SOCIAL RESPONSIBILITY AND MANAGERIAL ETHICS

SOCIAL RESPONSIBILITY

Two Opposing Views of Social Responsibility
Classical view - management’s only social

responsibility is to maximize profits
○ doing “social good” adds to the cost of doing

business ○ costs have to be passed on to consumers

Continued…

Two Opposing Views of Social Responsibility (continued)  Socioeconomic view - businesses are not just economic institutions ○ management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare ○ businesses have responsibility to a society ○ more organizations around the world have increased their social responsibility

Continued…

From Obligations to Responsiveness
 Social

responsibility - a business’s obligation to pursue long-term goals that help society  Social obligation - obligation of a business to meet its economic and legal responsibilities  Social responsiveness - capacity of a firm to adapt to changing societal conditions

LEVELS OF SOCIAL INVOLVEMENT

Social Responsibility

Social Responsiveness

Social Obligation

SOCIAL RESPONSIBILITY vs. SOCIAL RESPONSIVENESS
Social Social Responsibility Responsiveness Major consideration Focus Emphasis Decision framework Ethical Ends Obligation Long term Pragmatic Means Responses Medium and short term

SOCIAL RESPONSIBILITY AND ECONOMIC PERFORMANCE

Most Research Shows a Positive Relationship  Evaluation of Socially Conscious Mutual Stock Funds
 social

screening - applying social criteria to investment company’s socially responsible actions do not hurt its long-term economic performance

Conclusion
a

The Pyramid of Social Responsibility
Voluntary Responsibilities being a “good corporate citizen”; contributing to the community and quality of life

Ethical Responsibilities being ethical; doing what is right, just, and fair; avoiding harm Legal Responsibilities obeying the law (society’s codification of right and wrong); playing by the rules of the game Economic Responsibilities being profitable

Source: Adapted from Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders.” Business Horizons 34 (July/August 199

MANAGERIAL ETHICS
 Ethics
 Rules

and principles that define right and wrong conduct
Views of Ethics

 Four

 Utilitarian

view - ethical decisions are made on the basis of their outcomes or consequences

Continued…

Four Views of Ethics (continued)
 Rights

view - respects and protects individual liberties and privileges  Theory of justice view - managers impose and enforce rules fairly and impartially  Integrative social contracts theory decisions should be based on empirical and normative factors

FACTORS THAT AFFECT ETHICAL AND UNETHICAL BEHAVIOUR
Individual Characteristics Issue Intensity

Ethical Dilemma

Stage of Moral Development

Ethical/Unethical Behaviour

Moderators
Structural Variables Organizational Culture

STAGES OF MORAL DEVELOPMENT

MANAGERIAL ETHICS (continued)
 Factors

That Affect Managerial Ethics (continued)
 Individual

characteristics ○ values - basic convictions about right and wrong ○ ego strength - strength of a person’s convictions ○ locus of control - degree to which people believe that they control their own fate

Continued…

Factors That Affect Managerial Ethics (continued)  Structural variables ○ design of organization affects ethical behaviour ○ rules and regulations ○ behaviour of superiors ○ performance appraisal systems that focus on means as well as ends ○ reward systems that punish failure to achieve ends is likely to compromise ethics

Continued…

Factors That Affect Managerial Ethics (continued)  Organizational culture ○ strong culture more influential than a weak culture ○ high ethical standards result from a culture that is high in risk tolerance, control, and conflict tolerance  Issue intensity ○ importance of an ethical issue ○ more intense issues prompt greater ethical behaviour

DETERMINANTS OF ISSUE INTENSITY

MANAGERIAL ETHICS (continued)

Ethics in an International Context
 social

and cultural differences determine ethical and unethical behaviour  Global Compact - United Nations document containing principles for doing business globally in the areas of human rights, labour, and environment

THE GLOBAL COMPACT
Human Rights
Principle 1: Support and respect the protection of international human rights within their sphere of influence; and Principle 2: Make sure their own corporations are not complicit in human rights abuses.

Labour
Principle 3: Freedom of association and the effective recognition of the right to collective bargaining; Principle 4: The elimination of all forms of forced and compulsory labour; Principle 5: The effective abolition of child labour; and Principle 6: The elimination of discrimination in respect of employment and occupation.

Environment
Principle 7: Support a precautionary approach to environmental challenges; Principle 8: Undertake initiatives to promote greater environmental responsibility; and Principle 9: Encourage the development and diffusion of environmentally friendly technologies.

MANAGERIAL ETHICS (continued)

Toward Improving Ethical Behaviour
 Comprehensive

ethics programs have the potential to improve an organization’s ethical climate  Employee selection - eliminate ethically questionable applicants  Codes of ethics - formal statement of an organization’s primary values and ethical rules

MANAGERIAL ETHICS (continued)

Toward Improving Ethical Behaviour (continued)  Top management’s leadership - what they do is far more important than what they say  Job goals and performance appraisal - goals should be clear and realistic and must focus on ethical standards  Ethics training - an increasing number of organizations use training to encourage ethical behaviour  Independent social audits - evaluation of decisions in relation to code of ethics  Formal protective mechanisms - protect employees who face ethical dilemmas

Comparison of Business Ethics and Social Responsibility
Business Ethics world Social Responsibility impact

Refers to the principles and standards that define acceptable conduct in the of business. Refers to a business’s obligation to maximize its positive impact and minimize its negative on society.

Comparison of Business Ethics and Social Responsibility
Business ethics deal with the right and wrong actions that arise in any work environment Social responsibility refers to management’s consideration of the social and economic effects of its decisions

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