ninth edition

STEPHEN P. ROBBINS

Chapter

MARY COULTER

Social Responsibility
and Managerial Ethics
Instructor: Zhengxin

Lingnan College, Sun Yat-Sen University

2007 Prentice Hall, Inc.
All rights reserved.

PowerPoint Presentation by Charlie Cook

The University of West Alabama

Current stories about companies being

socially irresponsible
The Tainted Sanlu Baby Milk Powder Incident

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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

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53

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.

54

What Is Social Responsibility?

The Classical View
Managements 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.

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What Is Social Responsibility? (contd)

The Socioeconomic View
Managements 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

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56

 What are the reasons for corporations taking

(not taking) social responsibility ?
List at least five reasons

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Exhibit 52 Arguments For and Against Social Responsibility

For

Public expectations
Long-run profits
Ethical obligation
Public image
Better environment
Discouragement of further
governmental regulation
Balance of responsibility
and power
Stockholder interests
Possession of resources
Superiority of prevention
over cure

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Against
Violation of profit
maximization
Dilution of purpose
Costs
Too much power
Lack of skills
Lack of accountability

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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.

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59

 VALUES-BASED MANAGEMENT
An approach to managing in which managers
establish and uphold an organizations shared
values.

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510

 The Purposes of Shared Values

Guiding managerial decisions
Shaping employee behavior
Influencing the direction of marketing efforts
Building team spirit

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511

Exhibit 57 Survey of Stated

Values of
Organizations

Core Value

Percentage of
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.

2007 Prentice Hall, Inc. All rights reserved.

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Managerial Ethics

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

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Three domains of human action

Domain
of codified law

Domain
of ethics

Domain
of free choice

(Legal
standard)

(Social
standard)

(Personal
standard)

High

Amount of Explicit Control

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Low
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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.

515

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.

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Exhibit 58 Factors That Affect Ethical and Unethical Behavior

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Ethics in an International Context

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

Foreign Corrupt Practices Act

Makes 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

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518

How Managers Can Improve Ethical

Behavior in An Organization
1.
2.
3.
4.
5.
6.
7.

Hire 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.

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An Sample:

Code of Ethics

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Awareness of Social Issues

Social Entrepreneurs
Are 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.

521

Terms to Know
classical view
socioeconomic view
social obligation
social responsiveness

ethics
values
ego strength
locus of control

social responsibility

code of ethics
whistle-blower

social screening
greening of management

social entrepreneur
social impact
management

values-based
management
2007 Prentice Hall, Inc. All rights reserved.

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LEARNING OUTLINE
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.

523

LEARNING OUTLINE
Follow this Learning Outline as you read and study this chapter.

Social Responsibility and Economic Performance

Explain 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.

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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 Management

Describe how organizations can go green.
Relate the approaches to being green to the concepts of
social obligation, social responsiveness, and social
responsibility.

Values-Based Management
Discuss what purposes shared values serve.
Describe the relationship of values-based management to
ethics.

2007 Prentice Hall, Inc. All rights reserved.

525

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 Ethics
Discuss 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.

526

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 World

Explain 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.

527

Homework
1. Reading: Book chapter 5
1 paper essay covering the key points of social
responsibility and managerial ethics.
2. Movie watch <Outsourced>
http://v.youku.com/v_playlist/f2364608o1p0.html
1 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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