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Chapter 5 Social Responsibility and Managerial Ethics

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ninth edition STEPHEN P. ROBBINS PowerPoint Presentation by Charlie PowerPoint Presentation by Charlie Cook Cook The University of West Alabama The University of West Alabama MARY COULTER © 2007 Prentice Hall, Inc. © 2007 Prentice Hall, Inc. All rights reserved. All rights reserved. Social Social Responsibility and Responsibility and Managerial Ethics Managerial Ethics Chapter Chapter 5 5 Instructor: Zhengxin Lingnan College, Sun Yat-Sen University
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  • 2007 Prentice Hall, Inc. All rights reserved. 5*Current stories about companies being socially irresponsible The Tainted Sanlu Baby Milk Powder Incident

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*China starts probe into baby powder milk contamination as more cases reported (2008-09-12)Two babies with kidney stones receive medical treatment at a military hospital in Lanzhou, capital of northwest China's Gansu Province

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*China reports 432 infants with kidney stones, production of Sanlu halted; Stores in China pull contaminated milk powder off shelves (2008-09-12);Zhang Yujun, who produced and sold melamine-laced "protein powder" in the China tainted milk scandal, was convicted of endangering public security and sentenced to death by a local court. (2009-01-22)

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*What Is Social Responsibility?The Classical ViewManagements only social responsibility is to maximize profits (create a financial return) by operating the business in the best interests of the stockholders (owners of the corporation).Expending the firms resources on doing social good unjustifiably increases costs that lower profits to the owners and raises prices to consumers.

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*What Is Social Responsibility? (contd)The Socioeconomic ViewManagements social responsibility goes beyond making profits to include protecting and improving societys welfare.Corporations are not independent entities responsible only to stockholders.Firms have a moral responsibility to larger society to become involved in social, legal, and political issues.To do the right thing

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*What are the reasons for corporations taking (not taking) social responsibility ?

    List at least five reasons

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*Exhibit 52Arguments For and Against Social ResponsibilityForPublic expectationsLong-run profitsEthical obligationPublic imageBetter environmentDiscouragement of further governmental regulationBalance of responsibility and powerStockholder interestsPossession of resourcesSuperiority of prevention over cureAgainstViolation of profit maximizationDilution of purposeCostsToo much powerLack of skillsLack of accountability

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*Does Social Responsibility Pay?

    Studies appear to show a positive relationship between social involvement and the economic performance of firms.

    A general conclusion is that a firms social actions do not harm its long-term performance.

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*VALUES-BASED MANAGEMENT

    An approach to managing in which managers establish and uphold an organizations shared values.

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*

    The Purposes of Shared ValuesGuiding managerial decisionsShaping employee behaviorInfluencing the direction of marketing effortsBuilding team spirit

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*Exhibit 57Survey of Stated Values of OrganizationsPercentage of Core ValueRespondentsCustomer satisfaction 77% Ethics/integrity 76% Accountability 61% Respect for others 59% Open communication 51% Profitability 49% Teamwork 47% Innovation/change 47% Continuous learning 43% Positive work environment 42% Diversity 41% Community service 38% Trust 37% Social responsibility 33% Security/safety 33% Empowerment 32% Employee job satisfaction 31% Have fun 24%Source: AMA Corporate Values Survey, (www.amanet.org), October 30, 2002.

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*Managerial Ethics

    Ethics DefinedPrinciples, values, and beliefs that define what is right and wrong behavior.

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*Three domains of human actionHighLowAmount of Explicit ControlDomain of codified law

    (Legal standard)Domain of ethics

    (Social standard)Domain of free choice

    (Personal standard)

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*Small case I: Management Ethics Dilemma A top employee at your small company tells you he needs some time off because he has AIDS. You know the employee needs the job as well as the health insurance benefits. Providing health insurance has already stretched the companys budget, and this will send premiums through the roof. You recently read of a case in which federal courts upheld the right of an employer to modify health plans by putting a cap on AIDS benefits. Should you investigate whether this is a legal possibility for your company?

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*Small case II: Management Ethics Dilemma As a sales manager for a major pharmaceuticals company, youve been asked to promote a new drug that costs $2500 per dose. Youve read the reports saying the drug is only 1 percent more effective than an alternate drug that costs less than one-fourth as much. Can you in good conscience aggressively promote the $2500-per-dose drug? It you dont, could lives be lost that might have been saved with that 1 percent increase in effectiveness?

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*Exhibit 58Factors That Affect Ethical and Unethical Behavior

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*Ethics in an International ContextEthical standards are not universal.Social and cultural differences determine acceptable behaviors.Foreign Corrupt Practices ActMakes it illegal to corrupt a foreign official yet token payments to officials are permissible when doing so is an accepted practice in that country.The Global Compact

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*How Managers Can Improve Ethical Behavior in An OrganizationHire individuals with high ethical standards.Establish codes of ethics and decision rules.Lead by example.Set realistic job goals and include ethics in performance appraisals.Provide ethics training.Conduct independent social audits.Provide support for individuals facing ethical dilemmas.

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*

    An Sample:

    Code of Ethics

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  • 2007 Prentice Hall, Inc. All rights reserved. 5*Awareness of Social IssuesSocial EntrepreneursAre individuals or organizations who seek out opportunities to improve society by using practical, innovative, and sustainable approaches.Want to make the world a better place and have a driving passion to make that happen.

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*Terms to Knowclassical viewsocioeconomic view

    social obligationsocial responsivenesssocial responsibility

    social screeninggreening of managementvalues-based managementethicsvaluesego strengthlocus of control

    code of ethicswhistle-blowersocial entrepreneursocial impact management

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*L E A R N I N G O U T L I N E Follow this Learning Outline as you read and study this chapter.What is Social Responsibility?Contrast the classical and socioeconomic views of social responsibility.Discuss the role that stakeholders play in the four stages of social responsibility.Differentiate between social obligation, social responsiveness, and social responsibility.

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*L E A R N I N G O U T L I N E Follow this Learning Outline as you read and study this chapter.Social Responsibility and Economic PerformanceExplain what research studies have shown about the relationship between an organizations social involvement and its economic performance.Define social screening.Explain what conclusion can be reached regarding social responsibility and economic performance.

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*L E A R N I N G O U T L I N E (contd) Follow this Learning Outline as you read and study this chapter.The Greening of ManagementDescribe how organizations can go green.Relate the approaches to being green to the concepts of social obligation, social responsiveness, and social responsibility.Values-Based ManagementDiscuss what purposes shared values serve.Describe the relationship of values-based management to ethics.

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*L E A R N I N G O U T L I N E (contd) Follow this Learning Outline as you read and study this chapter.Managerial EthicsDiscuss the factors that affect ethical and unethical behavior.Describe the important roles managers play in encouraging ethical behavior.

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*L E A R N I N G O U T L I N E (contd) Follow this Learning Outline as you read and study this chapter.Social Responsibility and Ethics in Todays WorldExplain why ethical leadership is important.Discuss how managers and organizations can protect employees who raise ethical issues or concerns.Explain what role social entrepreneurs play.Describe social impact management.

    2007 Prentice Hall, Inc. All rights reserved.

  • 2007 Prentice Hall, Inc. All rights reserved. 5*Homework1. Reading: Book chapter 51 paper essay covering the key points of social responsibility and managerial ethics.

    2. Movie watch http://v.youku.com/v_playlist/f2364608o1p0.html1 paper essay talking about the global outsourcing and management issues in the movie.

    Due time: 30th, Oct., Friday before class.

    2007 Prentice Hall, Inc. All rights reserved.

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