5: Ethics and Social Responsibility

ethical responsibility

includes behaviors that are not necessarily codified into law and may not serve the corporations direct economic interests.

moral agent

individual who must make an ethical choice in an organization

preconventional level

individuals are concerned with external rewards and punishments and obey authority to avoid detrimental personal consequences

postconventional level(principled level)

individuals are guided by an internal set of values based on universal principles of justice and right and will even disobey rules or laws that will violate these principles.

chief ethics officer

a company executive who oversees all aspects of ethics and legal compliance, including establishing and broadly communicating standards, ethics training, dealing with exceptions or problems, and advising senior managers in the ethical and compliance aspects of decisions.

code of ethics

a formal statement of the company's values concerning ethics and social issues; it communicates to employees what the company stands for.

ethical dilemma

a situation in which all alternative choices or behaviors have potentially negative consequences. Right or wrong cannot be clearly distinguished.

ethics hotlines

allows employees to report questionable behavior, as well as seek guidance concerning ethical dilemmas.

compensatory justice

argues that individuals should be compensated for the cost of their injuries by the party responsible, and individuals should not be held responsible for matters over which they cannot control.

economic responsibility

be profitable; the first criterion of social responsibility; its responsibility of the business to produce the goods and services that society wants and to maximize profits for its owners and shareholders

triple bottom line

companies that embrace sustainability measure performance in terms of financial performance, social performance, and environmental performance

legal responsibility

defines what society deems as important with respect to appropriate corporate behavior. that is, businesses are expected to fulfill their economic goals within the framework of legal requirements imposed by local town councils, state legislators, and federal regulatory agencies.

criteria of corporate social performance

discretionary responsibility, ethical responsibility, legal responsibility, economic responsibility

whistle-blowing

employee disclosure of illegal, unethical, or illegitimate practices on the employer's part

moral-rights approach

ethical decisions are those that best maintain the fundamental rights of the people affected by them.

ethical organizations

ethical leadership, codes of ethics, ethics committee, chief ethics officer, ethics hotlines, ethics training, support for whistle-blowers

ethics committee

group of executives (and sometimes lower-level employees as well) appointed to oversee company ethics.

ethical leadership

managers are honest and trustworthy, fair in their dealings with employees and customers and behave ethically in both their personal and professional lives.

conventional level

people learn to conform to the expectations of good behavior as defined by colleagues, family, friends, and society.

free choice

pertains to behavior about which the law has no say and which an individual or organization enjoys complete freedom.

three levels of personal moral development

preconventional, conventional, postconventional

stakeholder mapping

provides systemic way to identify the expectations, needs, importance, and relative power of various stakeholders.

discretionary responsibility

purely voluntary and is guided by the organization's desire to make social contributions not mandated by economics, laws or ethics.

stakeholder

refers to any group or person within or outside the organization that has some type of investment or interest in the organization's performance.

sustainability (sustainable development)

refers to economic development that generates wealth and meets the needs of the current generation while preserving the environment and society so future generations can meet their needs as well.

corporate social responsibility

refers to the obligation of organizational managers to make choices and take actions that will enhance the welfare and interests of society, as well as the organization.

distributive justice

requires that different treatment of individuals not be based on arbitrary characteristics.

procedural justice

rules should be clearly stated and consistently and impartially enforced.

practical approach

sidesteps debates over what is right, good, or just, and bases decisions on prevailing standards of the profession and the larger society, taking the interests of all stakeholders into account.

justice approach

states that ethical decisions must be based on standards of equity, fairness, and impartiality.

individualism approach

suggests that actions are ethical when they promote the individual's best long-term interests, because with everyone pursuing self interest, the greater good is ultimately served.

ethics

the code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong

profit-maximizing view( economic responsibility taken to the extreme)

this view argues that the corporation should be operated on a profit-oriented basis, with its sole mission to increase its profits so long as it stays within the rules of the game.

utilitarian approach

to ethical decision making says that the ethical choice is the one that produces the greatest good for the greatest number.

criteria for ethical decision making

utilitarian approach, individualism approach, moral-rights approach, justice approach, compensatory justice, practical approach.

codified law (legal standard)

values and standards are written into the legal system and enforceable in the courts.