4.Social Responsibility 1

SOCIAL RESPONSIBILITY

AND MANAGERIALETHICS

SOCIAL RESPONSIBILITY

Two Opposing Views of Social ResponsibilityClassical 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

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

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

LEVELS OF SOCIAL INVOLVEMENT

Social Obligation

SocialResponsibility

SocialResponsiveness

SOCIAL RESPONSIBILITY vs. SOCIAL RESPONSIVENESS

Major considerationFocusEmphasisDecision framework

SocialResponsibility

EthicalEndsObligationLong term

SocialResponsiveness

PragmaticMeansResponsesMedium and short term

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

The Pyramid of Social Responsibility

Ethical Responsibilitiesbeing ethical; doing what is right, just,

and fair; avoiding harm

VoluntaryResponsibilities

being a “good corporate citizen”;

contributing to thecommunity and quality of life

Source: Adapted from Archie B. Carroll, “The Pyramid of CorporateSocial Responsibility: Toward the Moral Management of Organizational Stakeholders.” Business Horizons 34 (July/August 1991): 42.

Legal Responsibilitiesobeying the law (society’s codification of rightand wrong); playing by the rules of the game

Economic Responsibilitiesbeing profitable

MANAGERIAL ETHICS Ethics

Rules and principles that define right and wrong conduct

Four Views of EthicsUtilitarian view - ethical decisions

are made on the basis of their outcomes or consequences

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

FACTORS THAT AFFECT ETHICAL AND UNETHICAL

BEHAVIOUR

EthicalDilemma

Moderators

Stage of MoralDevelopment

Ethical/UnethicalBehaviour

OrganizationalCulture

StructuralVariables

IndividualCharacteristics

IssueIntensity

STAGES OF MORAL DEVELOPMENT

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

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

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

DETERMINANTS OF ISSUE INTENSITY

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

THE GLOBAL COMPACTHuman RightsPrinciple 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.

LabourPrinciple 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.

EnvironmentPrinciple 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.

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

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

Comparison of Business Ethics and Social Responsibility

Business Ethics Refers to the principles and standards that define

acceptable conduct in the world of business.

Social Refers to a business’s obligation Responsibility to maximize its positive impact

and minimize its negative impact on society.

Comparison of Business Ethics and Social Responsibility

Business ethics deal with the right and wrong actions that arise in any work environment

Social responsibility refers to management’s consideration of the social and economic effects of its decisions

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