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8/3/2019 24312286 Social Responsibility and Managerial Ethics Principles of Management
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Chapter 5
Social Responsibility and Managerial
Ethics
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LEARNING OUTLINEFollow this Learning Outline as you read and study this chapter.
What Is Social Responsibility?
Contrast the classical and socio-economic views of social
responsibility.
Discuss the role that stakeholders play in the four
approaches to social responsibility.
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LEARNING OUTLINE (contd)Follow this Learning Outline as you read and study this chapter.
Social Responsibility and Economic Performance
Explain what research studies have shown about therelationship between an organizations social involvement
and its economic performance.
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LEARNING OUTLINE (contd)Follow this Learning Outline as you read and study this chapter.
Values-based Management
Discuss the four purposes that shared values serve.
Describe the relationship of values-based management to
ethics.
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LEARNING OUTLINE (contd)Follow this Learning Outline as you read and study this chapter.
Managerial Ethics
Contrast the four views of ethics.
Discuss the factors that affect ethical and unethical behaviour.Discuss the six determinants of issue intensity.
Explain codes of ethics and how their effectiveness can be
improved.
Describe the important roles managers play in encouragingethical behaviour.
Discuss how managers and organizations can protect
employees who raise ethical issues or concerns.
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What Is Social Responsibility?
The Classical View
Maximize profits for the benefit of the
stockholders Doing social good unjustifiably increases costs
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What Is Social Responsibility?
(contd)
The Socio-economic View
Management should also protect and improvesocietys welfare
Corporations are responsible not only to
stockholders
Firms have a moral responsibility to larger
society to do the right thing
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Exhibit 4.1 Approaches to Social
Responsibility
Source:Adapted from S.L. Wartick and P.L. Cochran, The Evolution of the CorporateSocial Performance Model, Academy of Management Review, October 1985, p. 766.
DefensiveApproach
Minimalcommitment
to socialresponsibility
AccommodativeApproach
Moderatecommitment
to socialresponsibility
ProactiveApproach
Strongcommitment
to socialresponsibility
ObstructionistApproach
Disregardfor social
responsibility
No Social Responsibility High Social Responsibility
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Exhibit 4.2 Arguments For and
Against Social Responsibility For
Public expectations
Long-run profits
Ethical obligation Public image
Better environment
Discouragement of furthergovernmental regulation
Balance of responsibility andpower
Stockholder interests
Possession of resources
Superiority of prevention over cure
Against
Violation of profit
maximization Dilution of purpose
Costs
Too much power
Lack of skills Lack of accountability
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Values-based Management
Values-based Management
Managers establish and uphold an organizations sharedvalues
Purposes of Shared Values Guiding managerial decisions
Shaping employee behaviour
Influencing the direction of marketing efforts
Building team spirit The Bottom Line on Shared Corporate Values
An organizations values are reflected in the decisions andactions of its employees
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Exhibit 4.3 Purposes of Shared
Values
Build Team SpiritGuide Managers'
Decisions and ActionsShape Employee
BehaviorInfluence
Marketing Efforts
SHAREDORGANIZATIONAL
VALUES
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Exhibit 4.4
Stated Values ofOrganizations
Percentage ofCore Value Respondents
Customer satisfaction 77%
Ethics/integrity 76%
Accountability 61%
Respect for others 59%
Open communication 51%
Profitability 49%
Teamwork 47%
Innovation/change 47%
Continuous learning 43%
Positive work environment 42%
Diversity 41%
Community service 38%
Trust 37%
Social responsibility 33%
Security/safety 33%
Empowerment 32%
Employee job satisfaction 31%
Have fun 24%
Source:AMA Corporate Values Survey, (www.amanet.org), October 30, 2002.
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Managerial Ethics
Ethics Defined
The rules and principles that define right and
wrong conduct Four Views of Ethics
Utilitarian view
Rights viewTheory of justice view
Integrative social contracts theory
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Managerial Ethics (contd)
Utilitarian View
Greatest good is provided for the greatestnumber
Encourages efficiency and productivity and isconsistent with the goal of profit maximization
Rights View
Respecting and protecting individual libertiesand privileges
Seeks to protect individual rights of conscience, freespeech, life and safety, and due process
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Managerial Ethics (contd)
The Theory of Justice
Organizational rules are enforced fairly and impartially
and follow all legal rules and regulations
Protects the interests of underrepresented stakeholders and the
rights of employees
Integrative Social Contracts Theory
Ethical decisions should be based on existing ethical
norms in industries and communities Based on integration of the general social contract and the
specific contract between community members
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Exhibit 4.5 Factors That Affect
Ethical and Unethical Behaviour
EthicalDilemma
Stage of MoralDevelopment
Organizational Culture
StructuralVariables
IndividualCharacteristics
IssueIntensity
Moderators Ethical/UnethicalBehavior
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Factors That Affect Employee Ethics
Stages of moral development
Individual characteristics
Structural variables Organizational culture
Issue intensity
A measure of independence from outside influences
Levels of Individual Moral Development
Pre-conventional level
Conventional level
Principled level
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Exhibit 4.6 Stages 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. 3435.
6. Following self -chosen ethical principles ev en ifthey v iolate the law
5. Valuing rights of others and upholding absolute
v alues and rights regardless of the majority
sopinion4. Maintaining conv entional order by f ulf illing obligations
to which y ou hav e agreed3. Liv ing up to what is expected by people close to y ou
2. Following rules only when doing so is in y our immediate interest1. Sticking to rules to av oid physical punishment
Preconv entional
Conv entional
Lev el Description of Stage
Principled
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Factors That Affect Employee Ethics
Stages of moral development
Individual characteristics
Structural variables
Organizational culture
Issue intensity
Stage of moral development interacts with:
Individual characteristicsThe organizations structural design
The organizations culture
The intensity of the ethical issue
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Factors That Affect Employee Ethics
Stages of moral development
Individual characteristics
Structural variables
Organizational culture
Issue intensity
Research Conclusions:
People proceed through the stages of moral developmentsequentially
There is no guarantee of continued moral development
Most adults are in Stage 4 (good corporate citizen)
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Factors That Affect Employee Ethics
Stages of moral development
Individual characteristics
Structural variables
Organizational culture
Issue intensity
Values
Basic convictions about what is right or wrong on a broad range ofissues
Ego strengthA personality measure of the strength of a persons convictions
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Factors That Affect Employee Ethics
Stages of moral development
Individual characteristics
Structural variables
Organizational culture
Issue intensity
Locus of Control
A personality attribute that measures the degree to whichpeople believe they control their own life
Internal locus: the belief that you control your destiny
External locus: the belief that what happens to you is due to
luck or chance
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Factors That Affect Employee Ethics
Stages of moral development Individual characteristics
Structural variables
Organizational culture Issue intensity
Organizational characteristics and mechanisms thatguide and influence individual ethics:
Performance appraisal systems
Reward allocation systems
Behaviors (ethical) of managers
An organizations culture
Intensity of the ethical issue
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Factors That Affect Employee Ethics
Stages of moral development
Individual characteristics
Structural variables
Organizational culture
Issue intensity
Good structural design minimizes ambiguity anduncertainty and fosters ethical behavior
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Factors That Affect Employee Ethics
Stages of moral development
Individual characteristics
Structural variables
Organizational culture
Issue intensity
Cultures high in risk tolerance, control, and conflicttolerance are most likely to encourage high ethicalstandards
Weak cultures have less ability to encourage high ethicalstandards
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Exhibit 4.7 Determinants of Issue Intensity
Issue Intensity
Consensusof Wrong
Proximity toVictim(s)
Concentrationof Effect
Greatnessof Harm
Immediacy ofConsequences
Probabilityof Harm
How many peoplewill be harmed?
How concentratedis the effect of the
action on the victim(s)?
How likely is itthat this action
will cause harm?
Will harm be feltimmediately?
How much agreementis there that thisaction is wrong?
How close are thepotential victims?
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Ethics in an International Context
Ethical standards are not universal
Social and cultural differences determine
acceptable behaviors
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The Global Compact
Human Rights Principle 1: Support and respect the protection of international
human rights within their sphere of influence
Principle 2: Make sure business corporations are not complicit in
human rights abuses
Labor Standards Principle 3: Freedom of association and the effective recognition
of the right to collective bargaining
Principle 4: Eliminate all forms of forced and compulsory labor Principle 5: Abolish child labor
Principle 6: Eliminate discrimination in respect of employment andoccupation
Source:The Global Compact Web Site (www.unglobalcompact.org), November 7, 2004.
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The Global Compact (contd)
Environment
Principle 7: Support a precautionary approach to environmental
challenges
Principle 8: Undertake initiatives to promote greater environmentalresponsibility
Principle 9: Encourage the development and diffusion of
environmentally friendly technologies
Anticorruption
Principle 10: Work against all forms of corruption, including
extortion and bribery
Source:The Global Compact Web Site (www.unglobalcompact.org), November 7, 2004.
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How Managers Can Improve Ethical
Behavior in an Organization Hire individuals with high ethical standards.
Establish codes of ethics and decision rules.
Lead by example.
Delineate job goals and performance appraisal
mechanisms.
Provide ethics training.
Conduct independent social audits.
Provide support for individuals facing ethical dilemmas.
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Code of Ethics
A formal statement of an organizations
primary values and the ethical rules it expects
its employees to followBe a dependable organizational citizen
Dont do anything unlawful or improper that will
harm the organization
Be good to customers
Source:F.R. David, An Empirical Study of Codes of Business Ethics: A Strategic Perspective. Paperpresented at the 48th Annual Academy of Management Conference, Anaheim, California, August 1988.
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Effective Use of a Code of Ethics
Develop a code of ethics to guide decision
making
Communicate the code regularly Have all levels of management show
commitment to the code
Publicly reprimand and consistently disciplinethose who break the code
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Exhibit 4.8 Examining Ethics
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Ethical Leadership
Managers must provide agood role modelby:
Being ethical and honest at all times
Telling the truth
Admitting failure and not trying to cover it up
Communicating shared ethical values to employeesthrough symbols, stories, and slogans
Rewarding employees who behave ethically andpunishing those who do not
Protecting employees (whistleblowers) who bring to lightunethical behaviours or raise ethical issues
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The Value of Ethics Training
Training can make a difference in ethical
behaviors
Training increases employee awareness ofethical issues in business decisions
Training clarifies and reinforces the standards
of conduct
Employees are more confident of support when
taking unpopular but ethically correct stances