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