Chapter 4

Managerial Ethics and

Corporate Social Responsibility
Managerial Ethics
• Ethics - code of moral principles and values that govern the behaviors of right or wrong
• Standards about good/bad
• Ethical issues can be complex
• People in organizations have divergent views about right/wrong
Three Domains of Human Action
Ethical Dilemmas
You are the moral agent, what would you do?

Your company requires a terrorist

watch-list in order to screen all new
customers. It takes approximately
24 hours from the time an order is
placed to receive the list.

You can close a lucrative deal with a

potential long-term customer
overnight, even though that means
the required watch-list screening
will have to be done after the fact.
Criteria for Ethical Decision Making
• Utilitarian Approach – moral behavior produces the greatest good for the greatest number.

• Individualism Approach – acts are moral if they promote the individual’s long-term interest.

• Moral-Rights Approach – humans have fundamental rights and liberties that cannot be taken
by an individual's decision.

• Justice Approach – moral decisions must be based on standards of equity, fairness and
impartiality.
Six Moral Rights (Moral Rights Approach)
 The right of free consent.

 The right to privacy.

 The right of freedom of conscience.

 The right of free speech.

 The right to due process.

 The right to life and safety.

A Manager’s Ethical Choices
 Individuals bring their own personality and traits to organizations

 Personal needs, family influence and religious background shape individuals

 Personality characteristics like ego, confidence and independence

Three Level of Personal Development
Transparency International Bribe Index
What is Corporate Responsibility?
• Distinguishing right from wrong; doing right

• Good corporate citizenship

• Make choices that contribute to society and stakeholders

• Stakeholders – any group within or outside

Major Stakeholders Relevant to
Monsanto Company
The Bottom of the Pyramid
• Corporations can alleviate poverty and social ills while making profits

• BOP is twofold, profit and address poverty

• Serving and engaging customers at lowest level of economy

• Profitable Responsibility is essential for sustainability

The Ethic of Sustainability

Sustainability – economic development

that generates wealth and meets the
needs of current population while
preserving the environment for the needs
of future generations.
Evaluating Corporate Social Performance
Managing Company Ethics and
Social Responsibility

Code of Ethics – a formal statement of the company’s

values regarding ethics and social issues.

Ethical Structures – systems, positions and programs like

ethics training.

Whistle-blowing – employee disclosure of illegal,

immoral, or illegitimate practices.
Building an Ethical Organization
The Business Case for Ethics and Social
Responsibility

• Ethics and social responsibility is an

important business issue

• Stakeholders are pushing more

initiatives and issues

• The connection between ethics and

financial performance has been
widely debated

• What do you THINK?