Principal of management 9erobbins ppt05 lecture_3

ninth editionninth edition

STEPHEN P. ROBBINSSTEPHEN P. ROBBINS

PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie CookThe University of West AlabamaThe University of West Alabama

MARY COULTERMARY COULTER

Social Responsibility Social Responsibility and Managerial Ethicsand Managerial Ethics

ChapterChapter

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L E A R N I N G O U T L I N E L E A R N I N G O U T L I N E Follow this Learning Outline as you read and study this chapterFollow this Learning Outline as you read and study this chapter..

What is Social Responsibility?What is Social Responsibility?• Contrast the classical and socioeconomic views of social Contrast the classical and socioeconomic views of social

responsibility.responsibility.

• Discuss the role that stakeholders play in the four stages of social Discuss the role that stakeholders play in the four stages of social responsibility.responsibility.

• Differentiate between social obligation, social responsiveness, Differentiate between social obligation, social responsiveness, and social responsibility.and social responsibility.

Social Responsibility and Economic PerformanceSocial Responsibility and Economic Performance• Explain what research studies have shown about the relationship Explain what research studies have shown about the relationship

between an organization’s social involvement and its economic between an organization’s social involvement and its economic performance.performance.

• Define social screening.Define social screening.

• Explain what conclusion can be reached regarding social Explain what conclusion can be reached regarding social responsibility and economic performance.responsibility and economic performance.

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L E A R N I N G O U T L I N E (cont’d) L E A R N I N G O U T L I N E (cont’d) Follow this Learning Outline as you read and study this chapter.Follow this Learning Outline as you read and study this chapter.

The Greening of ManagementThe Greening of Management

• Describe how organizations can go green.Describe how organizations can go green.

• Relate the approaches to being green to the concepts of Relate the approaches to being green to the concepts of social obligation, social responsiveness, and social social obligation, social responsiveness, and social responsibility.responsibility.

Values-Based ManagementValues-Based Management

• Discuss what purposes shared values serve.Discuss what purposes shared values serve.

• Describe the relationship of values-based management to Describe the relationship of values-based management to ethics.ethics.

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L E A R N I N G O U T L I N E (cont’d) L E A R N I N G O U T L I N E (cont’d) Follow this Learning Outline as you read and study this chapter.Follow this Learning Outline as you read and study this chapter.

Managerial EthicsManagerial Ethics

• Discuss the factors that affect ethical and unethical Discuss the factors that affect ethical and unethical behavior.behavior.

• Describe the important roles managers play in Describe the important roles managers play in encouraging ethical behavior.encouraging ethical behavior.

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What Is Social Responsibility?What Is Social Responsibility?

• The Classical ViewThe Classical View

Management’s only social responsibility is to Management’s only social responsibility is to maximize profits (create a financial return) by maximize profits (create a financial return) by operating the business in the best interests of the operating the business in the best interests of the stockholders (owners of the corporation).stockholders (owners of the corporation).

Expending the firm’s resources on doing “social good” Expending the firm’s resources on doing “social good” unjustifiably increases costs that lower profits to the unjustifiably increases costs that lower profits to the owners and raises prices to consumers.owners and raises prices to consumers.

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What Is Social Responsibility? (cont’d)What Is Social Responsibility? (cont’d)

• The Socioeconomic ViewThe Socioeconomic View

Management’s social responsibility goes beyond Management’s social responsibility goes beyond making profits to include protecting and improving making profits to include protecting and improving society’s welfare.society’s welfare.

Corporations are not independent entities responsible Corporations are not independent entities responsible only to stockholders.only to stockholders.

Firms have a moral responsibility to larger society to Firms have a moral responsibility to larger society to become involved in social, legal, and political issues.become involved in social, legal, and political issues.

““To do the right thing”To do the right thing”

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Exhibit 5–1Exhibit 5–1 To Whom is Management Responsible?To Whom is Management Responsible?

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Exhibit 5–2Exhibit 5–2 Arguments For and Against Social ResponsibilityArguments For and Against Social Responsibility

• ForFor Public expectationsPublic expectations Long-run profitsLong-run profits Ethical obligationEthical obligation Public imagePublic image Better environmentBetter environment Discouragement of further Discouragement of further

governmental regulationgovernmental regulation Balance of responsibility Balance of responsibility

and powerand power Stockholder interestsStockholder interests Possession of resourcesPossession of resources Superiority of prevention Superiority of prevention

over cureover cure

• AgainstAgainst Violation of profit Violation of profit

maximizationmaximization Dilution of purposeDilution of purpose CostsCosts Too much powerToo much power Lack of skillsLack of skills Lack of accountabilityLack of accountability

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From Obligation to Responsiveness to From Obligation to Responsiveness to ResponsibilityResponsibility

• Social ObligationSocial Obligation The obligation of a business to meet its economic and The obligation of a business to meet its economic and

legal responsibilities and nothing more.legal responsibilities and nothing more.

• Social ResponsivenessSocial Responsiveness When a firm engages in social actions in response to When a firm engages in social actions in response to

some popular social need. some popular social need.

• Social ResponsibilitySocial Responsibility A business’s intention, beyond its legal and economic A business’s intention, beyond its legal and economic

obligations, to do the right things and act in ways that obligations, to do the right things and act in ways that are good for society.are good for society.

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Does Social Responsibility Pay?Does Social Responsibility Pay?

• Studies appear to show a positive relationship Studies appear to show a positive relationship between social involvement and the economic between social involvement and the economic performance of firms.performance of firms. Difficulties in defining and measuring “social Difficulties in defining and measuring “social

responsibility” and “economic performance raise responsibility” and “economic performance raise issues of validity and causation in the studies.issues of validity and causation in the studies.

• A general conclusion is that a firm’s social A general conclusion is that a firm’s social actions do not harm its long-term performance.actions do not harm its long-term performance.

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The Greening of ManagementThe Greening of Management

• The recognition of the close link between an The recognition of the close link between an organization’s decision and activities and its organization’s decision and activities and its impact on the natural environment.impact on the natural environment. Global environmental problems facing managers:Global environmental problems facing managers:

Air, water, and soil pollution from toxic wastesAir, water, and soil pollution from toxic wastes

Global warming from greenhouse gas emissionsGlobal warming from greenhouse gas emissions

Natural resource depletionNatural resource depletion

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How Organizations Go GreenHow Organizations Go Green

• Legal (or Light Green) ApproachLegal (or Light Green) Approach Firms simply do what is legally required by obeying laws, rules, Firms simply do what is legally required by obeying laws, rules,

and regulations willingly and without legal challenge.and regulations willingly and without legal challenge.

• Market ApproachMarket Approach Firms respond to the preferences of their customers for Firms respond to the preferences of their customers for

environmentally friendly products.environmentally friendly products.

• Stakeholder ApproachStakeholder Approach Firms work to meet the environmental demands of multiple Firms work to meet the environmental demands of multiple

stakeholdersstakeholders——employees, suppliers, and the community.employees, suppliers, and the community.

• Activist ApproachActivist Approach Firms look for ways to respect and preserve environment and be Firms look for ways to respect and preserve environment and be

actively socially responsible.actively socially responsible.

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Exhibit 5–5Exhibit 5–5 Approaches to Being GreenApproaches to Being Green

Source: Based on R.E. Freeman. J. Pierce, and R. Dodd. Shades of Green: Business Ethics and the Environment (New York: Oxford University Press, 1995).

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Evaluating the Greening of ManagementEvaluating the Greening of Management

• Organizations become “greener” byOrganizations become “greener” by (Global Reporting Initiative) Using the Sustainability (Global Reporting Initiative) Using the Sustainability

Reporting Guidelines to document “green” actions.Reporting Guidelines to document “green” actions. Adopting ISO 14001 standards for environmental Adopting ISO 14001 standards for environmental

managementmanagement Being named as one of the 100 Most Sustainable Being named as one of the 100 Most Sustainable

Corporations in the World.Corporations in the World.

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Values-Based ManagementValues-Based Management

• Values-Based ManagementValues-Based Management An approach to managing in which managers An approach to managing in which managers

establish and uphold an organization’s shared values.establish and uphold an organization’s shared values.

• The Purposes of Shared ValuesThe Purposes of Shared Values Guiding managerial decisionsGuiding managerial decisions Shaping employee behaviorShaping employee behavior Influencing the direction of marketing effortsInfluencing the direction of marketing efforts Building team spiritBuilding team spirit

• The Bottom Line on Shared Corporate ValuesThe Bottom Line on Shared Corporate Values An organization’s values are reflected in the decisions An organization’s values are reflected in the decisions

and actions of its employees.and actions of its employees.

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Exhibit 5–6Exhibit 5–6 Purposes of Shared ValuesPurposes of Shared Values

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Managerial EthicsManagerial Ethics

• Ethics DefinedEthics Defined

Principles, values, and beliefs that define what is right Principles, values, and beliefs that define what is right and wrong behavior.and wrong behavior.

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Exhibit 5–8Exhibit 5–8 Factors That Affect Ethical and Unethical BehaviorFactors That Affect Ethical and Unethical Behavior

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Factors That Affect Employee EthicsFactors That Affect Employee Ethics

• Moral DevelopmentMoral Development A measure of independence from outside influencesA measure of independence from outside influences

Levels of Individual Moral DevelopmentLevels of Individual Moral Development

– Preconventional levelPreconventional level

– Conventional levelConventional level

– Principled levelPrincipled level

Stage of moral development interacts with:Stage of moral development interacts with: Individual characteristicsIndividual characteristics

The organization’s structural designThe organization’s structural design

The organization’s cultureThe organization’s culture

The intensity of the ethical issueThe intensity of the ethical issue

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Exhibit 5–9Exhibit 5–9 Stages of Moral DevelopmentStages of Moral Development

Source: Based on L. Kohlberg, “Moral Stages and Moralization: The Cognitive-Development Approach,” in T. Lickona (ed.). Moral Development and Behavior: Theory, Research, and Social Issues (New York: Holt, Rinehart & Winston, 1976), pp. 34–35.

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Factors That Affect Employee Ethics Factors That Affect Employee Ethics (cont’d)(cont’d)

• Moral DevelopmentMoral Development Research Conclusions:Research Conclusions:

People proceed through the stages of moral development People proceed through the stages of moral development sequentially.sequentially.

There is no guarantee of continued moral development.There is no guarantee of continued moral development. Most adults are in Stage 4 (“good corporate citizen”).Most adults are in Stage 4 (“good corporate citizen”).

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Individual Characteristics Affecting Individual Characteristics Affecting Ethical BehaviorsEthical Behaviors

• ValuesValues Basic convictions about what is right or wrong on a Basic convictions about what is right or wrong on a

broad range of issuesbroad range of issues

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Individual CharacteristicsIndividual Characteristics

• Personality VariablesPersonality Variables Ego strengthEgo strength

A personality measure of the strength of a person’s A personality measure of the strength of a person’s convictionsconvictions

Locus of ControlLocus of Control A personality attribute that measures the degree to which A personality attribute that measures the degree to which

people believe they control their own life.people believe they control their own life.

Internal locus:Internal locus: the belief that you control your destiny. the belief that you control your destiny.

External locus:External locus: the belief that what happens to you is due to the belief that what happens to you is due to luck or chance.luck or chance.

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Other VariablesOther Variables

• Structural VariablesStructural Variables Organizational characteristics and mechanisms that Organizational characteristics and mechanisms that

guide and influence individual ethics:guide and influence individual ethics: Performance appraisal systemsPerformance appraisal systems Reward allocation systemsReward allocation systems Behaviors (ethical) of managersBehaviors (ethical) of managers

• An Organization’s CultureAn Organization’s Culture

• Intensity of the Ethical IssueIntensity of the Ethical Issue

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Exhibit 5–10Exhibit 5–10 Determinants of Issue IntensityDeterminants of Issue Intensity