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MUHAMMAD QAMA UZ ZAMAN

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Chapter 3

Ethics and Social Responsibility

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Learning Objectives Define ethics and understand the importance of ethical

behavior for organizations Discuss four perspectives on ethics and arguments for

ethical relativism and universalism Understand the efficiency and social responsibility

perspectives of corporate social responsibility Know how ethics affect individual behavior in organizations Consider ways of scientifically studying organizational

ethics Know methods for resolving cross-cultural ethical conflicts Analyze your ethics and how they affect your understanding

of management and organizational behavior.

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Ethics

Moral standards, not governed by law, that focus on the human

consequences of actions

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Four Perspectives on Ethics Descriptive Approach

Uses methods and theories of social science Conceptual Approach

Focuses on the meaning of key ideas in ethics Normative Approach

Involves constructing arguments in defense of basic moral positions and prescribing correct ethical behavior

Practical ApproachInvolves developing a set of normative guidelines

for resolving conflicts of interest to improve societal well-being

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Relativism Vs. Universalism

Individual ethical relativism No absolute principle of right and wrong,

good or bad, in any social situation Cultural ethical relativism

What is right or wrong, good or bad, depends on one's culture

Ethical universalism Universal and objective ethical rules

located deep within a culture that also apply across societies

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The Social Responsibility of Corporations The Efficiency Perspective

The obligation of business is to maximize profits for shareholders

The Social Responsibility PerspectiveManagers bear a fiduciary

relationship to stakeholders

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Kohlberg’s Theory of Moral Development

Stage 1 - Obedience and PunishmentObedience to those in authority who have the

power to punish Stage 2 - Individualism and Reciprocity

The greatest good for the individual person making the decision

Stage 3 - Interpersonal ConformityExpectations of others, including friends, family

members, and people in general

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Kohlberg’s Theory of Moral Development (cont.) Stage 4 - Social System/Law and Order

Play one's role in the social system, do one's duty, obey rules

Stage 5 - Social Contract“The greatest good for the greatest

number"

Stage 6 - Universal Ethical PrinciplesPrinciples selected freely by a person and

that the individual is willing for everyone to live by

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Face and Ethical Behavior

Displays an individual’s understanding of culturally defined moral codes as they apply to and maintain a particular social situation

Behavior that sustains the definition of the situation supports a person's face

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Organizational Ethics

Internal Ethical IssuesDiscriminationSafetyCompensationChild Labor

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Organizational Ethics (cont.)

Cross-Cultural Ethical Issues Theft of Intellectual PropertyBribery and CorruptionIntentionally Selling Dangerous

ProductsEnvironmental PollutionIntentional Misrepresentation in

Negotiations

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Studying Ethics

Social science methods Study comparing U.S. and U.K.

Corporations vary in the emphasis on different aspects of ethics and how they manage them

Differences in perceptions of corruption among countries

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Resolving Cross-Cultural Ethical Conflicts U.S. approach

Transform ethics into laws Global approach

OECD views corruption in developing countries to be particularly harmful to their prospects for economic growth

Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

Caux Round Table and the Conference Board standards for global business ethics and social responsibility

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Resolving Cross-Cultural Ethical Conflicts (cont.)

Codes of ethicsCodify behavior that is

unacceptable under certain conditions

Reduce ambiguity by specifying appropriate behavior

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Kohls and Buller’s Approaches for Resolving Ethical Conflict

AvoidingOne party ignores or does not deal with the

conflict Forcing

One party forces its will upon the other Education-Persuasion

One party attempts to convert others to its position through providing information, reasoning, or appeals to emotion

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Kohls and Buller’s Approaches for Resolving Ethical Conflict (cont.) Infiltration

One party introduces its cultural values to another society hoping that an appealing idea will spread

Negotiation-CompromiseBoth parties give up something to negotiate

a settlement Accommodation

One party adapts to the ethics of the other Collaboration-Problem Solving

Both parties work together to achieve a mutually satisfying solution

Values: Core and Periphery

HumanLife

Honesty

Job security

Knowledge

Leisure

Freedom

Peace

Stockholder values

Job satisfaction

Power

HealthTrust

Property rights

Living standards

Efficiency

Family

Friends

Society

Customer satisfaction

Status

Worker safety

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Ethics as a Competitive Advantage in Global Business

Ethical capability related to perceiving interdependence, thinking ethically, responding effectively

Trust as a value among multinational corporations

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Convergence or Divergence?

A Bureaucratic Ethic

International Regulatory Agencies

Diffusion of Capitalism Worldwide

Religious Differences

Reassertion of National and Ethnic Cultures

Varying Economic Systems and Levels of Development

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Implications for Managers

Develop a Framework for Evaluating Ethical Codes and Determining Personal Ethics

Understand Behaviors and Ethics of Other Societies

Consider Approaches to Resolving Cross-Cultural Ethical Conflicts