Ethics and Social Responsibility

Ethics and Social ResponsibilityEthics and Social Responsibility

CHAPTER 5CHAPTER 5

2 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved.

Learning ObjectivesLearning Objectives

Define ethics and explain how ethical behavior relates to behavior governed by law and free choice.

Explain the utilitarian, individualism, moral-rights, and justice approaches for evaluating ethical behavior.

Describe how both individual and organizational factors shape ethical decision making.

Define corporate social responsibility and how to evaluate it along economic, legal, ethical, and discretionary criteria.


Learning Objectives (contd.)Learning Objectives (contd.)

Describe four organizational approaches to environmental responsibility, and explain the philosophy of sustainability.

Discuss how ethical organizations are created through ethical leadership and organizational structures and systems.

Identify important stakeholders for an organization and discuss how managers balance the interests of various stakeholders.


EthicsEthics

The code of moral principles and values that

govern the behaviors of a person or group with

respect to what is right or wrong.


Three Domains of Human ActionThree Domains of Human Action

Amount of

Explicit ControlHigh Low

Domain of Codified Law

(Legal Standard)

Domain of Ethics

(Social Standard)

Domain of Free Choice

(Personal Standard)

Exhibit 5.1


Ethical DilemmaEthical Dilemma

A situation that arises when all alternative choices or behaviors have been deemed undesirable because...

Of potentially negative ethical consequences, making it difficult to distinguish right from wrong


Criteria For Ethical Decision Making

Criteria For Ethical Decision Making

Most ethical dilemmas involve

Conflict between needs of the part & whole- Individual versus the organization - Organization versus society as a whole

Managers benefit from a normative strategy to guide their decision making - norms and values


Ethical Decision Making ApproachesEthical Decision Making Approaches

Utilitarian Approach

Individualism Approach

Moral-Rights Approach

Justice Approach


Utilitarian ApproachUtilitarian Approach

● Moral behavior produces the greatest good for the greatest number

● Example – recent trend among companies to monitor employee use of the Internet


Individualism ApproachIndividualism Approach

● Acts are moral when they promote the individual's best long-term interests, which ultimately leads to the greater good

● Individual self-direction paramount

● Individualism is believed to lead to honesty & integrity since that works best in the long run

● However, top executives from WorldCom, Enron, Tyco demonstrate flaws of approach


Moral-Rights ApproachMoral-Rights Approach

Moral decisions are those that best maintain the rights of those people affected by them.

An ethical decision is one that avoids interfering with the fundamental rights of others.


Six Moral Rights Six Moral Rights

1. The right of free consent1. The right of free consent

2. The right to privacy2. The right to privacy

3. The right of freedom of conscience3. The right of freedom of conscience

4. The right of free speech4. The right of free speech

5. The right to due process5. The right to due process

6. The right to life and safety6. The right to life and safety


Justice ApproachJustice Approach

Moral Decisions must be based on standards of equity, fairness, impartiality

Three types of Justice Approaches: Distributive Justice Procedural Justice Compensatory Justice


Distributive JusticeDistributive Justice

Different treatment of people should not be based on arbitrary characteristics

In case of substantive differences, people should be treated differently in proportion to the differences among them


Procedural JusticeProcedural Justice

Rules should be clearly stated

Rules should be consistently and impartially enforced


Compensatory JusticeCompensatory Justice

● Individuals should be compensated for the cost of their injuries by the party responsible

● Individuals should not be held responsible for matters they have no control over


Factors Affecting Ethical ChoicesFactors Affecting Ethical Choices

The Manager Levels or stages of moral

development• Pre-conventional• Conventional• Post-conventional

The Organization


Levels of Personal Moral DevelopmentLevels of Personal Moral Development

Exhibit 5.2


The OrganizationThe Organization

Rarely can ethical or unethical corporate actions be attributed solely to the personal values of a single manager

Values adopted within the organization are highly important

Most people believe their duty is to fulfill obligations and expectations of others


Corporate Social ResponsibilityCorporate Social Responsibility

Organization’s obligation to make decisions and take actions that will enhance the welfare and interests of society and organization

Being a good corporate citizen

Difficulty in understanding – issues can be ambiguous with respect to right and wrong


Organizational StakeholdersOrganizational Stakeholders

Any group within or outside the organization that has a stake in the organization’s performance

Each stakeholder – Has a different criterion of responsiveness – Has a different interest in the company

Monsanto


Environmental Responsibility CommitmentEnvironmental Responsibility Commitment

Activist Approach

Stakeholder Approach

Market Approach

Legal Approach

The Shades of Corporate Green

Adapted from Exhibit 5.6


Total Corporate Social ResponsibilityTotal Corporate Social Responsibility

Total Corporate Social Responsibility

Exhibit 5.7


The Ethical OrganizationThe Ethical Organization

Exhibit 5.9

The Three Pillars of an Ethical Organization

Ethics and Social Responsibility

Technology

free choice

procedural justice

distributive justice

justice approaches

learning objectives

compensatory justice

justice approach

moral decisions