good to the greatest number
of people, but not to all. Based on philosopher john Stuart Mill. E.g. cut 30% of
populations to save the business. (good to the company and the clients but not to the
people who are laid off)

How do you judge what is best for most people? How can we predict future outcomes?

2. Individualism view: society would be better if everyone maximizes their own self-interest
for the long and short term—supposed to promote honesty and integrity. Could
encourage greed. As soon as certain people stop self-regulating, everything collapses.

Assumption of self regulation is a big leap. May lead to greed in business.

3. Moral rights view: human rights are central to this view; employees are always protected
in rights to privacy, due process, free speech, free consent, health and safety, and freedom
of conscience. Problem: if the freedom some endangers the privacy of one, then it is not
applicable. E.g. google refusing to crack info of shooter in a shootout dur to privacy
issues.

Definition of Human Rights continuously expanding. What if privacy of one leads

to loss of safety of others?

4. The Justice view: Treat people impartially and fairly, according to legal rules and
standards. Evaluates the ethical aspects of any decision on the basis of whether it is
“equitable” for everyone affected.

Justice issues in organizations are often addressed on four dimensions—procedural,

distributive, interactional, and commutative. But which one is most important?
1. Procedural justice involves the degree to which policies and rules are fairly applied to
all individuals. For example, does a sexual harassment charge levied against a senior
executive receive the same full hearing as one made against a first-level supervisor?
 2. Distributive justice
involves the degree to which outcomes are allocated fairly among people and without respect
to individual characteristics based on ethnicity, race, gender, age, or other particularistic
criteria. For example, are women and minorities treated fairly when pay raises and
promotions are made? Do universities allocate a proportionate share of athletic scholarships
to males and females?
3. Interactional justice involves the degree to which people treat one another with dignity
and respect. For example, does a bank loan officer take the time to fully explain to an
applicant why he or she was turned down for a loan?
4. Commutative justice
focuses on the fairness of exchanges or transactions. Things are fair if all parties enter freely,
have access to relevant information, and obtain some benefit.
Does a bank loan officer make it clear, for example, that a applicant may have difficulty
repaying the loan if interest rates increase and the applicant’s in-come does not?

Cultural issues in Ethical behaviour

- Cultural relativism: Ethical behaviour is always determined by cultural context

- Cultural universalism: behaviour unacceptable in one’s home environment should not be
acceptable anywhere else. Considered by some to be ethical imperialism.

How international businesses can respect core or universal values

1. Respect for human dignity:

Create a culture that values employees, customers, and suppliers
Maintain a safe workplace
Produce safe products and services

2. Respect for basic rights:

Protect rights of employees, customers, and communities
Anything that threatens safety, health, education, or living standards
 3. Be good citizens:
Support social institutions, including economic and educational systems
Work with local government and institutions to protect the environment

Ethics in the workplace

Ethical dilemma: Situation that offers potential benefit or gain and that is also unethical. Choices,
although having a personal or organizational benefit. When there is no clear consensus on what
is right vs what is wrong.

1. Discrimination: denying promotion or appointment to a job candidate because of the

candidate’s race, religion, gender, age or any other non-job-relevant criterion.
2. Sexual harassment: making a co-worker uncomfortable because of inappropriate
comments or actions regarding sexuality; requesting sexual favours in return for
favourable job treatment.
3. Conflict of interest: taking a bribe or kickback or extraordinary gift in return for
deciding in favour to the gift giver.
4. Customer confidence: giving another party privileged information regarding the
activities of a customer
5. Organizational resources: using official stationery or a company official email
account to communicate personal opinions or make requests from community
organizations.

Corporate social responsibility: Obligates organizations to act in ways that serve both own
interests and the interests of society at large.

- Stakeholders: those persons, groups, and other organizations directly affected by the
behaviour of the organization and holding a stake in its performances.
Employees
Customers
Suppliers
Owners
Competitors
Regulators
Interest groups

Perspectives on social responsibility:

1. Classical view: Management’s only responsibility is to maximize profits. The

principal obligation of management should always be to owners and
shareholders. Supported by Milton Friedman.
2. Socio-economic view: management of any organization must be concerned
with the broader social welfare and not just with corporate profits. Supported
by Paul Samuelson.
Strategies for pursuing social responsibility

- Obstructionist strategy: Meets only economic responsibilities. Avoids social

responsibility.

- Defensive strategy: seeks protection by doing the minimum legally required

- Accommodative strategy: accepts social responsibility and tries to satisfy economic, legal
and ethical criteria. E.g. an oil company might engage in taking the proper steps in case
of an oil spill but might still take a lot of time to do so.

- Proactive strategy: meets all the criteria of social responsibility, including discretionary
performance. Corporate behaviour at this level will take preventive action to avoid social
impacts from company activities.

Sustainability
- Development that meets the needs of the present without compromising the ability of
future generations to meet their own needs.

Focuses on
- Social rights
- Environmental protection
- Economic development

Benefits of sustainability

1. Cost reduction: provides a mechanism to reduce costs by focusing attention on efficiency.

Reducing waste produced, increasing recycling, or host of other strategies. E.g. Procter &
Gamble “Waste-out” Program saved over 500M$ and eliminated 2M tons of waste.
2. Resource preservation: It is recognized that the raw materials we are all dependent upon
are used up quicker than they can be replenished.
3. Legislative compliance: organizations must work closely with regulators to ensure
compliance and to build commitment to ensure all are following the rules.
4. Positive reputation: being a promoter of the environment keeps a positive reputation
among stakeholders. Allow to keep and attract and retain quality employees. A failure to
it could cause major costs. E.g. BP and Mexico Gulf spill.
5. Right initiative: for the sake of the environment.