Social Responsibility & Business Ethics

Management’s Social and Ethical Responsibilities

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Copyright © Houghton Mifflin Company. All rights reserved. Lecture Outline and Line Art Presentation, 3–2

Chapter Objectives

1. Define corporate social responsibility and summarize the arguments for and against it.

2. Identify and describe the four social responsibility strategies.

3. Explain the role of enlightened self-interest in social responsibility.

4. Summarize the three practical lessons from business ethics research.

5. Identify and describe at least four of the ten general ethical principles.

6. Discuss what management can do to improve business ethics


Social Responsibility:Definition and Debate

• Corporate Social Responsibility– The idea that business has social obligations above

and beyond making a profit.

– Business has an obligation to constituent groups in society other than stockholders and beyond that prescribed by law.


Social Responsibility:Definition and Debate (cont’d)

• What Does Social Responsibility Involve?– Voluntary action

– Action before lawsuits or other actions that are taken to force a firm to take action on a matter.

– An emphasis on means, not ends

– How the decision to act was reached, not the decision itself.


Figure 3.2A Continuum of Social Responsibility Strategies


Social Responsibility Strategies

• Reactive Strategy– Denying responsibility while striving to maintain the

status quo by resisting change.

• Defensive Strategy– Resisting additional social responsibilities with legal

and public relations tactics.


Social Responsibility Strategies (cont’d)

• Accommodation Strategy– Assuming social responsibility only in response to

pressure from interest groups or the government.

• Proactive Strategy– Taking the initiative in formulating and putting in place

new programs that serve as role models for industry.


Who Benefits from Corporate Social Responsibility?

• Altruism– The unselfish devotion to the interests of others.

• Research Findings– There is a positive correlation between industry

leadership on a socially responsible issue (pollution control) and profitability.

– Corporate social responsibility is a competitive advantage in recruiting talented people.


Who Benefits from Corporate Social Responsibility? (cont’d)

• Enlightened Self-Interest– A business ultimately helps itself by helping solve

social problems.

• An Array of Benefits for the Organization– Tax-free incentives to employees.

– Retention of talented employees.

– Help in recruiting the talented and socially conscious.

– Help in swaying public opinion.

– Improved community living standards.

– …Others.


The Ethical Dimension of Management

• Ethics– The study of moral obligation involving the distinction

between right and wrong.

• Business Ethics– The study of the complex business practices and

behaviors that give rise to ethical issues in organizations.


Practical Lessons from Business Ethics Research: Ethical Hot Spots

• Balancing work and family

• Poor internal communications

• Poor leadership

• Work hours, work load

• Lack of management support

• Need to meet sales, budget, or profit goals

• Little or no recognition of achievements

• Company politics

• Personal financial worries

• Insufficient resources


Practical Lessons from Business Ethics Research (cont’d)

• Pressure from Above– The problem of superiors pressuring subordinates is

widespread.

• Responding to Pressure from Above– Consciously avoid putting undue pressure on

subordinates.

– Be prepared to deal with excessive organization pressure.


Practical Lessons from Business Ethics Research (cont’d)

• Ambiguous Situations– Situations where there are no clear-cut ethical

guidelines.

– Ethical codes can help satisfy employees’ need for formal guidelines.

• A Call to Action– The deliberate and conscious actions of a manager to

do the right thing is an ethical and personal matter.


General Ethical Principles

• Self-Interests

• Personal virtues

• Religious injunctions

• Government requirements

• Utilitarian benefits

• Universal rules

• Individual rights

• Economic efficiency

• Distributive justice

• Contributive justice


Encouraging Ethical Conduct

• Ethics Training– Amoral managers: managers who are neither moral

or immoral, but ethically lazy.

– Key features of effective ethics training programs

– Top management support.

– Open discussion.

– A clear focus on ethical issues.

– Integration of ethics into the organization.

– A mechanism for anonymously reporting ethical violations.

– Reward ethical conduct.


Encouraging Ethical Conduct (cont’d)

• Whistle-Blowing– The reporting of perceived unethical matters.

– Reducing the fear of retaliation against whistleblowers

– Anonymous hotlines and web sites

– Personal, confidential guidance

• Ethical Advocate– An ethics specialist who plays a role of critical

questioner in top-management’s decision-making.

– Serves as the Board of directors’ social conscience.

– Helps prevent groupthink and blind conformity


Encouraging Ethical Conduct (cont’d)

• Code of Ethics– Published statement of moral expectations for

employee conduct

– Requirements for an effective ethics code

– Must describe specific practices as unethical (e.g., kickbacks, payoffs, gifts, falsification of records, and misleading product claims).

– Must be firmly supported and fairly enforced by top management.

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Social Responsibility & Business Ethics