Chapter 3

Ethics and Social

Responsibility

© 2005 Prentice-Hall, Inc. 3-1

 Learning Objectives
 Define ethics and understand the importance of ethical
behavior for organizations
 Discuss four perspectives on ethics and arguments for
ethical relativism and universalism
 Understand the efficiency and social responsibility
perspectives of corporate social responsibility
 Know how ethics affect individual behavior in
organizations
 Consider ways of scientifically studying organizational
ethics
 Know methods for resolving cross-cultural ethical conflicts
 Analyze your ethics and how they affect your
understanding of management and organizational
behavior.
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 Ethics

Moral standards, not governed by

law, that focus on the human
consequences of actions

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 Four Perspectives on Ethics
 Descriptive Approach
Uses methods and theories of social science
 Conceptual Approach
Focuses on the meaning of key ideas in ethics
 Normative Approach
Involves constructing arguments in defense of
basic moral positions and prescribing correct
ethical behavior
 Practical Approach
Involves developing a set of normative guidelines
for resolving conflicts of interest to improve
societal well-being

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 Relativism Vs. Universalism

 Individual ethical relativism

No absolute principle of right and wrong,
good or bad, in any social situation
 Cultural ethical relativism
What is right or wrong, good or bad,
depends on one's culture
 Ethical universalism
Universal and objective ethical rules
located deep within a culture that also
apply across societies

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 The Social Responsibility of
Corporations
 The Efficiency Perspective
The obligation of business is to
maximize profits for shareholders
 The Social Responsibility
Perspective
Managers bear a fiduciary
relationship to stakeholders

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 Kohlberg’s Theory of Moral
Development
 Stage 1 - Obedience and Punishment
Obedience to those in authority who have the
power to punish
 Stage 2 - Individualism and Reciprocity
The greatest good for the individual person
making the decision
 Stage 3 - Interpersonal Conformity
Expectations of others, including friends, family
members, and people in general
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 Kohlberg’s Theory of Moral
Development (cont.)
 Stage 4 - Social System/Law and Order
Play one's role in the social system, do
one's duty, obey rules
 Stage 5 - Social Contract
“The greatest good for the greatest
number"
 Stage 6 - Universal Ethical Principles
Principles selected freely by a person and
that the individual is willing for everyone
to live by
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 Face and Ethical Behavior

 Displays an individual’s
understanding of culturally defined
moral codes as they apply to and
maintain a particular social
situation
 Behavior that sustains the
definition of the situation supports
a person's face
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 Organizational Ethics
 Internal Ethical Issues
 Discrimination
 Safety
 Compensation
 Child Labor

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 Organizational Ethics (cont.)
 Cross-Cultural Ethical Issues
 Theft of Intellectual Property
 Bribery and Corruption
 Intentionally Selling Dangerous
Products
 Environmental Pollution
 Intentional Misrepresentation in
Negotiations

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 Studying Ethics

 Social science methods

 Study comparing U.S. and U.K.
 Corporations vary in the emphasis
on different aspects of ethics and
how they manage them
 Differences in perceptions of
corruption among countries

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 Resolving Cross-Cultural
Ethical Conflicts
 U.S. approach
 Transform ethics into laws
 Global approach
 OECD views corruption in developing
countries to be particularly harmful to
their prospects for economic growth
 Convention on Combating Bribery of
Foreign Public Officials in International
Business Transactions
 Caux Round Table and the Conference
Board standards for global business
ethics and social responsibility
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 Resolving Cross-Cultural
Ethical Conflicts (cont.)

 Codes of ethics
 Codify behavior that is
unacceptable under certain
conditions
 Reduce ambiguity by specifying
appropriate behavior

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 Kohls and Buller’s Approaches
for Resolving Ethical Conflict
 Avoiding
One party ignores or does not deal with the
conflict
 Forcing
One party forces its will upon the other
 Education-Persuasion
One party attempts to convert others to its
position through providing information,
reasoning, or appeals to emotion

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 Kohls and Buller’s Approaches
for Resolving Ethical Conflict
(cont.)
 Infiltration
One party introduces its cultural values to
another society hoping that an appealing
idea will spread
 Negotiation-Compromise
Both parties give up something to negotiate
a settlement
 Accommodation
One party adapts to the ethics of the other
 Collaboration-Problem Solving
Both parties work together to achieve a
mutually satisfying solution
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Values: Core and Periphery
Status Leisure

Customer satisfaction Knowledge

Society Job security

Friends Honesty
Family Worker safety
Human
Life
Health Freedom
Trust
Peace
Property rights
Stockholder values
Living standards
Job satisfaction
Efficiency
Power
 Ethics as a Competitive
Advantage in Global Business

 Ethical capability related to

perceiving interdependence,
thinking ethically, responding
effectively
 Trust as a value among
multinational corporations

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 Convergence or Divergence?

 A Bureaucratic  Religious
Ethic Differences
 International  Reassertion of
Regulatory National and
Agencies Ethnic Cultures
 Diffusion of  Varying Economic
Capitalism Systems and
Worldwide Levels of
Development

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 Implications for Managers

 Develop a Framework for Evaluating

Ethical Codes and Determining
Personal Ethics
 Understand Behaviors and Ethics of
Other Societies
 Consider Approaches to Resolving
Cross-Cultural Ethical Conflicts

© 2005 Prentice-Hall, Inc. 3-20