Management, chap 5: Managing Social Responsibilities

INDIVIDUAL CHARACTERISTICS:

+ Value: basic convictions about what is right and wrong. Our values develop from a young age based on what we see and hear from parents, teachers, friends, and others. Thus, employees in the same organization often possess very different values. Although values and stage of moral development may seem similar, they're not. Values are broad and cover a wide range of issues; the stage of moral development is a measure of independence from outside influences. + Ego strength: measures the strength of a person's convictions. People with high ego strength are likely to resist impulses to act unethically and instead follow their convictions. That is, individuals high in ego strength are more likely to do what they think is right and be more consistent in their moral judgments and actions than those with low ego strength. + Locus of control is the degree to which people believe they control their own fate. People with an internal locus of control believe they control their own destinies. They're more likely to take responsibility for consequences and rely on their own internal standards of right and wrong to guide their behavior. They're also more likely to be consistent in their moral judgments and actions. People with an external locus believe what happens to them is due to luck or chance. They're less likely to take personal responsibility for the consequences of their behavior and more likely to rely on external forces.

The recognition of the close link between an organization's decision and activities and its impact on the natural environment. Issues include:

- Air, water, and soil pollution from toxic wastes - Global warming from greenhouse gas emissions - Natural resource depletion

the implications that these studies have for our social responsibility orientation

It appears that a company's social actions don't hurt its economic performance. Given political and societal pressures to be socially involved, managers probably need to take social issues and goals into consideration as they plan, organize, lead, and control.

define the four approaches to green management

- Legal (or Light Green) Approach: Firms simply do what is legally required by obeying laws, rules, and regulations willingly and without legal challenge. - Market Approach: Firms respond to the preferences of their customers for environmentally friendly products. - Stakeholder Approach: Firms work to meet the environmental demands of multiple stakeholders—employees, suppliers, and the community. For instance, Hewlett Packard has several corporate environmental programs in place for its supply chain (suppliers), product design and product recycling (customers and society), and work operations (employees and community). - Activist (or Dark Green) Approach: Firms look for ways to preserve environment and be actively socially responsible and influence constituents to do the same.

Arguments For Social Responsibility

- Public expectations: Public opinion now supports businesses pursuing economic and social goals - Long-run profits: Socially responsible companies tend to have more secure long-run profits. - Ethical obligation: Businesses should be socially responsible because responsible actions are the right thing to do. - Public image: Businesses can create a favorable public image by pursuing social goals. - Better environment: Business involvement can help solve difficult social problems. - Discouragement of further governmental regulation: By becoming socially responsible, businesses can expect less government regulation. - Balance of responsibility and power: Businesses have a lot of power and an equally large amount of responsibility is needed to balance against that power. - Stockholder interests: Social responsibility will improve a business's stock price in the long run. - Possession of resources: Businesses have the resources to support public and charitable projects that need assistance. - Superiority of prevention over cures: Businesses should address social problems before they become serious and costly to correct.

the ethical frameworks

- Utilitarianism: Seeking the greatest good for the greatest number. - Rights: Respecting and protecting basic rights of individuals such whistleblowers. - Justice: Imposing and enforcing rules fairly and impartially.

Arguments Against Social Responsibility

- Violation of profit maximization: Business is being socially responsible only when it pursues its economic interests. - Dilution of purpose: Pursuing social goals dilutes business's primary purpose—economic productivity. - Costs: Many socially responsible actions do not cover their costs and someone must pay those costs. - Too much power: Businesses have a lot of power already and if they pursue social goals they will have even more. - Lack of skills: Business leaders lack the necessary skills to address social issues. - Lack of accountability: There are no direct lines of accountability for social action

- STRUCTURAL VARIABLES

An organization's structural design can influence whether employees behave ethically. Those structures that minimize ambiguity and uncertainty with formal rules and regulations and those that continuously remind employees of what is ethical are more likely to encourage ethical behavior.

green management

Managers consider the impact of their organization on the natural environment

the basic findings of studies attempting to define the relationship between social responsibly and organizational performance

Numerous studies have examined whether social involvement affects a company's economic performance. Although most found a small positive relationship, no generalizable conclusions can be made because these studies have shown that relationship is affected by various contextual factors such as firm size, industry, economic conditions, and regulatory environment. Another concern was causation. If a study showed that social involvement and economic performance were positively related, this correlation didn't necessarily mean that social involvement caused higher economic performance. It could simply mean that high profits afforded companies the "luxury" of being socially involved. Such methodological concerns can't be taken lightly. In fact, one study found that if the flawed empirical analyses in these studies were "corrected," social responsibility had a neutral impact on a company's financial performance. Another found that participating in social issues not related to the organization's primary stakeholders was negatively associated with shareholder value. A re-analysis of several studies concluded that managers can afford to be (and should be) socially responsible.

social responsibility

a business's intention, beyond its legal and economic obligations, to do the right things and act in ways that are good for society. Our definition assumes that a business obeys the law and cares for its stockholders, but adds an ethical imperative to do those things that make society better and not to do those that make it worse

classical view

management's only social responsibility is to maximize profits (Nobel laureate Milton Friedman). - managers' primary responsibility is to operate the business in the best interests of the stockholders, whose primary concerns are financial. when managers decide to spend the organization's resources for "social good," they add to the costs of doing business, which have to be passed on to consumers through higher prices or absorbed by stockholders through smaller dividends

socioeconomic view

managers' social responsibilities go beyond making profits to include protecting and improving society's welfare. This view is based on the belief that corporations are not independent entities responsible only to stockholders, but have an obligation to the larger society

ISSUES INTENSITY

six characteristics determine issue intensity or how important an ethical issue is to an individual: greatness of harm, consensus of wrong, probability of harm, immediacy of consequences, proximity to victim(s), and concentration of effect. These factors suggest that the larger the number of people harmed, the more agreement that the action is wrong, the greater the likelihood that the action will cause harm, the more immediately that the consequences of the action will be felt, the closer the person feels to the victim(s), and the more concentrated the effect of the action on the victim(s), the greater the issue intensity or importance. When an ethical issue is important, employees are more likely to behave ethically.

Ethics

the principles, values, and beliefs that define right and wrong decisions and behavior

social screening

they apply social and environmental criteria to investment decisions

ORGANIZATION'S CULTURE

values-based management, in which the organization's values guide employees in the way they do their jobs. An organization's managers do play an important role here. They're responsible for creating an environment that encourages employees to embrace the culture and the desired values as they do their jobs. In fact, research shows that the behavior of managers is the single most important influence on an individual's decision to act ethically or unethically. People look to see what those in authority are doing and use that as a benchmark for acceptable practices and expectations

Social responsiveness

when a company engages in social actions in response to some popular social need

Social obligation

when a firm engages in social actions because of its obligation to meet certain economic and legal responsibilities. The organization does what it's obligated to do and nothing more => classical view