Chapter 5

Managements Social and Ethical Responsibilities

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Chapter Outline

Social Responsibility: Definition and Perspectives

What Does Social Responsibility Involve? What Is the Role of Business in Society? Arguments For and Against Corporate Social Responsibility

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Chapter Outline
(continued)

Toward Greater Social Responsibility

Social Responsibility Strategies Who Benefits from Corporate Social Responsibility? The Future of Corporate Social Responsibility

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Chapter Outline
(continued)

The Ethical Dimension of Management

Practical Lessons from Business Ethics Research Personal Values as Ethical Anchors General Ethical Principles

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Chapter Outline
(continued)

Encouraging Ethical Conduct

Ethics Training Ethical Advocates Codes of Ethics Whistle-blowing

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WHAT DOES CORPORATE SOCIAL RESPONSIBILITY INVOLVE? Corporate social responsibility: the
notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract. Voluntary action An emphasis on means, not ends
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Figure 5.1 A Sample Stakeholder Audit for an Automobile Company

Source: Nancy C. Roberts and Paula J. King, The Stakeholder Audit Goes Public. Reprinted from Organizational Dynamics, Winter 1989. 1989, American Management Association International. Reprinted by permission of American Management Association International, New York, NY. All rights reserved. http:/hwww.amanet.org

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Figure 5.2 A Continuum of Social Responsibility Strategies

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WHAT DOES CORPORATE SOCIAL RESPONSIBILITY INVOLVE?

(continued)

For Discussion:
1. Why is voluntary action a key to corporate social responsibility?

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WHAT DOES CORPORATE SOCIAL RESPONSIBILITY INVOLVE?

(continued)

For Discussion:
2. Could an emphasis on means rather than ends encourage well-meaning but socially irresponsible actions? (For example, some college organizations sponsor social events on behalf of needy groups, such as disabled children, who actually get very little if any benefit after program expenses have been paid.)
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Figure 5.3 Present and Future Executives Support the Concept of Corporate Social Responsibility

Source: Data from Mark N. Vamos and Christopher Power, A Kinder, Gentler Generation of Executives? Business Week (April 23, 1990): 86-87.

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ARGUMENTS FOR AND AGAINST CORPORATE SOCIAL RESPONSIBILITY

Arguments for:
1. Business is unavoidably involved in social issues. 2. Business has the resources to tackle todays complex societal problems. 3. A better society means a better environment for doing business. 4. Corporate social action will prevent government intervention.
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ARGUMENTS FOR AND AGAINST CORPORATE SOCIAL RESPONSIBILITY

(continued)

Arguments against:
1. Profit maximization ensures the efficient use of societys resources. 2. As an economic institution, business lacks the ability to pursue social goals. 3. Business already has enough power. 4. Because managers are not elected, they are not directly accountable to the people.
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ARGUMENTS FOR AND AGAINST CORPORATE SOCIAL RESPONSIBILITY

(continued)

For Discussion:
Which set of arguments do you find most convincing? Why?

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ENLIGHTENED SELF-INTEREST

Enlightened self-interest: realization that

business ultimately helps itself by helping to solve societal problems.

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ENLIGHTENED SELF-INTEREST
(continued)

For Discussion:
1. Do you personally endorse the concept of enlightened self-interest? Why or why not? 2. Is the reality of short-term costs versus longterm benefits a fatal flaw for the concept of enlightened self-interest in the business world?
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THE ETHICAL DIMENSION OF MANAGEMENT

Ethics: The study of moral obligation involving the distinction between right and wrong.

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ETHICS SURVEY
Instructions: Based on your personal work experience,
rank (from 1 = most common to 10 = least common) the following ten ethical hot spots said to be associated with unethical and illegal conduct in the workplace.

Rank
1. 2. 3. 4. 5. Balancing work and family Poor internal communications Poor leadership Work hours, work load Lack of management support
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_____ _____ _____ _____ _____

ETHICS SURVEY
(continued)

Rank
6. Need to meet sales, budget or profit goals 7. Little or no recognition of achievements 8. Company politics 9. Personal financial worries 10. Insufficient resources _____ _____ _____ _____ _____

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ETHICS SURVEY
(continued)

For Discussion:
1. What do the results of this survey tell you about the future of ethics in the workplace? 2. What can management do to improve the climate for ethical conduct?

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PERSONAL VALUES AS ETHICAL ANCHORS

Instrumental value: an enduring belief that

a certain way of behaving is appropriate in all situations (e.g., ambitious, courageous, loving).

Terminal value: an enduring belief that a

certain end-state of existence is worth striving for and attaining (e.g., an exciting life, freedom, social recognition).
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PERSONAL VALUES AS ETHICAL ANCHORS

(continued)

Discussion: of value conflict based on your value profile in Table 5.2: Intrapersonal value conflict: Will your top three instrumental values help you achieve your top three terminal values, or is there a fundamental and frustrating conflict?

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PERSONAL VALUES AS ETHICAL ANCHORS

(continued)

Individual-organizational value conflict: Do your top-ranked values clash with those promoted by your organizations culture? Intercultural value conflict: How well do differing values explain conflict and misunderstanding between racial, gender, ethnic, religious, and cultural groups in todays world?

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GENERAL ETHICAL PRINCIPLES

1. 2. 3. 4. 5.

Self-interests Personal virtues Religious injunctions Government requirements Utilitarian benefits

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GENERAL ETHICAL PRINCIPLES

(continued)

6. Universal rules 7. Individual rights 8. Economic efficiency 9. Distributive justice 10. Contributive liberty

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GENERAL ETHICAL PRINCIPLES

(continued)

For Discussion:
1. Which of these ethical principles drives most of your behavior?

2. How situational are your ethical principles? Do you switch from one ethical principle to another as dictated by convenience? 3. Is situational ethics a problem for managers? Explain.
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HOW TO MAKE AN ORGANIZATIONAL CODE OF ETHICS EFFECTIVE

1. Refer to specific practices such as kickbacks, payoffs, receiving gifts, and falsifying records. 2. Top management must firmly support the code by communicating it broadly and role modeling appropriate behavior. 3. The code must be equitably enforced with stiff penalties for noncompliance.
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HOW TO MAKE AN ORGANIZATIONAL CODE OF ETHICS EFFECTIVE

(continued)

For Discussion: What would you say to a manager who declares corporate codes of ethics a waste of time?

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