Ethical and Social context of Management

Individual ethics in Org.

o Ethics: an individual’s personal beliefs regarding what is right and wrong or good
or bad.
o Three implications:
• In the context of individual people have ethic and org do not.
• Ethical behavior varies from one person to another.
• Conforms to generally accept social norms.

The Formation of Individual ethics

Situational Values Experiences Peer

factors and influences
morals

↓ ↓ ↓ ↓ ↓

Individual ethics

Managerial ethics
o Standards of behavior that guide individual managers in their work.
o Areas of concerns for managers
• How an org. treats its employees
• How employees treat the org.
• How the org. treats other economic agents

Managing ethical behavior

o Begins with top management which establishes the organization’s culture and
defines what will and will not be acceptable behavior.
o Includes training on how to handle different ethical dilemmas.
o Developing a code of ethics.
• Written statement of the values and ethical standards that will guide the
firm’s actions.

Social responsibility and org.

 o The set of obligations (to behave responsibility) that an organization has to protect
and enhance that social context in which it functions.
o In the awareness that business activities have an impact on society and the
consideration of that impact by firms in decision making.

Areas of social responsibility

o Stakeholders: customers, employees, and investors.
o The natural environment: environmentally sensitive product, and public safety.
o The general social welfare: charitable contributions, and support for social issues
such as child labor and human rights.

Arguments for and against SR

Organizational approaches to SR
o Social obstruction: an approach to social responsibility in which firms do as little
as possible to solve social or environmental problems (higher price charge).
o Social obligation: a social responsibility stance in which an organization does
everything that is required of it legally but nothing more. (install pollution control
equipment but inferior quality)

o Social response: a social responsibility stance in which an organization meets its

basic legal and ethical obligation in selected cases. (donation, school, college,
university)
o Social contribution: a social responsibility stance in which an organization views
itself as a citizen in a society and proactively seeks opportunities to contribute to
that society. (medical center, scholarship etc)

The Govt. and SR

Managing social responsibility

o Formal organizational decision
• Legal compliance
• Ethical compliance
• Philanthropic giving
o Informal organizational decision
• Organizational Leadership and culture
• Whistle blowing
• Social audit