Chapter 5 CSR

8/3/2019 Chapter 5 CSR

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Corporate Social Responsibility

and Managerial Ethics

Chapter 5


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What Is Corporate Social

Responsibility? The Classical View

Maximize profits for the benefit of the

stockholders

Doing social good unjustifiably increasescosts


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What Is Corporate Social

Responsibility? The Socio-economic View

Management should also protect andimprove societys welfare

Corporations are responsible not only tostockholders

Firms have a moral responsibility to largersociety to do the right thing


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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 overcure

Against Violation of profit

maximization

Dilution of purpose

Costs

Too much power

Lack of skills Lack of

accountability


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Purposes of Shared Values

Build Team SpiritGuide Managers'

Decisions and ActionsShape Employee

BehaviorInfluence

Marketing Efforts

SHAREDORGANIZATIONAL

VALUES


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The Greening of Management

The recognition by business of the close

link between its decisions and activitiesand their impact on the naturalenvironment.


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Managerial Ethics

The rules and principles that define rightand wrong conduct.


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Factors That Affect Ethical and

Unethical Behavior

EthicalDilemma

Stage of MoralDevelopment

Organizational Culture

StructuralVariables

IndividualCharacteristics

IssueIntensity

Moderators Ethical/UnethicalBehaviour


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Factors That Affect Employee

Ethics Stages of moral development

Individual characteristics

Structural variables

Organizational culture

Issue intensity


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Stages of Moral Development

6. Following self -chosen ethical principles ev en ifthey v iolate the law

5. Valuing rights of others and upholding absolute

v alues and rights regardless of the majority

sopinion4. Maintaining conv entional order by f ulf illing obligations

to which y ou hav e agreed3. Liv ing up to what is expected by people close to y ou

2. Following rules only when doing so is in y our immediate interest1. Sticking to rules to av oid physical punishment

Preconv entional

Conv entional

Lev el Description of Stage

Principled


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Structural variables Organizational culture

Issue intensityStage of moral development interacts with:


The organizations structural design

The organizations culture

The intensity of the ethical issue


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Issue intensity

Research Conclusions: People proceed through the stages of moral development

sequentially

There is no guarantee of continued moral development

Most adults are in Stage 4 (good corporate citizen)


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Issue intensityValuesBasic convictions about what is right or wrong on a broad range of

issues

Ego strength

A personality measure of the strength of a persons convictions


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Ethics Stages of moral development Individual characteristics


Issue intensity

Locus of ControlA personality attribute that measures the degree to which

people believe they control their own life Internal locus: the belief that you control your destiny

External locus: the belief that what happens to you is due to

luck or chance


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Ethics Stages of moral development Individual characteristics



Issue intensity

Organizational characteristics and mechanisms that

guide and influence individual ethics:Performance appraisal systems

Reward allocation systems

Behaviours (ethical) of managers

An organizations culture

Intensity of the ethical issue


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Factors That Affect EmployeeEthics

Stages of moral development




Issue intensity

Good structural design minimizes ambiguity anduncertainty and fosters ethical behavior


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Factors That Affect EmployeeEthics

Stages of moral development



Issue intensity

Cultures high in risk tolerance, control, and conflicttolerance are most likely to encourage high ethicalstandards

Weak cultures have less ability to encourage high ethical

standards


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Determinants of Issue Intensity

Issue Intensity

Consensusof Wrong

Proximity toVictim(s)

Concentrationof Effect

Greatnessof Harm

Immediacy ofConsequences

Probabilityof Harm

How many peoplewill be harmed?

How concentratedis the effect of the

action on the victim(s)?

How likely is itthat this action

will cause harm?

Will harm be feltimmediately?

How much agreementis there that thisaction is wrong?

How close are thepotential victims?


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Ethics in an International Context

Ethical standards are not universal

Social and cultural differences determine

acceptable behaviors


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The Global Compact

Human Rights

Principle 1: Support and respect the protectionof international human rights within their sphereof influence

Principle 2: Make sure business corporations

are not complicit in human rights abuses


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Labor Standards

Principle 3: Freedom of association and theeffective recognition of the right to collective

bargaining Principle 4: Eliminate all forms of forced and

compulsory labor

Principle 5: Abolish child labor

Principle 6: Eliminate discrimination in respect ofemployment and occupation


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The Global Compact

Environment Principle 7: Support a precautionary approach to

environmental challenges Principle 8: Undertake initiatives to promote greater

environmental responsibility

Principle 9: Encourage the development and diffusion

of environmentally friendly technologies

Anticorruption Principle 10: Work against all forms of corruption,

including extortion and bribery


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How Managers Can Improve Ethical

Behavior in an Organization Hire individuals with high ethical standards.

Establish codes of ethics and decision rules.

Lead by example

Delineate job goals and performance appraisalmechanisms

Provide ethics training

Conduct independent social audits

Provide support for individuals facing ethical

dilemmas


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Code of Ethics

A formal statement of an organizationsprimary values and the ethical rules it

expects its employees to follow Be a dependable organizational citizen

Dont do anything unlawful or improper

that will harm the organization Be good to customers


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Effective Use of a Code of Ethics

Develop a code of ethics to guidedecision making

Communicate the code regularly

Have all levels of management showcommitment to the code

Publicly reprimand and consistentlydiscipline those who break the code


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Examining Ethics?


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Ethical Leadership

Managers must provide a good role modelby:

Being ethical and honest at all times

Telling the truth

Admitting failure and not trying to cover it up

Communicating shared ethical values to employees

through symbols, stories, and slogans Rewarding employees who behave ethically and

punishing those who do not

Protecting employees (whistleblowers) who bring

to light unethical behaviors or raise ethical issues


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The Value of Ethics Training

Training can make a difference inethical behaviors

Training increases employee awarenessof ethical issues in business decisions

Training clarifies and reinforces the

standards of conduct

Employees are more confident ofsupport when taking unpopular but

ethically correct stances

Chapter 5 CSR

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