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Lamb, Hair, McDaniel

CHAPTER 3

Ethics and Social Responsibility

2010-2011

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LO 1 Explain the concept of ethical behavior

LO 2 Describe ethical behavior in business

LO 3 Discuss corporate social responsibility

Learning OutcomesLearning Outcomes

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The Concept of Ethical Behavior

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Explain the concept of ethical behavior

LO1

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Ethical Behavior

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Unwritten rules governing interactions

•sharing resources

•honoring contracts

•waiting in line

LO1

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Ethical Behavior in Business

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Describe ethical behavior

in business

LO2

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Ethical Behavior in Business

EthicsEthics

MoralsMorals

The moral principles or

values that generally govern

the conduct of an individual.

The rules people develop as a result of cultural values and norms.

Morals involve “good” and “bad” as well as “deviant” behaviorsLO2

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Ethical Development Levels

PreconventionalMorality

ConventionalMorality

PostconventionalMorality

MoreMature

MoreChildlike

• Based on what will be punished or rewarded

• Self-centered, calculating, selfish

• Moves toward the expectations of society

• Concerned over legality and the opinion of others

• Concern about how they judge themselves

• Concern if it is right in the long run

LO2

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Ethical Decision Making

Influential Factors

Extent of Problems

Top Management Actions

Potential Consequences

Social Consensus

Probability of Harm

Time UntilConsequences

Number Affected

LO2

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Creating Ethical Guidelines

• Helps identify acceptable business practices

• Helps control behavior internally

• Avoids confusion in decision making

• Facilitates discussion about right and wrong

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Ethical Guidelines and Training

Exhibit 3.3

LO2

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Corporate SocialResponsibility

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Discuss corporate social responsibility

LO3

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Sustainability

• Socially responsible companies will outperform their peers

• It is in business’s best interest to find ways to attack society’s ills

LO3

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Discuss CorporateSocial Responsibility

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EthicalDo what is right.

LegalObey the Law.

EconomicBe profitable.

PhilanthropicBe a good citizen.

LO3

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Arguments AgainstSocial Responsibility

• Businesses should focus on making a profit and leave social and environmental concerns to nonprofits

• Businesses don’t have the expertise to deal with social issues and doing so may interfere with the primary goals of their firms

• The expense of social responsibility may damage the country in the global marketplace

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Arguments for Social Responsibility

• The right thing to do

• Business should police itself to avoid government intervention

• Small companies can prosper and build shareholder value as they tackle social problems

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Cost of Ignoring Social Responsibilities

• Treating key stakeholders poorly can cost companies significant fines and loss of respect

LO3

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Green Marketing

• More prevalent with increase in environmental awareness– Environmentally aware customers pay

more for products– Companies must to educate customers

of environmental benefits

LO3

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Environmentally Aware Advertising

The Blog Oddee has gathered some of this year’s most creative environmentally aware campaigns: www.oddee.com

Denver Water Authority’s campaign gets the conservation word out in creative ways:http://www.useonlywhatyouneed.org/Bandwagon/CampaignTrain/

LO3