Chapter Four

In a disagreement about what is right and what is wrong, if your greatest concern is utility, you want to know...

"Does it optimize the best for all?"

In a disagreement about what is right and what is wrong, if your greatest concern is rights, you want to know...

"Does it respect the rights of those involved?"

In a disagreement about what is right and what is wrong, if your greatest concern is caring, you want to know...

"Is it consistent with responsibility to care?"

In a disagreement about what is right and what is wrong, if your greatest concern is justice, you want to know...

"Is it consistent with what is fair?"

Arguments for Social Responsibility

(1) business creates problems, and should therefore help solve them; (2) corporations are citizens in our society; (3) business often has the resources necessary to solve problems; (4) business is a partner in our society, along with the government and the general population.

Favors

Businesses also do personal favors for politicians, like taking them out to dinner or covering some of their expenses

Primary Agents

Customers, competitors, stockholders, suppliers, dealers, and unions Interactions between the organization and these agents includes advertising and promotions, financial disclosures, ordering and purchasing, shipping and solicitations, bargaining and negotiation, etc

Match each example with the stance toward social responsibility it represents. Making products that comply with safety regulations but do not use the latest safety technology

Defensive

How an organization treats its employees

Includes policies such as hiring and firing, wages and working conditions, and employee privacy and respect

Organizational Justice

The perceptions of people in an organization regarding fairness Consists of distributive justice, procedural justice, interpersonal justice, and informational justice

Social Responsibility

The set of obligations an organization has to protect and enhance the societal context in which it functions

Managerial Ethics

The standards of behavior that guide individual managers in their work

Social Audit

a systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs

Four Approaches to Social Responsibility:

obstructionist, defensive, accommodative, proactive

The Kiwanis Club asks you to make a presentation on corporate social responsibility. Which story will help you explain the concept of philanthropic giving in your presentation?

-Walmart donated products valued at a total of $755,868,381 to several charities. -The Monsanto Fund Matching Gifts Program supports charities by matching donations of its employees. -Walmart donated 4.5% of its pre-tax profits, amounting to $311,607,280, which helped support about 50,000 different charities.

How to apply ethical judgment to situations

1. Gather the relevant factual information 2. Determine the most appropriate moral values, and 3. Make an ethical judgment based on the rightness or wrongness of the proposed activity or policy

Sarbanes-Oxley Act

A law passed by Congress that requires the CEO and CFO to certify that their firm's financial statements are accurate.

Match each example with the stance toward social responsibility it represents. Helping a youth center after the center requests assistance

Accomodative

Categorize that situation in terms of the area of ethical concern for managers it represents: Nina waits tables, and a large part of her earnings comes from tips, which depend on how large the bill is. She falsely tells customers who order less expensive dishes that the kitchen is sold out of those items so that they are limited to more expensive choices.

Employee or Organization's treatment of others

Categorize that situation in terms of the area of ethical concern for managers it represents: In companies that strive to be first to market with new technology, the risk that employees may divulge trade secrets is great.

Employee's treatment of organization

Accomodative Stance

Firm meets its legal and ethical obligations but will also go beyond these obligations in select cases. Must be asked first, though

Obstructionist Stance

Firms do as little as possible to solve social or environmental problems

Direct Regulation

Government's attempts to influence business by establishing laws and rules that dictate what businesses can and cannot do. Legislation, special agencies, etc

Match each example with the stance toward social responsibility it represents. Claiming a product does something it does not

Obstructionist

Ethics

One's personal beliefs about whether a behavior, action, or decision is right or wrong

Categorize that situation in terms of the area of ethical concern for managers it represents: At Zappos, managers are committed to making workers happy.

Organization's treatment of employees

Distributive Justice

People's perceptions of the fairness with which rewards and other valued outcomes are distributed within the organization Ex:The sales force thinks it is fair for the company to pay top sellers more.

Stakeholders

Person or organization who is directly affected by the practices of an organization and has a stake in its performance

Personal Contacts

Politicians and heads of government agencies cultivate working relationships with businesspeople and heads of nonprofit organizations, and vice versa, for several reasons. Therefore, businesspeople can often contact legislators to try to influence how they will vote on upcoming business-related legislation or agency heads to ask for government grants or loans.

Match each example with the stance toward social responsibility it represents. Taking the initiative to start a nonprofit to meet a community need

Proactive

Interpersonal Justice

Refers to the degree of fairness people see in how they are treated by others in their organizations Ex: Employees feel that their managers treat them with respect.

Proactive Stance

Take to heart the arguments of social responsibility. Seek out opportunities to contribute

Philanthropic Giving

The awarding of funds or gifts to charities or other worthy causes

Whistleblowing

The disclosure by an employee of illegal or unethical conduct on the part of others within the organization. Usually has to pass through several levels if not immediately addressed. How company responds depends on their social responsibility

Which of the following are examples of ethical issues in corporate governance?

The unethical actions of corporate boards of directors -A company solicits business from another company that does not have customer data privacy policies. -A board of directors lends corporate funds to several of its own members.

Lobbying

The use of a persons or groups to formally represent an organization or group of organizations before political bodies to influence government

Political Action Committee (PAC)

These are fundraising groups that businesses create so they can legally donate money to politicians' election campaigns. Business PACs influence government by funding the campaigns of politicians whose policies are favorable to business interests.

Four norms of ethics:

Utility, rights, justice, caring

Utility

Whether a particular act optimizes what is best for the organization's constituencies

Caring

Whether the act is consistent people's responsibilities to one another

Justice

Whether the act is consistent with what most people would prefer to see as fair

Rights

Whether the act respects the rights of the people involved

Code of Ethics

Written statements of the values and ethical standards that guide the firm's actions

Ethical behavior

behavior that conforms to a society's accepted principles of right and wrong

How employees treat the organization

conflicts of interest, secrecy and confidentiality, honesty

Procedural Justice

Individual perceptions of the fairness used to determine various outcomes Ex: Employees believe the process for deciding who gets promotions is fair.

Ethical Compliance

The extent to which the members of the organization follow basic ethical and legal standards of behavior - providing training, establishing codes of ethics

Arguments against social responsibility

1. The purpose of business in US society is to generate profit for owners. 2. Involvement in social programs gives business too much power. 3. There is potential for conflicts of interest. 4. Business lacks the expertise to manage social programs.

Legal Compliance

The extent to which the organization conforms to local, state, federal, and international laws. The task of legal compliance is usually assigned to the appropriate functional managers

Defensive Stance

The organization does everything that is required of it legally, but nothing more. Most consistent with arguments against social responsibility. Insist job is to generate profits. However, they are unlikely to cover up wrongdoing and will admit mistakes

Informational Justice

The perceived fairness of of information used to arrive at decisions Ex: Management feels that the board of directors sets company policy only after studying information from all departments.

Indirect Regulation

taxes, incentives, etc