CHAPTER 4

SOCIAL
RESPONSIBILITY &

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LECTURE OUTLINE
Organisational social responsibility
Organisational social responsiveness
Managing an ethical organisation

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MANAGERIAL ETHICS
Ethics
Standards of behaviour and moral
judgment differentiating right from wrong

Managerial ethics
Standards of conduct and moral judgment
mangers use in their business

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ORGANISATIONAL SOCIAL
RESPONSIBILITY
The obligation of an organisation
to seek actions protecting and
improving societys welfare along
with its own interests.

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ORGANISATIONAL SOCIAL
RESPONSIBILITY
Major viewpoints:
Invisible hand
Hand of government
Hand of management

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ORGANISATIONAL SOCIAL
RESPONSIBILITY
INVISIBLE HAND ARGUMENT
A view holding that the entire social responsibility

of a corporation can be summed up as make

profits and obey the law.
Corporate responsibility is guided by the invisible

hand of free market forces

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ORGANISATIONAL SOCIAL
RESPONSIBILITY
HAND OF GOVERNMENT ARGUMENT
A view holding that the interests of society are best

served by having the law and political process

guide the corporations activities.
Law and political process controls corporation re:

employee well-being, customer protection and

community issues e.g. environment.

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ORGANISATIONAL SOCIAL
RESPONSIBILITY
Hand of Management argument
Incorporates:
Anti-freeloader argument
Capacity argument
Enlightened self-interest argument

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ORGANISATIONAL SOCIAL
RESPONSIBILITY
HAND OF MANAGEMENT ARGUMENT

A view stating that corporations and

their managers are expected to act in

ways that protect and improve
societys welfare as well as make
profit.

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ORGANISATIONAL SOCIAL
RESPONSIBILITY
ANTI-FREELOADER ARGUMENT
Holds that since businesses benefit from a

better society, they should bear part of the

costs by actively working to bring about
solutions to social problems.

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ORGANISATIONAL SOCIAL
RESPONSIBILITY
CAPACITY ARGUMENT
States that the private sector,
because of its considerable economic
resources, must make up for
government cutbacks in social
programs.

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ORGANISATIONAL SOCIAL
RESPONSIBILITY
ENLIGHTENED SELF-INTEREST
ARGUMENT
Holds that businesses exist at societys

pleasure and that, for their own legitimacy

and survival, businesses should meet the
publics expectations regarding social
responsibility.

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SOCIAL RESPONSIBILITIES OF
MANAGERS
Economic and legal
Responsibility to make a profit and obey the law
(recognised by: invisible hand, hand of
government, hand of management).

Ethical and discretionary

Ethical behaviour expected by society
(recognised by: hand of management).
Difficult to determine, identify

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SOCIAL STAKEHOLDERS
Shareholders
Employees
Customers
Local community
Society

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SOCIAL STAKEHOLDERS
Employees
Shareholders

THE
ORGANISATION

Customers

International
community
Local community
Society (regional & national)
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SOCIAL STAKEHOLDERS
DIVERSITY AS COMPETITIVE ADVANTAGE
Attracting workers is costly, diversity may
help attract and retain workers
Workforce that reflects customer base may
give insight into customer wants, needs,
preferences
Innovations are more likely where diversity
exists
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DOES SOCIAL RESPONSIBILITY

PAY?
Evidence is mixed
Strategically beneficial
Likely, profit socially responsible

management
Shareholders are sensitive to the

extent that it affects profit

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ORGANISATIONAL SOCIAL
RESPONSIVENESS
A term referring to the development of
organisational decision processes where
managers anticipate, respond to and
manage areas of social responsibility.
Two aspects:
Monitoring social demands and expectations
Internal social response mechanisms

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MONITORING SOCIAL
DEMANDS/EXPECTATIONS
Social forecasting
Opinion surveys
Social audits
Issues management
Social scanning

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INTERNAL SOCIAL
RESPONSE MECHANISMS
Individual executives
Temporary task forces
Permanent committees
Permanent departments
Combination approaches

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BEING AN ETHICAL
MANAGER
The difficulties and concerns with
business ethics raise three important
issues about being a manager:
Types of managerial ethics
Ethical guidelines for managers
Ethical career issues
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TYPES OF MANAGERIAL
ETHICS
Immoral management

Lacks ethical principles, concern for profit only

Amoral management
Ignores, or oblivious to, ethical issues

Moral management
Conscious attention to ethical standards and
issues
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ETHICAL GUIDELINES FOR

MANAGERS
Obey the law.
Tell the truth.
Show respect for people.
Stick to the Golden Rule.
Above all, do no harm.
Participation not paternalism.
Responsibility requires action.
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ETHICAL CAREER ISSUES

Assessing values and protecting yourself
Seek advice and support from trusted sources.
Take action to change what you see as not
being ethical.
Take actions to protect yourself.
Anticipating ethical conflicts
Pre-employment checks: Is this an ethical
company?
Is the industry marked by patterns of unethical
behaviour?
Avoid ethical compromises.
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MANAGING AN ETHICAL
ORGANISATION
Situational factors influencing
ethical behaviour:
External factors
Competitiveness, high/low opportunities for
success, dependency on other organisations

Internal factors
Push for high performance, labour unrest,
delegation, quests for innovation
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MECHANISMS FOR ETHICAL

MANAGEMENT
Increasing awareness of diversity
Top management commitment
Codes of ethics
Ethics committees
Ethics audits
Ethics hotlines
Ethics training
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LECTURE SUMMARY
Organisational social responsibility

Major perspectives: invisible hand, hands of

government and management
Social responsibilities of managers
Social stakeholders: shareholders, employees,
customers, local and international community,
society
Does social responsibility pay? Evidence mixed

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LECTURE SUMMARY
Organisational social responsiveness

Monitoring social demands and

expectations: forecasting, opinion surveys,
social audits, issues management, social
scanning, internal social response
mechanisms

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LECTURE SUMMARY
Being an ethical manager

Types of managerial ethics: immoral, amoral,

moral
Ethical guidelines for managers
Ethical career issues: assessing & anticipating
ethical conflicts

Managing an ethical organisation

Situational factors influencing ethical

behaviour; external and internal
Mechanisms for ethical behaviour

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