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Ethics and Social ResponsibilityEthics and Social Responsibility
CHAPTER 5CHAPTER 5
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Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.2
Learning ObjectivesLearning Objectives
Define ethics and explain how ethical behaviorrelates to behavior governed by law and freechoice.
Explain the utilitarian, individualism, moral-rights, and justice approaches for evaluatingethical behavior.
Describe how both individual and organizationalfactors shape ethical decision making.
Define corporate social responsibility and howto evaluate it along economic, legal, ethical,and discretionary criteria.
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Learning Objectives (contd.)Learning Objectives (contd.)
Describe four organizational approaches to
environmental responsibility, and explain the
philosophy of sustainability.
Discuss how ethical organizations are created
through ethical leadership and organizational
structures and systems.
Identify important stakeholders for an
organization and discuss how managersbalance the interests of various stakeholders.
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EthicsEthics
The code of moral principles and
values that govern the behaviors of a
person or group with respect to what
is right or wrong.
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Three Domains of Human ActionThree Domains of Human Action
Amount of
Explicit ControlHigh Low
Domain of Codified Law
(Legal Standard)
Domain of Ethics
(Social Standard)
Domain of Free Choice
(Personal Standard)
Exhibit 5.1
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Ethical DilemmaEthical Dilemma
A situation that arises when all
alternative choices or behaviors have
been deemed undesirable because...
Of potentially negative ethical
consequences, making it difficult to
distinguish right from wrong
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Criteria ForEthical Decision Making
Criteria ForEthical Decision Making
Most ethical dilemmas involve
Conflict between needs of the part &
whole
- Individual versus the organization
- Organization versus society as a whole
Managers benefit from a normative
strategy to guide their decisionmaking - norms and values
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Ethical Decision Making ApproachesEthical Decision Making Approaches
Utilitarian Approach
Individualism Approach
Moral-Rights Approach
Justice Approach
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Utilitarian ApproachUtilitarian Approach
Moral behavior produces the greatest
good for the greatest number
Example recent trend amongcompanies to monitor employee use
of the Internet
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Individualism ApproachIndividualism Approach
Acts are moral when they promote the
individual's best long-term interests, which
ultimately leads to the greater good
Individual self-direction paramount Individualism is believed to lead to honesty
& integrity since that works best in the long
run
However, top executives from WorldCom,Enron, Tyco demonstrate flaws of approach
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Moral-Rights ApproachMoral-Rights Approach
Moral decisions are those that best
maintain the rights of those people
affected by them.
An ethical decision is one that avoids
interfering with the fundamental rights
of others.
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Six Moral RightsSix Moral Rights
1. The right of free consent
2. The right to privacy
3. The right of freedom of conscience
4. The right of free speech
5.T
he right to due process6. The right to life and safety
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Justice ApproachJustice Approach
Moral Decisions must be based on
standards of equity, fairness,
impartiality
Three types of Justice Approaches:
Distributive Justice
Procedural Justice
Compensatory Justice
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Distributive JusticeDistributive Justice
Different treatment of people should not
be based on arbitrary characteristics
In case of substantive differences,
people should be treated differently in
proportion to the differences amongthem
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Procedural JusticeProcedural Justice
Rules should be clearly stated
Rules should be consistently andimpartially enforced
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Compensatory JusticeCompensatory Justice
Individuals should be compensated for the
cost of their injuries by the partyresponsible
Individuals should not be held responsible
for matters they have no control over
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Factors Affecting Ethical ChoicesFactors Affecting Ethical Choices
The Manager
Levels or stages of moral
development Pre-conventional
Conventional
Post-conventional
The Organization
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Levels of Personal Moral DevelopmentLevels of Personal Moral Development
Exhibit 5.2
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The OrganizationThe Organization
Rarely can ethical or unethical corporate
actions be attributed solely to the
personal values of a single manager Values adopted within the organization
are highly important
Most people believe their duty is to fulfillobligations and expectations of others
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Corporate Social ResponsibilityCorporate Social Responsibility
Organizations obligation to make
decisions and take actions that will
enhance the welfare and interests
of society and organization Being a good corporate citizen
Difficulty in understanding issues
can be ambiguous with respect toright and wrong
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Organizational StakeholdersOrganizational Stakeholders
Any group within or outside the
organization that has a stake in the
organizations performance Each stakeholder
Has a different criterion of responsiveness
Has a different interest in the company
Monsanto
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Environmental Responsibility CommitmentEnvironmental Responsibility Commitment
Activist
Approach
Stakeholder
Approach
MarketApproach
LegalApproach
The Shades of
Corporate Green
Adapted from Exhibit 5.6
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Total Corporate Social ResponsibilityTotal Corporate Social Responsibility
Total Corporate Social Responsibility
Exhibit 5.7
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The Ethical OrganizationThe Ethical Organization
Exhibit 5.9
The Three Pillars of an Ethical Organization
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