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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 Social
Responsibility Responsiveness

Social Obligation
SOCIAL RESPONSIBILITY vs.
SOCIAL RESPONSIVENESS

Social Social
Responsibility Responsiveness

Major consideration Ethical Pragmatic


Focus Ends Means
Emphasis Obligation Responses
Decision framework Long term 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
 Conclusion
acompany’s socially responsible actions do
not hurt its long-term economic performance
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
 Four Views of Ethics
 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
Issue
Individual Intensity
Characteristics

Ethical Stage of Moral


Dilemma Ethical/Unethical
Development Behaviour
Moderators

Structural Organizational
Variables Culture
STAGES OF MORAL
DEVELOPMENT
MANAGERIAL ETHICS
(continued)
 Factors That Affect Managerial Ethics
(continued)
 Individualcharacteristics
○ 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
 socialand 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 Refers to the principles and


standards that define
acceptable conduct in the
world of business.
Social Refers to a business’s obligation
Responsibility to maximize its positive impact
and minimize its negative
impact 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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