Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 5.1.
Chapter 5 SOCIAL RESPONSIBILITY AND MANAGERIAL ETHICS 5.1© 2003 Pearson Education Canada Inc.
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Transcript of Chapter 5 SOCIAL RESPONSIBILITY AND MANAGERIAL ETHICS 5.1© 2003 Pearson Education Canada Inc.
© 2003 Pearson Education Canada Inc.
LEARNING OBJECTIVES• You should be able to:
– Explain the classical and socioeconomic views of social responsibility
– List the arguments for and against business’s being socially responsible
– Differentiate among social obligation, social responsiveness, and social responsibility
– Explain the relationship between corporate social responsibility and economic performance
– Describe values-based management and how it is related to organizational culture
5.25.2
© 2003 Pearson Education Canada Inc.
LEARNING OBJECTIVES (continued)
• You should be able to:– Explain what the “greening” of management is
and how organizations are “going green”– Differentiate among the four views of ethics– Identify the factors that affect ethical behaviour– Discuss various ways organizations can
improve the ethical behaviour of their employees
5.35.3
© 2003 Pearson Education Canada Inc.
WHAT IS SOCIAL RESPONSIBILITY?
• Two Opposing Views of Social Responsibility– Classical view - management’s only social
responsibility is to maximize profits• doing “social good” adds to the cost of doing
business• costs have to be passed on to consumers
5.45.4
© 2003 Pearson Education Canada Inc.
WHAT IS SOCIAL RESPONSIBILITY? (continued)• Two Opposing Views of Social Responsibility (continued)
– Socioeconomic view - businesses are not just economic institutions
• management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare
• businesses have responsibility to a society• more organizations around the world have increased
their social responsibility
5.55.5
© 2003 Pearson Education Canada Inc.
WHAT IS SOCIAL RESPONSIBILITY? (continued)
• From Obligations to Responsiveness– Social responsibility - a business’s obligation
to pursue long-term goals that help society– Social obligation - obligation of a business to
meet its economic and legal responsibilities– Social responsiveness - capacity of a firm to
adapt to changing societal conditions
5.65.6
© 2003 Pearson Education Canada Inc.
LEVELS OF SOCIAL INVOLVEMENT (Exhibit 5.2)
Social Obligation
SocialResponsibility
SocialResponsiveness
5.75.7
© 2003 Pearson Education Canada Inc.
SOCIAL RESPONSIBILITY vs. SOCIAL RESPONSIVENESS
(Exhibit 5.3)
Major considerationFocusEmphasisDecision framework
SocialResponsibility
EthicalEndsObligationLong term
SocialResponsiveness
PragmaticMeansResponsesMedium and short term
5.85.8
© 2003 Pearson Education Canada Inc.
SOCIAL RESPONSIBILITY AND ECONOMIC PERFORMANCE
• Most Research Shows a Positive Relationship• Evaluation of Socially Conscious Mutual Stock
Funds– social screening - applying social criteria to
investment• Conclusion
– a company’s socially responsible actions do not hurt its long-term economic performance
5.95.9
© 2003 Pearson Education Canada Inc.
VALUES-BASED MANAGEMENT
• Definition– An approach to managing in which managers
establish, promote, and practice an organization’s shared values
• Purposes of Shared Values– Act as guideposts for managerial decisions and
actions– Influence marketing efforts– Build team spirit
5.105.10
PURPOSES OF SHARED VALUES (Exhibit 5.4)
SharedOrganizational
Values
Guide Managers’Decisions and
Actions
InfluenceMarketing
Efforts
Build Team Spirit
Shape Employee Behaviour
5.115.11© 2003 Pearson Education Canada Inc.
© 2003 Pearson Education Canada Inc.
VALUES-BASED MANAGEMENT (continued)
• Developing Shared Values– It is difficult to establish shared values– Managers are responsible for shaping the
organization so that its values, norms, and ideals appeal strongly to employees
– Companies that practice values-based management have broad commitment to being socially responsible and socially responsive
5.125.12
© 2003 Pearson Education Canada Inc.
SUGGESTIONS FOR CREATING A GOOD CORPORATE VALUES
STATEMENT (Exhibit 5.5)
5.135.13
© 2003 Pearson Education Canada Inc.
THE “GREENING” OF MANAGEMENT
• Definition – Recognition of the close link between an organization’s
decisions and activities and its impact on the natural environment
• Global Environmental Problems– There are many global environmental problems– Economically developed nations are blamed for the
problems– Problems expected to increase as emerging countries
become more developed
5.145.14
© 2003 Pearson Education Canada Inc.
THE “GREENING” OF MANAGEMENT (continued)
• How Organizations Go Green– Products and production processes have become cleaner
– Shades of green - describe different approaches that organizations may take
• legal approach - follow legal obligations• market approach - organizations respond to the environmental
preferences of customers• stakeholder approach - organization chooses to respond to
multiple demands made by stakeholders• activist approach - looks for ways to respect and preserve the
earth and its natural resources
5.155.15
APPROACHES TO BEING GREEN (Exhibit 5.6)
LegalApproach
(Light Green)
MarketApproach
StakeholderApproach
ActivismApproach
(Dark Green)
Low HighEnvironmental Sensitivity
© 2003 Pearson Education Canada Inc. 5.165.16
© 2003 Pearson Education Canada Inc.
THE “GREENING” OF MANAGEMENT (continued)
• Summing Up Social Responsibility– Four-stage progression of an organization’s
social responsibility• each stage implies an increasing level of managerial
discretion• Stage 1 - promote stockholders’ interests by seeking
to minimize costs and maximize profits• Stage 2 - managers accept their responsibility to
employees and focus on human resource concerns
5.175.17
© 2003 Pearson Education Canada Inc.
THE “GREENING” OF MANAGEMENT (continued)
• Summing Up Social Responsibility (continued)– Four-stage progression (continued)
• Stage 3 - expand responsibilities to other stakeholders
• Stage 4 - managers feel responsibility to society as a whole
5.185.18
TO WHOM IS MANAGEMENT RESPONSIBLE? (Exhibit 5.7)
Stage 1Owners andManagement
Stage 2Employees
Stage 3Constituents in the
Specific Environment
Stage 4BroaderSociety
Social ResponsibilityLesser Greater
5.195.19© 2003 Pearson Education Canada Inc.
© 2003 Pearson Education Canada Inc.
MANAGERIAL ETHICS
• Ethics– Rules and principles that define right and
wrong conduct• Four Views of Ethics
– Utilitarian view - ethical decisions are made on the basis of their outcomes or consequences
5.205.20
© 2003 Pearson Education Canada Inc.
MANAGERIAL ETHICS (continued)
• Four Views of Ethics (continued)– Rights view - respects and protects individual
liberties and privileges– Theory of justice view - managers impose and
enforce rules fairly and impartially– Integrative social contracts theory - decisions
should be based on empirical and normative factors
5.215.21
FACTORS THAT AFFECT ETHICAL AND UNETHICAL BEHAVIOUR
(Exhibit 5.8)
EthicalDilemma
Moderators
Stage of MoralDevelopment
Ethical/UnethicalBehaviour
OrganizationalCulture
StructuralVariables
IndividualCharacteristics
IssueIntensity
© 2003 Pearson Education Canada Inc. 5.225.22
© 2003 Pearson Education Canada Inc.
MANAGERIAL ETHICS (continued)
• Factors That Affect Managerial Ethics (continued)– Individual characteristics
• values - basic convictions about right and wrong
• ego strength - strength of a person’s convictions
• locus of control - degree to which people believe that they control their own fate
5.245.24
© 2003 Pearson Education Canada Inc.
MANAGERIAL ETHICS (continued)
• Factors That Affect Managerial Ethics (continued)
– Structural variables• design of organization affects ethical behaviour• rules and regulations• behaviour of superiors• performance appraisal systems that focus on means as
well as ends• reward systems that punish failure to achieve ends is
likely to compromise ethics
5.255.25
© 2003 Pearson Education Canada Inc.
MANAGERIAL ETHICS (continued)
• Factors That Affect Managerial Ethics (continued)
– Organizational culture• strong culture more influential than a weak culture• high ethical standards result from a culture that is high
in risk tolerance, control, and conflict tolerance
– Issue intensity• importance of an ethical issue• more intense issues prompt greater ethical behaviour
5.265.26
© 2003 Pearson Education Canada Inc.
MANAGERIAL ETHICS (continued)
• Ethics in an International Context– social and cultural differences determine
ethical and unethical behaviour– Global Compact - United Nations
document containing principles for doing business globally in the areas of human rights, labour, and environment
5.285.28
© 2003 Pearson Education Canada Inc.
THE GLOBAL COMPACTHuman Rights
Principle 1:support and respect the protection of international human rights within their sphere of influence; andPrinciple 2: make sure their own corporations are not complicit in human rights abuses.
Labour
Principle 3: freedom of association and the effective recognition of the right to collective bargaining;Principle 4: the elimination of all forms of forced and compulsory labour;Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation.
Environment
Principle 7: support a precautionary approach to environmental challenges;Principle 8: undertake initiatives to promote greater environmental responsibility; andPrinciple 9: encourage the development and diffusion of environmentally friendly technologies.
5.295.29
© 2003 Pearson Education Canada Inc.
MANAGERIAL ETHICS (continued)
• Toward Improving Ethical Behaviour– Comprehensive ethics programs have the
potential to improve an organization’s ethical climate
– Employee selection - eliminate ethically questionable applicants
– Codes of ethics - formal statement of an organization’s primary values and ethical rules
5.305.30
© 2003 Pearson Education Canada Inc.
MANAGERIAL ETHICS (continued)• Toward Improving Ethical Behaviour (continued)
– Top management’s leadership - what they do is far more important than what they say
– Job goals and performance appraisal - goals should be clear and realistic and must focus on ethical standards
– Ethics training - an increasing number of organizations use training to encourage ethical behaviour
– Independent social audits - evaluation of decisions in relation to code of ethics
– Formal protective mechanisms - protect employees who face ethical dilemmas
5.315.31