session16: business ethics and social responsibility dr. mark h. mortensen 66.490.211 and 212 tues...
TRANSCRIPT
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Session16: Business Ethics and Social Responsibility
Dr. Mark H. Mortensen66.490.211 and 212Tues &Thurs 2:00 to 3:15
3:30 to 4:45
Manning School of Business
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Mortensen Consulting Group
Today
1. Attendance
2. Business Ethics
3. Assignment for next class
No assignment due
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Corporate Governance
Broader responsibility --
Private corporations have responsibility to society that extend beyond making a profit
Do they?
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Social Responsibility
There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.
Milton Friedman
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Corporate Governance
Carroll’s 4 Responsibilities
–Economic–Legal–Ethical–Discretionary
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Prentice Hall, Inc. © 2008 3-6
Mortensen’s View
The order and strength of the priorities for the five stakeholders, as decided by the executives, sets the tone for a company:CustomersEmployeesStockholdersExecutivesSociety
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3-7Prentice Hall, Inc. © 2008
Corporate Stakeholders
“Corporate Stakeholders”Affect or are affected by the achievement of the corporation’s objectives
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3-8Prentice Hall, Inc. © 2008
Corporate Stakeholders
Stakeholder Analysis –
–Primary stakeholder• Sufficient bargaining power to affect outcomes
–Secondary stakeholder• Indirect stake but are affected by corporation’s actions
–Stakeholder Input• Determine whether input is necessary
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3-9Prentice Hall, Inc. © 2008
Ethical Behavior
“business ethics”
–Argument that there is no such thing … it is an oxymoron
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Ethical Decision Making
BAD Corporate practices --
–Massive write-downs and restatements of profit[after having gotten the bonuses for making their numbers]
–Misclassification of expenses as capital expenditures
–Pirating corporate assets for personal gain
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Ethical Decision Making
Recent Survey Results --
–70% distrust business executives–Enron–WorldCom–Banks
Provocative Question --
–Why are businesspeople perceived to be acting unethically?
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Reasons for Unethical Behavior
Perceptions caused by --
–Not aware of impropriety–Cultural norms and values vary–Governance systems based on rule or
relationships–Differences in values between businesspeople
and key stakeholders
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Reasons for Unethical Behavior
Allport-Vernon-Lindzey Study of Values --
–Aesthetic–Economic–Political–Religious–Social–Theoretical
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Reasons for Unethical Behavior
Most common reasons for bending rules --
– Organizational performance required it– Ambiguous or out of date rules– Peer pressure – everyone else does it
– [Greedy #@%$(#s]
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Moral Relativism
“Moral Relativism” says that morality is relative to some personal, social, or cultural standard and there is no method for deciding whether one decision is better than another.
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Kohlberg’s Levels of Moral Development
1. Preconventional level–Characterized by a concern for self
• Personal interest• Avoidance of punishment
2. Conventional level–Characterized consideration of society’s values
• External code of conduct
3. Principled level–Characterized by adherence to internal moral code
• Universal values or principles
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Encouraging Ethical Behavior
Guidelines for Ethical Behavior
Ethics
Morality
Law
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Encouraging Ethical Behavior
Codes of Ethics
–Specifies how an organization expects its employees to behave on the job.
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Encouraging Ethical Behavior
Approaches to Ethical Behavior
–Utilitarian• Judged by consequences
– Individual Rights• Fundamental rights in all decisions
–Justice• Distribution in equitable fashion
–Categorical imperative• “golden rule”• Means - Ends
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You will be faced with ethical issues in your career Doing your taxes Getting that contract:
Your boss says “Do whatever it takes!” Your customer requires you to use an agency
Making your numbers at the end of a quarter: “Borrowing revenue” Stuffing the channel Irrevocable contracts
Your colleague engages in unethical behavior.
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Strategy Bits
192 U.S. companies surveyed --
–92% monitored employees use of e-mail/Internet
–26% monitored employees electronic activities all the time
–Almost none had checks in place to protect employees privacy
So be careful with unethical behavior, anyway.
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Strategic Management – Spring 2014