Ch 5: Managing Responsibly and Ethically

What is the main goal of utilitarian view of ethics? what are the cons?

- encourage efficiency and productivity - profit maximization cons: - biased resource allocations - ignoring some stakeholder rights

What are the 3 categories of content in the code of ethics?

1. Be a dependable organizational citizen; 2. Don't do anything unlawful or improper that will harm the organization; and 3. Be good to customers.

Define Locus of Control (internal and external)

A personality attribute that measures the degree to which people believe they control their own life. Internal locus: the belief that you control your destiny. External locus: the belief that what happens to you is due to luck or chance. - less likely to take personal responsibilities for the consequences of their behaviour and are more likely to rely on external forces.

Define ego strength

An individual characteristic (moderating variable that affects ethical and unethical behavior) A personality measure of the strength of a person's convictions. Individuals high in ego strength are likely to resist impulses to act unethically and instead do what they think is right.

Define values

An individual characteristic (moderating variable that affects ethical and unethical behavior) Basic convictions about what is right or wrong on a broad range of issues.

Define activist to manage sustainability

An organization which exhibits the highest degree of environmental sensitivity pursues an activist approach to sustainable management. - look for ways to respect and preserve earth and its natural resources

Define market approach to manage sustainability

An organization which is more sensitive to environmental issues, responding to the environmental preferences of their customers. e.g. customer demand eco friendly products then that's what the org will provide

Define social screening

Applying social and environmental criteria (screens) to investment decisions. - especially for use of SRI funds

What are the 4 approaches for org to manage sustainability?

Environment sensitivity from scale of low to high 1. legal approach 2. market approach 3. stakeholder approach 4. activist approach

Define ethics

The rules and principles that define right and wrong conduct.

Define the socio-economic view (of social responsiveness and responsibility)

The view that management's social responsibility goes beyond the making of profits to include protecting and improving society's welfare. - society expects business to be involved in social, political, and legal issues and no longer as economic institutions and have moral responsibility - to be responsible to more than just stockholders

Define the classical view of social obligation

The view that the management's only social responsibility is to maximize profits and that business should be operated in the best interests of the stockholders (who's primary concerns are financial). States that social good unjustifiably increases costs. - Milton Friedman

Define value-based management

an approach to managing in which managers establish, promote, and practice an organization's shared values.

What are some structural moderating variable that influence ethical behavior?

formal rules and regulations job descriptions written codes of ethics performance appraisal systems reward systems - Good structural design minimizes ambiguity and uncertainty and fosters ethical behaviour

Define Socially Responsible Investing (SRI)

funds which provide a way for individual investors to support socially responsible companies

What are whistle-blowers?

individuals who raise ethical concerns or issues to others inside or outside the organization.

What are some detailed reports that can be issued on an org's environmental performance?

- global reporting initiatiive - adopting IOS standards - inclusion in the list of the Global 100 most sustainable corporations of the world

What is the main goal of rights view of ethics? what are the cons?

- protect individual rights of.. conscience, free speech, life and safety and due process cons: - hinder productivity and efficiency (bc work climate more concerned about protecting individual rights than getting work done)

What are the moderating variables that affect ethical and unethical behavior?

Stages of moral development interacts with: - Individual characteristics - Org's structural design - Organizational culture - Ethical issue intensity

What is the main goal of the theory of justice in ethics? what are the cons?

- protects interests of underrepresented stakeholders and rights of employees cons: - can encourage sense of entitlement -> employee reduce risk-taking, innovation, and productivity

What are some purposes of shared values in management? (4)

1. Guide manager's decisions and actions 2. Shape employee behavior 3. Influence marketing efforts 4. Build team spirit

What are ways to encourage ethical behavior in the org? (7)

1. employee selection (select for high ethical standards) 2. code of ethics (what is expected for employees to follow) 3. ethical leadership (leaders actions upholds cultural tone) 4. tangible and realist goals (employees aren't stressed and do anything to meet the unrealistic goals) 5. ethics training (increase awareness, clarifies, reinforces) 6. independent social audits/management practices in terms of org's code of ethics (to increase fear of being caught and decrease unethical behavior) 7. provide support for those facing ethical dilemmas (do what is right without fear of reprimand)

What are the 6 characteristics that determine issue intensity?

1. greatness of harm - how many people 2. consensus of wrong - how much agreement that action is wrong? 3. probability of harm - how likely to cause harm? 4. immediacy of consequences - will harm be felt immediately? 5. proximity to victim - how close to potential victim? 6. concentration of effect - how concentrated is effect of action on victim?

What are the 4 views of Ethics? Define each

1. utilitarian view - ethical decisions are made solely on the basis of their outcomes or consequences. 2. rights view - concerned with respecting and protecting individual liberties and privileges - e.g. rights to privacy, free speech, and due process 3. theory of justice view - where managers impose and enforce rules fairly and impartially - e.g. following all legal rules and regulations 4. integrative social contracts theory - ethical decisions be based on existing ethical norms in industries and communities

Define social responsibility

A business's obligation, beyond that required by law and economics, to pursue long-term goals that are good for society. the right thing over popular social need

Define social obligation

A firm's engaging in social actions because of its obligation to meet certain economic and legal responsibilities.

Define social responsiveness

A firm's engaging in social actions in response to some popular social need. Managers are more guided by social norms and values and make practical, market-oriented decisions about their actions.

Define code of ethics

A formal statement of an organization's primary values and the ethical rules it expects employees to follow. Also, decision rules can be developed to guide managers in handling ethical dilemmas in decision-making.

Define social need

A need of a segment of society caused by factors such as physical and mental disabilities; language barriers; and cultural, social, or geographical isolation.

What is the "The Bottom Line on Shared Corporate Values"?

It means that an organization's values are reflected in the decisions and actions of its employees.

Define legal approach to manage sustainability

Organizations obey laws, rules, and regulations willingly and without legal challenge, but that is the extent of their implementation of sustainable management practices. E.g. of social obligation (such as in preventing pollution and environment protection)

Define stakeholder approach to manage sustainability

Organizations that follow the stakeholder approach work to meet the environmental demands of multiple stakeholders such as employees, suppliers, and the community. e.g. of social responsiveness (org with various programs for suppliers, customers, society, employees, etc. -> social needs!)

What are the levels and stages of moral development?

Preconventional Level - person's choice based on personal consequences involved Conventional Level - Moral values reside in maintaining expected standards Principled Level - individuals make clear effort to define moral principles apart from the authority of the groups to which the individuals belong

What is an integrative social contract?

Two contracts: A general social contract - allows business to operate and defines acceptable ground rules A contract among members of community - addresses acceptable ways of behaving

What types of cultures encourage high ethical standards?

cultures high in risk tolerance, control, and conflict tolerance (strong cultures? -> exert more influence on managers than weak cultures) - weak cultures have less ability to encourage this standard

What are the environmental factors that also determine ethical and unethical behavior?

social and cultural differences also determine acceptable behavior no universal ethical standards