Social Responsibility and Managerial Ethics-Prince Dudhatra-9724949948

8/7/2019 Social Responsibility and Managerial Ethics-Prince Dudhatra-9724949948

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ninth editionninth edition

STEPHEN P. ROBBINSSTEPHEN P. ROBBINS

PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie CookThe University of West AlabamaThe University of West Alabama

MARY COULTERMARY COULTER

prince dudhatraprince dudhatra--97249499489724949948

Social ResponsibilitySocial Responsibility

and Managerial Ethicsand Managerial Ethics

ChapterChapter

55


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prince dudhatra-9724949948

L E A R N I N G O U T L I N EL E A R N I N G O U T L I N EFollow this Learning Outline as you read and study this chapterFollow this Learning Outline as you read and study this chapter..

What is Social Responsibility?What is Social Responsibility?

Contrast the classical and socioeconomic views of socialContrast the classical and socioeconomic views of social

responsibility.responsibility.

Discuss the role that stakeholders play in the four stagesDiscuss the role that stakeholders play in the four stages

of social responsibility.of social responsibility.

Differentiate between social obligation, socialDifferentiate between social obligation, social

responsiveness, and social responsibility.responsiveness, and social responsibility.


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L E A R N I N G O U T L I N EL E A R N I N G O U T L I N EFollow this Learning Outline as you read and study this chapterFollow this Learning Outline as you read and study this chapter..

Social Responsibility and Economic PerformanceSocial Responsibility and Economic Performance

Explain what research studies have shown about theExplain what research studies have shown about the

relationship between an organizations social involvementrelationship between an organizations social involvement

and its economic performance.and its economic performance.

Define social screening.Define social screening.

Explain what conclusion can be reached regarding socialExplain what conclusion can be reached regarding social

responsibility and economic performance.responsibility and economic performance.


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L E A R N I N G O U T L I N E (contd)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.Follow this Learning Outline as you read and study this chapter.

The Greening of ManagementThe Greening of Management

Describe how organizations can go green.Describe how organizations can go green.

Relate the approaches to being green to the concepts ofRelate the approaches to being green to the concepts of

social obligation, social responsiveness, and socialsocial obligation, social responsiveness, and social

responsibility.responsibility.

ValuesValues--Based ManagementBased Management

Discuss what purposes shared values serve.Discuss what purposes shared values serve.

Describe the relationship of valuesDescribe the relationship of values--based management tobased management to

ethics.ethics.


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Managerial EthicsManagerial Ethics

Discuss the factors that affect ethical and unethicalDiscuss the factors that affect ethical and unethical

behavior.behavior.

Describe the important roles managers play inDescribe the important roles managers play in

encouraging ethical behavior.encouraging ethical behavior.


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Social Responsibility and Ethics in Todays WorldSocial Responsibility and Ethics in Todays World

Explain why ethical leadership is important.Explain why ethical leadership is important.

Discuss how managers and organizations can protectDiscuss how managers and organizations can protect

employees who raise ethical issues or concerns.employees who raise ethical issues or concerns.

Explain what role social entrepreneurs play.Explain what role social entrepreneurs play.

Describe social impact management.Describe social impact management.


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What Is Social Responsibility?What Is Social Responsibility?

The Classical ViewThe Classical ViewManagements only social responsibility is toManagements only social responsibility is to

maximize profits (create a financial return) bymaximize profits (create a financial return) by

operating the business in the best interests of theoperating the business in the best interests of the

stockholders (owners of the corporation).stockholders (owners of the corporation).Expending the firms resources on doing social goodExpending the firms resources on doing social good

unjustifiably increases costs that lower profits to theunjustifiably increases costs that lower profits to the

owners and raises prices to consumers.owners and raises prices to consumers.


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What Is Social Responsibility? (contd)What Is Social Responsibility? (contd)

The Socioeconomic ViewThe Socioeconomic ViewManagements social responsibility goes beyondManagements social responsibility goes beyond

making profits to include protecting and improvingmaking profits to include protecting and improving

societys welfare.societys welfare.

Corporations are not independent entities responsibleCorporations are not independent entities responsibleonly to stockholders.only to stockholders.

Firms have a moral responsibility to larger society toFirms have a moral responsibility to larger society to

become involved in social, legal, and political issues.become involved in social, legal, and political issues.

To do the right thingTo do the right thing


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Exhibit 5Exhibit 511 To Whom is Management Responsible?To Whom is Management Responsible?


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Exhibit 5Exhibit 522 Arguments For and Against Social ResponsibilityArguments For and Against Social Responsibility

ForFor Public expectationsPublic expectations

LongLong--run profitsrun profits

Ethical obligationEthical obligation

Public imagePublic image

Better environmentBetter environment

Discouragement of furtherDiscouragement of further

governmental regulationgovernmental regulation

Balance of responsibilityBalance of responsibility

and powerand power

Stockholder interestsStockholder interests

Possession of resourcesPossession of resources

Superiority of preventionSuperiority of prevention

over cureover cure

AgainstAgainst Violation of profitViolation of profit

maximizationmaximization

Dilution of purposeDilution of purpose

CostsCosts

Too much powerToo much power

Lack of skillsLack of skills

Lack of accountabilityLack of accountability


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From Obligation to Responsiveness toFrom Obligation to Responsiveness to

ResponsibilityResponsibility

Social ObligationSocial Obligation

The obligation of a business to meet its economic andThe obligation of a business to meet its economic and

legal responsibilities and nothing more.legal responsibilities and nothing more.

Social ResponsivenessSocial ResponsivenessWhen a firm engages in social actions in response toWhen a firm engages in social actions in response to

some popular social need.some popular social need.

Social ResponsibilitySocial Responsibility

A businesss intention, beyond its legal and economicA businesss intention, beyond its legal and economic

obligations, to do the right things and act in ways thatobligations, to do the right things and act in ways that

are good for society.are good for society.


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Exhibit 5Exhibit 533 Social Responsibility versus Social ResponsivenessSocial Responsibility versus Social Responsiveness

Social Responsibility Social Responsiveness

Major consideration Ethical Pragmatic

Focus Ends Means

Emphasis Obligation Responses

Decision framework Long term Medium and short term

Source: Adapted from S.L. Wartick and P.L. Cochran, The Evolution of the Corporate

Social Performance Model, Academy of Management Review, October 1985, p. 766.


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Does Social Responsibility Pay?Does Social Responsibility Pay?

Studies appear to show a positive relationshipStudies appear to show a positive relationshipbetween social involvement and the economicbetween social involvement and the economic

performance of firms.performance of firms.

Difficulties in defining and measuring socialDifficulties in defining and measuring social

responsibility and economic performance raiseresponsibility and economic performance raiseissues of validity and causation in the studies.issues of validity and causation in the studies.

Mutual funds using social screening in investmentMutual funds using social screening in investment

decisions slightly outperformed other mutual funds.decisions slightly outperformed other mutual funds.

A general conclusion is that a firms socialA general conclusion is that a firms socialactions do not harm its longactions do not harm its long--term performance.term performance.


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Exhibit 5Exhibit 544 Social InvestingSocial Investing

Source: Social Investment Forum Foundation.


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The Greening of ManagementThe Greening of Management

The recognition of the close link between anThe recognition of the close link between anorganizations decision and activities and itsorganizations decision and activities and its

impact on the natural environment.impact on the natural environment.

Global environmental problems facing managers:Global environmental problems facing managers:

Air, water, and soil pollution from toxic wastesAir, water, and soil pollution from toxic wastes

Global warming from greenhouse gas emissionsGlobal warming from greenhouse gas emissions

Natural resource depletionNatural resource depletion


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How Organizations Go GreenHow Organizations Go Green

Legal (or LightG

reen) ApproachLegal (or LightG

reen) Approach Firms simply do what is legally required by obeying laws, rules,Firms simply do what is legally required by obeying laws, rules,

and regulations willingly and without legal challenge.and regulations willingly and without legal challenge.

Market ApproachMarket Approach

Firms respond to the preferences of their customers forFirms respond to the preferences of their customers for

environmentally friendly products.environmentally friendly products.

Stakeholder ApproachStakeholder Approach

Firms work to meet the environmental demands of multipleFirms work to meet the environmental demands of multiple

stakeholdersstakeholdersemployees, suppliers, and the community.employees, suppliers, and the community.

Activist ApproachActivist Approach

Firms look for ways to respect and preserve environment and beFirms look for ways to respect and preserve environment and be

actively socially responsible.actively socially responsible.


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Exhibit 5Exhibit 555 Approaches to Being GreenApproaches to Being Green

Source: Based on R.E. Freeman. J. Pierce, and R. Dodd. Shades of Green:

Business Ethics and the Environment(New York: Oxford University Press, 1995).


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Evaluating the Greening of ManagementEvaluating the Greening of Management

Organizations become greener byOrganizations become greener byUsing the Sustainability Reporting Guidelines toUsing the Sustainability Reporting Guidelines to

document green actions.document green actions.

Adopting ISO 14001 standards for environmentalAdopting ISO 14001 standards for environmental

managementmanagementBeing named as one of the 100 Most SustainableBeing named as one of the 100 Most Sustainable

Corporations in the World.Corporations in the World.


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ValuesValues--Based ManagementBased Management

ValuesValues--Based ManagementBased ManagementAn approach to managing in which managersAn approach to managing in which managers

establish and uphold an organizations shared values.establish and uphold an organizations shared values.

The Purposes of Shared ValuesThe Purposes of Shared Values

Guiding managerial decisionsGuiding managerial decisionsShaping employee behaviorShaping employee behavior

Influencing the direction of marketing effortsInfluencing the direction of marketing efforts

Building team spiritBuilding team spirit

The Bottom Line on Shared Corporate ValuesThe Bottom Line on Shared Corporate Values

An organizations values are reflected in the decisionsAn organizations values are reflected in the decisions

and actions of its employees.and actions of its employees.


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Exhibit 5Exhibit 566 Purposes of Shared ValuesPurposes of Shared Values


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Exhibit 5Exhibit 577 Survey of StatedSurvey of Stated

Values ofValues of

OrganizationsOrganizations

Percentage of

Core Value Respondents

Customer 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.


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Managerial EthicsManagerial Ethics

Ethics DefinedEthics Defined

Principles, values, and beliefs that define what is rightPrinciples, values, and beliefs that define what is rightand wrong behavior.and wrong behavior.


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Exhibit 5Exhibit 588 Factors That Affect Ethical and Unethical BehaviorFactors That Affect Ethical and Unethical Behavior


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Factors That Affect Employee EthicsFactors That Affect Employee Ethics

Moral DevelopmentMoral DevelopmentA measure of independence from outside influencesA measure of independence from outside influences

Levels of Individual Moral DevelopmentLevels of Individual Moral Development

Preconventional levelPreconventional level

Conventional levelConventional level Principled levelPrincipled level

Stage of moral development interacts with:Stage of moral development interacts with:

Individual characteristicsIndividual characteristics

The organizations structural designThe organizations structural design

The organizations cultureThe organizations culture

The intensity of the ethical issueThe intensity of the ethical issue


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Exhibit 5Exhibit 599 Stages of Moral DevelopmentStages of Moral Development

Source: Based on L. Kohlberg, Moral Stages and Moralization: The Cognitive-

Development Approach, in T. Lickona (ed.). Moral Development and Behavior: Theory,

Research, and Social Issues (New York: Holt, Rinehart & Winston, 1976), pp. 3435.


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Factors That Affect Employee EthicsFactors That Affect Employee Ethics

(contd)(contd)

Moral DevelopmentMoral Development

Research Conclusions:Research Conclusions:

People proceed through the stages of moral developmentPeople proceed through the stages of moral development

sequentially.sequentially. There is no guarantee of continued moral development.There is no guarantee of continued moral development.

Most adults are in Stage 4 (good corporate citizen).Most adults are in Stage 4 (good corporate citizen).


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Individual Characteristics AffectingIndividual Characteristics Affecting

Ethical BehaviorsEthical Behaviors

ValuesValues

Basic convictions about what is right or wrong on aBasic convictions about what is right or wrong on a

broad range of issuesbroad range of issues


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Individual CharacteristicsIndividual Characteristics

P

ersonality VariablesP

ersonality VariablesEgo strengthEgo strength

A personality measure of the strength of a personsA personality measure of the strength of a persons

convictionsconvictions

Locus of ControlLocus of Control A personality attribute that measures the degree to whichA personality attribute that measures the degree to which

people believe they control their own life.people believe they control their own life.

Internal locus:Internal locus: the belief that you control your destiny.the belief that you control your destiny.

External locus:External locus: the belief that what happens to you is due tothe belief that what happens to you is due toluck or chance.luck or chance.


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Other VariablesOther Variables

Structural VariablesStructural VariablesOrganizational characteristics and mechanisms thatOrganizational characteristics and mechanisms that

guide and influence individual ethics:guide and influence individual ethics:

Performance appraisal systemsPerformance appraisal systems

Reward allocation systemsReward allocation systems

Behaviors (ethical) of managersBehaviors (ethical) of managers

An Organizations CultureAn Organizations Culture

Intensity of the Ethical IssueIntensity of the Ethical Issue


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Exhibit 5Exhibit 51010 Determinants of Issue IntensityDeterminants of Issue Intensity


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Ethics in an International ContextEthics in an International Context

Ethical standards are not universal.Ethical standards are not universal.Social and cultural differences determine acceptableSocial and cultural differences determine acceptable

behaviors.behaviors.

Foreign Corrupt Practices ActForeign Corrupt Practices Act

Makes it illegal to corrupt a foreign official yet tokenMakes it illegal to corrupt a foreign official yet tokenpayments to officials are permissible when doing so ispayments to officials are permissible when doing so is

an accepted practice in that country.an accepted practice in that country.

The Global CompactThe Global Compact


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Exhibit 5Exhibit 51111 The Global CompactThe Global Compact

Human RightsPrinciple 1: Support and respect the protection of international human rights within their

sphere of influence.

Principle 2: Make sure business corporations are not complicit in human rights abuses.

Labor Standards

Principle 3: Freedom of association and the effective recognition of the right to collective

bargaining.Principle 4: The elimination of all forms of forced and compulsory labor.

Principle 5: The effective abolition of child labor.

Principle 6: The elimination of discrimination in respect of employment and occupation.

Environment

Principle 7: Support a precautionary approach to environmental challenges.

Principle 8: Undertake initiatives to promote greater environmental responsibility.

Principle 9: Encourage the development and diffusion of environmentally friendly

technologies.

Source: Courtesy ofGlobal Compact.


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How Managers Can Improve EthicalHow Managers Can Improve Ethical

Behavior in An OrganizationBehavior in An Organization

1.1. Hire individuals with high ethical standards.Hire individuals with high ethical standards.

2.2. Establish codes of ethics and decision rules.Establish codes of ethics and decision rules.

3.3. Lead by example.Lead by example.

4.4. Set realistic job goals and include ethics inSet realistic job goals and include ethics in

performance appraisals.performance appraisals.

5.5. Provide ethics training.Provide ethics training.

6.6. Conduct independent social audits.Conduct independent social audits.7.7. Provide support for individuals facing ethicalProvide support for individuals facing ethical

dilemmas.dilemmas.


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The Value of Ethics TrainingThe Value of Ethics Training

Can make a difference in ethical behaviors.Can make a difference in ethical behaviors. Increases employee awareness of ethical issuesIncreases employee awareness of ethical issues

in business decisions.in business decisions.

Clarifies and reinforces the organizationsClarifies and reinforces the organizationsstandards of conduct.standards of conduct.

Helps employees become more confident thatHelps employees become more confident that

they will have the organizations support whenthey will have the organizations support when

taking unpopular but ethically correct stances.taking unpopular but ethically correct stances.


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Exhibit 5Exhibit 51212 Clusters of Variables Found in 83 CorporateClusters of Variables Found in 83 Corporate

Codes of Business EthicsCodes of Business Ethics

Cluster 1. Be a Dependable Organizational Citizen1. Comply with safety, health, and security regulations.2. Demonstrate courtesy, respect, honesty, and fairness.3. Illegal drugs and alcohol at work are prohibited.4.Manage personal finances well.5. Exhibit good attendance and punctuality.6. Follow directives of supervisors.

7. Do not use abusive language.8. Dress in business attire.

9. Firearms at work are prohibited.

Cluster 2. Do Not Do Anything Unlawful or Improper That

Will Harm the Organization

1. Conduct business in compliance with all laws.2. Payments for unlawful purposes are prohibited.3. Bribes are prohibited.4. Avoid outside activities that impair duties.5.Maintain confidentiality of records.

6. Comply with all antitrust and trade regulations.7. Comply with all accounting rules and controls.8. Do not use company property for personal benefit.9. Employees are personally accountable for company funds.10. Do not propagate false or misleading information.11.Make decisions without regard for personal gain.

Cluster 3. Be Good to Customers1. Convey true claims in product advertisements.2. Perform assigned duties to the best of your ability.3. Provide products and services of the highest quality.

Source: F. R. David, An Empirical Study of Codes of Business Ethics: A Strategic Perspective, paper

presented at the 48th Annual Academy ofManagement Conference, Anaheim, California, August 1988.


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Exhibit 5Exhibit 51313 Twelve Questions for Examining the EthicsTwelve Questions for Examining the Ethics

of a Business Decisionof a Business Decision

1. Have you defined the problem accurately?

2. How would you define the problem if you stood on the other side of the fence?

3. How did this situation occur in the first place?

4. To whom and to what do you give your loyalty as a person and as a member of the

corporation?

5. What is your intention in making this decision?6. How does this intention compare with the probable results?

7. Whom could your decision or action injure?

8. Can you discuss the problem with the affected parties before you make the decision?

9. Are you confident that your position will be as valid over a long period of time as it

seems now?

10. Could you disclose without qualm your decision or action to your boss, your chief

executive officer, the board of directors, your family, society as a whole?

11. What is the symbolic potential of your action if understood? If misunderstood?

12. Under what conditions would you allow exceptions to your stand?

Source: Reprinted by permission ofHarvard Business Review. An exhibit from Ethics Without the Sermon, by L. L. Nash.

NovemberDecember 1981, p. 81. Copyright 1981 by the President and Fellows of Harvard College. All rights reserved.


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Effective Use of a Code of EthicsEffective Use of a Code of Ethics

Develop a code of ethics as a guide in handlingDevelop a code of ethics as a guide in handlingethical dilemmas in decision making.ethical dilemmas in decision making.

Communicate the code regularly to allCommunicate the code regularly to all

employees.employees.

Have all levels of management continuallyHave all levels of management continually

reaffirm the importance of the ethics code andreaffirm the importance of the ethics code and

the organizations commitment to the code.the organizations commitment to the code.

Publicly reprimand and consistently disciplinePublicly reprimand and consistently disciplinethose who break the code.those who break the code.


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Ethical LeadershipEthical Leadership

M

anagers must provide aM

anagers must provide a good role modelgood role modelby:by:Being ethical and honest at all times.Being ethical and honest at all times.

Telling the truth; dont hide or manipulate information.Telling the truth; dont hide or manipulate information.

Admitting failure and not trying to cover it up.Admitting failure and not trying to cover it up.

Communicating shared ethical values to employeesCommunicating shared ethical values to employees

through symbols, stories, and slogans.through symbols, stories, and slogans.

Rewarding employees who behave ethically andRewarding employees who behave ethically and

punish those who do not.punish those who do not.

Protecting employees (Protecting employees (whistleblowerswhistleblowers) who bring to) who bring to

light unethical behaviors or raise ethical issues.light unethical behaviors or raise ethical issues.


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Managing Ethical Lapses and SocialManaging Ethical Lapses and Social

IrresponsibilityIrresponsibility

Provide ethical leadershipProvide ethical leadership

Protect employees who raise ethical issuesProtect employees who raise ethical issues

(whistle(whistle--blowers)blowers)


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Awareness of Social IssuesAwareness of Social Issues

Social EntrepreneursSocial EntrepreneursAre individuals or organizations who seek outAre individuals or organizations who seek out

opportunities to improve society by using practical,opportunities to improve society by using practical,

innovative, and sustainable approaches.innovative, and sustainable approaches.

Want to make the world a better place and have aWant to make the world a better place and have adriving passion to make that happen.driving passion to make that happen.


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Awareness of Social Issues (contd)Awareness of Social Issues (contd)

Social ImpactM

anagementSocial ImpactM

anagement Is the field of inquiry at the intersection of businessIs the field of inquiry at the intersection of business

practice and wider societal concerns that reflects andpractice and wider societal concerns that reflects and

respects the complex interdependency of those tworespects the complex interdependency of those two

realities.realities.Seeks to answer the question of how to go aboutSeeks to answer the question of how to go about

increasing managers awareness within theirincreasing managers awareness within their

decisiondecision--making processes of how society ismaking processes of how society is

impacted by the conduct and activities of their firms.impacted by the conduct and activities of their firms.


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Terms to KnowTerms to Know

classical viewclassical view

socioeconomic viewsocioeconomic view

social obligationsocial obligation

social responsivenesssocial responsiveness

social responsibilitysocial responsibility

social screeningsocial screening

greening of managementgreening of management

valuesvalues--basedbased

managementmanagement

ethicsethics

valuesvalues

ego strengthego strength

locus of controllocus of control

code of ethicscode of ethics

whistlewhistle--blowerblower

social entrepreneursocial entrepreneur

social impactsocial impact

managementmanagement

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