ethics and social responsibility
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Ethics and Social ResponsibilityEthics and Social Responsibility
CHAPTER 5CHAPTER 5
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Learning ObjectivesLearning Objectives
Define ethics and explain how ethical behavior relates to behavior governed by law and free choice.
Explain the utilitarian, individualism, moral-rights, and justice approaches for evaluating ethical behavior.
Describe how both individual and organizational factors shape ethical decision making.
Define corporate social responsibility and how to 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 managers balance 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 For Ethical Decision Making
Criteria For Ethical 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 decision making - 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 among companies 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 Rights Six Moral Rights
1. The right of free consent1. The right of free consent
2. The right to privacy2. The right to privacy
3. The right of freedom of conscience3. The right of freedom of conscience
4. The right of free speech4. The right of free speech
5. The right to due process5. The right to due process
6. The right to life and safety6. 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 among them
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Procedural JusticeProcedural Justice
Rules should be clearly stated
Rules should be consistently and impartially enforced
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Compensatory JusticeCompensatory Justice
● Individuals should be compensated for the cost of their injuries by the party responsible
● 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 fulfill obligations and expectations of others
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Corporate Social ResponsibilityCorporate Social Responsibility
Organization’s 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 to right and wrong
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Organizational StakeholdersOrganizational Stakeholders
Any group within or outside the organization that has a stake in the organization’s 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
Market Approach
Legal Approach
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