ch.3 Ethics & Social Responsibility
accommodative strategy
"Do minimum ethically required" Meet economic, legal and ethical responsibilities
Ethical responsibility
-Be ethical -Do what is right -Avoid harm
Rationalizations for unethical behavior:
-Behavior is not really legal -Behavior is really in everyone's best interests -Nobody will ever find out -The organization will "protect" you
Moral Absolutism
-Behavior unacceptable in one's home environment should not be acceptable anywhere else -certain absolute truths apply everywhere -Universal values transcend cultures in determining what is right or wrong -don't do anything you wouldn't do at home
Principle-based statements & integrity-based ethics programs
-Company mechanisms designed to instill in people a personal responsibility for ethical behavior -Goes beyond mere avoidance of illegality
Laws protecting whistleblowers
Whistle-blower protection act (1989) Dodd-Frank
ETHICAL STRUCTURES
systems, positions, and programs like ethics training
Arguments in favor of social responsibility:
•Adds long-run profits •Improved public image •Avoids more government regulation •Businesses have resources and ethical obligation
Arguments against social responsibility:
•Reduced business profits •Higher business costs •Dilution of business purpose •Too much social power for business •Lack of public accountability
defensive strategy
"do minimum legally required" Meet economic and legal responsibilities
obstructionist strategy
"fight social demands" Meet economic responsibilities
proactive strategy
"take leadership in social initiatives" Meet economic, legal, ethical, and discretionary responsibilities
Policy-based statements & compliance-based ethics programs
*Policy-based statements & compliance-based ethics programs* -Company mechanisms typically designed by corporate counsel to prevent, detect, and punish violations -Typically designed by lawyers
preconventional
*Self-centered behavior* Stage 1: avoid harm or punishment Stage 2: make deals for personal gain
conventional
*Social-centered behavior* Stage 3: act consistently with peers, others Stage 4: follow rules to help society run smoothly
postconventional
*principle-centered behavior* Stage 5: live up to societal agreement concerning individual rights Stage 6: act according to internal principles
cultural issues in ethical behavior
- Cultural relativism - Moral absolutism - Ethical imperialism
Discretionary responsibility
-Contribute to the community -Be a good corporate citizen
cultural relativism
-Ethical behavior is always determined by cultural context -no cultures ethics are superior the values and practices of the local setting determine what is right or wrong -when in Rome, do as the Romans do
external environment
-Government laws and regulations --sarbanes/oxley act of 2002 -Competitive climate in an industry -Societal norms and values
laws vs ethics
-Legal behavior is not necessarily ethical behavior -Role of personal values ---Terminal vs instrumental values
Contrasting Views of corporate social responsibility strategies
-Managers should act as agents for shareholders and, as such, are obligated to maximize the present value of the firm -Managers should be motivated by principled moral reasoning and do what is best for society at large
ethics
-Moral code of principles -Set standards of "good" or "bad" or "right" or "wrong" in one's conduct
Social Responsibility
-Obligation assumed by an organization to act in ways that serve the interests of multiple stakeholders -Making choices that contribute to society
Typically included in codes of ethics:
-Organizational citizenship -Illegal or improper acts -Customer/coworkers relationships -Bribes and kickbacks -Political contributions -Honesty of books or records -Confidentiality of corporate information
Kohlberg's levels of individual moral development
-Preconventional -Conventional -Postconventional
Why do employees expose misdeeds of others?
-Preserve ethical standards -Protect against wasteful, harmful, or illegal acts
Reconciliation: corporate social responsibilities
-Profit maximization and corporate social responsibility used to be regarded as antagonistic, leading to opposing policies. But the two views can converge -Recent attention has also been centered on the possible competitive advantages of socially responsible actions
Social Responsibilities:
-Stewardship -Sustainability -Triple bottom line
Unilever's Green Thumb
-The essence of the plan is to put society and the challenges facing society smack in the middle of the business -Paul Polman, CEO, Unilever
Total corporate social responsibilities:
-discretionary -ethical -legal -economic
justice view
-does a decision or behavior show fairness and impartiality? -Philosophy that suggests that behavior is ethical when people are treated impartially; according to rules and standards ---Distributive ---Procedural ----Interactional ---Commutative
maintaining high ethical standards
-moral management -code of ethics -ethical structures -whistle-blower protection
influences of ethical decision making
-person (moral development) -situation (ethical intensity) -organization (ethics culture) -environment (industry norms)
stakeholder management consists of:
-stakeholder power -demand legitimacy -issue urgency
6 steps in ethical decision making
1) Recognize the ethical dilemma 2) Get the facts and identify your options 3) Test each option 4) Decide which option to follow 5) Double-check your ethics by asking questions 6) Take action
4 views of ethical behavior
1) individualism 2) justice 3) moral rights 4) utilitarian
4 strategies of corporate social responsibility:
1) proactive 2) accommodative 3) defensive 4) obstructionist
ethical dilemmas
A situation requiring a choice regarding possible courses of action that may be unethical (although having potential for personal and/or organizational benefit) --Discrimination --Sexual harassment --Conflicts of interest --Product safety --Use of organizational resources
step 5: ethical decision making
Double-check your ethics by asking: How will I feel if my family finds out about my decision? How will I feel about this if my decision is reported in the local newspaper or posted on the internet? What would the person I admire most for their character and ethical judgement say about my decision?
step 3: ethical decision making
Test each option: Is it legal? Is it right? Whom does it affect? Who benefits? Who gets hurt?
A proponent of the classical view of corporate social responsibility would most likely agree with which of these statements?
The primary responsibility of business is to maximize business profits.
ethical behavior
What is accepted as good and right in the context of the governing moral code
Whistle-blower Protection
Why do employees expose misdeeds of others? Why don't more employees "blow the whistle" Laws protecting whistleblowers vary
An amoral manager ________.
acts without considering whether or not the behavior is ethical
economic responsibility
be profitable
The Sarbanes-Oxley Act of 2002 makes it easier for corporate executives to ________.
be tried and sentenced to jail for financial misconduct
The criterion of ________ identifies the highest level of conviction by an organization to operate in a socially responsible manner.
discretionary responsibility
MORAL MANAGEMENT
employ people who pursue ethical behavior as a personal goal
WHISTLEBLOWER PROTECTION
employee disclosure of illegal, immoral, or illegitimate practices
Managers show self-governance when they always try to achieve performance objectives in ways that are ________.
ethical and socially responsible
CODE OF ETHICS
formal statement of the company's values regarding ethics and social issues
legal responsibility
obey the law
Research on ethical dilemmas indicates that ________ is/are often the cause of unethical behavior by people at work.
pressures from bosses and superiors
An organization that takes the lead in addressing emerging social issues is being ________, showing the most progressive corporate social responsibility strategy.
proactive
A manager's failure to enforce a late-to-work policy the same way for employees on the day and night shifts is an ethical violation of ________ justice.
procedural
The triple bottom line of organizational performance focuses on the "3 Ps" :
profit people planet
Values are personal beliefs that help determine whether a behavior is considered ethical or unethical. An example of a terminal value is ________.
self-respect
Which viewpoint emphasizes that business can find ways to profit by doing things that advance the well being of society?
shared value
Customers, investors, employees, and regulators are examples of ________ that are important in the analysis of corporate social responsibility (CSR).
stakeholders
stakeholder power
the capacity of the stakeholder to positively or negatively affect the operations of the organization
issue urgency
the extent to which a stakeholder's concerns need immediate attention
demand legitimacy
the validity and legitimacy of a stakeholder's interest in the organization
Two "spotlight" questions for conducting the ethics double-check of a decision are (a) "How would I feel if my family found out about this?" and (b) "How would I feel if ________?"
this was published in the local newspaper
Under the ________ view of ethical behavior, a business owner would be considered ethical if she reduced a plant's workforce by 10% in order to cut costs to keep the business from failing and thus save jobs for the other 90%.
utilitarian
A(n) ________ is someone who exposes the ethical misdeeds of others.
whistleblower