CHP 5 Managements Social and Ethical Responsibilities

Management
s
Chapter Five
Social and
Ethical
Responsibiliti
es
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1
Chapter Objectives
Define the term corporate social responsibility
(CSR) and specify the four levels in Carrolls global
CSR pyramid.
Contrast the classical economic and
socioeconomic models of business and summarize
the arguments for and against CSR.
Identify and describe the four social responsibility
strategies and explain the concept of enlightened
self-interest.
Summarize the four practical lessons from
business ethics research.
2
Chapter Objectives (contd)
Distinguish between instrumental and
terminal values and explain their relationship
to business ethics.
Identify and describe at least four of the ten
general ethical principles.
Discuss what management can do to improve
business ethics.
3
Social Responsibility:
Definition and Perspectives
Corporate Social Responsibility (CSR)
The idea that business has:
Social obligations above and beyond making a profit
Social obligations to constituent groups in society
other than stockholders and beyond that prescribed by

law
Organizations include financial, environmental,
and social responsibility in their core business
strategies.
Triple bottom line:
People, planet, profits
4
Figure 5.1: Carrolls Corporate
Global Social Responsibility
Pyramid
5
Social Responsibility:
Definition and Perspectives (contd)
CSR for global and transnational corporations

Working from the bottom up, the global
corporation should:
Make a profit
Obey the law
Be ethical in its practices
Be a good corporate citizen
CSR requires voluntary action
6
What Is the Role of Business in
Society?
The Classical Economic Model (Adam Smith)
An invisible hand promoted the public
welfare.
The public interest was served by individuals
pursuing their own economic self-interests.
According to the classical economic model of
business, profitability and social responsibility
are the same thing.
7
What Is the Role of Business in
Society?
The Socioeconomic Model
Business has an obligation to meet the needs
of the many groups in society besides
stockholders in its pursuit of profit.
Stakeholder audit: Systematically identifying all
the parties that could possibly be affected by the
companys performance
8
Figure 5.2:
A Sample
Stakeholder
Audit for
Wal-Mart,
the Worlds
Largest
Retailer
9
Arguments For and Against
Corporate Social Responsibility
Arguments For
Business is unavoidably involved in social
issues.
Business has the resources to tackle todays
complex societal problems.
A better society means a better environment
for doing business.
Corporate social action will prevent
government intervention.
10
Arguments For and Against
Corporate Social Responsibility
(contd)
Arguments Against
Profit maximization ensures the efficient use of
societys resources.
As an economic institution, business lacks the
ability to pursue social goals.
Business already has enough power.
Because business managers are not elected,
they are not directly accountable to society.
11
Toward Greater Social
Responsibility
Iron Law of Responsibility
Those who do not use power in a socially
responsible way will eventually lose it.
If business does not meet the challenge of
social responsibility, then government reform
legislation will force it to meet its obligations.
12
Social Responsibility Strategies
Reactive Strategy
Denying responsibility while striving to
maintain the status quo by resisting change
Defensive Strategy
Resisting additional social responsibilities with
legal and public relations tactics
13
Social Responsibility Strategies
(contd)
Accommodation Strategy
Assuming social responsibility only in response
to pressure from interest groups or the
government
Proactive Strategy
Taking the initiative in formulating and putting
in place new programs that serve as role
models for the industry
14
Figure 5.3: A Continuum
of Social Responsibility
Strategies
15
Who Benefits from
Corporate Social Responsibility?
Altruism
The unselfish devotion to the interests of
others
Research Findings
There is a positive correlation between
industry leadership in environmental
protection/pollution control and profitability.
Corporate social responsibility is a competitive
advantage in recruiting.
16
Who Benefits from Corporate
Social Responsibility (contd)
Enlightened Self-Interest
A business ultimately helps itself by helping
solve social problems.
Corporate philanthropy
The charitable donation of company resources
Research shows that corporate giving is a form
of profit-motivated advertising
17
Who Benefits from Corporate
Social Responsibility (contd)
An Array of Benefits for the Organization

Tax-free incentives to employees
Retention of talented employees
Help in recruiting the talented and socially
conscious
Help in swaying public opinion
Improved community living standards
Attracting socially conscious investors
A nontaxable benefit for employees from
company donations to charitable causes
18
The Ethical Dimension of
Management
Ethics
The study of moral obligation involving the
distinction between right and wrong
Business Ethics
Narrows the frame of reference to productive
organizations
Also referred to as management ethics or
organizational ethics
19
Practical Lessons from
Business Ethics Research
Ethical Hot Spots Need to meet sales,
Balancing work and budget, or profit
family goals
Poor internal Little or no
communications recognition of
Poor leadership achievements
Work hours, work Company politics
load Personal financial

Lack of worries
management Insufficient
support resources
20
Business Ethics Research (contd)
Pressure from Above

The problem of superiors pressuring
subordinates to achieve results is widespread.
Managers responses to pressure from above
Consciously avoid putting undue pressure on
subordinates (who may act unethically to relieve
the pressure).
Prepare to deal with excessive organizational
pressure.
21
Business Ethics Research (contd)
Ambiguous Situations
Situations where there are no clear-cut ethical
guidelines or ethical codes
Rationalization: How Good People End Up
Doing Bad Things
Perceiving an objectively questionable action
as normal and acceptable
A Call to Action
The deliberate and conscious action of a
manager to do the right thing is an ethical and
personal matter
22
Table 5.1: How Employees Tend to
Rationalize Unethical Conduct
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not be scanned, copied or
duplicated, or posted to a
publicly accessible website,
in whole or in part.
23
Personal Values as Ethical
Anchors
Values
Abstract ideals that shape ones thinking and
behavior
Instrumental value: Enduring belief that a certain
way (mode) of behaving is appropriate in all
situations
Terminal value: Enduring belief that a certain end-
state of existence (being admired) is worth striving
for
Identifying and Acting Upon Your Own Values
Basic personal values are taken for granted.
They are not arranged consciously in order of
priority.
24
Managerial Ranking of Values
Terminal Values
Self-respect
Family security
Freedom
A sense of
accomplishment Instrumental Values
Happiness Honesty
Responsibility
Capability
Ambition
Independence
25
General Ethical Principles
Self-interests
Personal virtues
Religious injunctions
Government
Universal rules
requirements
Individual rights
Utilitarian benefits
Economic efficiency
Distributive justice
Contributive liberty
26
Encouraging Ethical Conduct
Ethics Training
Amoral managers: Managers who are neither
moral nor immoral, but ethically lazy
Key features of effective ethics programs
Support of top management
Open discussion
A clear focus on ethical issues
Integration of ethics into the organization

A mechanism for anonymously reporting ethical
violations
Rewarding of ethical conduct
27
Table 5.2: Twelve Questions for
Examining the Ethics of a Business
Decision
28
Encouraging Ethical Conduct
(contd)
Ethical Advocate
An ethics specialist who plays a role in top
managements decision making
Code of Ethics
Published statement of moral expectations
Requirements for an effective code:
Reference to specific practices
Is supported and equitably enforced by top
management
Whistle-Blowing
The reporting of perceived unethical matters
29
Summary
Corporate responsibility is the idea that
management has broader responsibilities than
just making a profit.
The debate over the basic purpose of the
corporation is long-standing.
Management scholars who advocate greater
corporate social responsibility cite the iron law
of responsibility.
30
Summary (contd)
Ethics research indicates that many

employees have acted unethically, have been
pressured to act unethically, desire ethical
standards, and engage in rationalization to
defend their behaviors.
Managers must pay attention to the
instrumental and terminal values that
comprise employees personal value systems.
31
Summary (contd)
There are at least ten general ethical

principles that guide behavior are self-
interests, personal virtues, religious
injunctions, government requirements,
utilitarian benefits, universal rules, individual
rights, economic efficiency, distributive
justice, and contributive liberty.
The typical manager is considered to be
amoral--neither moral nor immoraljust
ethically lazy or indifferent.
32
Terms to Understand
Corporate social
responsibility Altruism
Stakeholder audit Enlightened self-interest
Iron law of responsibility Corporate philanthropy
Reactive social Ethics
responsibility strategy Values
Defensive social Instrumental value
responsibility strategy Terminal value
Accommodative social
Amoral managers
responsibility strategy
Ethical advocate
Proactive social
Whistle-blowing
responsibility strategy
33

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CHP 5 Managements Social and Ethical Responsibilities

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Management

other than stockholders and beyond that prescribed by

CSR for global and transnational corporations

Be a good corporate citizen

CSR requires voluntary action

An Array of Benefits for the Organization

load Personal financial

Pressure from Above

Integration of ethics into the organization

Ethics research indicates that many

There are at least ten general ethical

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