MGMT Chapter 5 - Managing Social Responsibility and Ethics

Issue Intensity

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.

Locus of Control

a personality attribute that measures the degree to which people believe they control their own fate

Ego Strength

a personality measure of the strength of a person's convictions

Social Entrepreneur

an individual or organization who seeks out opportunities to improve society by using practical, innovative, and sustainable approaches.

Social Screening

applying social criteria (screens) to investment decisions

Activist Approach

firms look for ways to respect and preserve the environment and be actively socially responsible

Market Approach

firms respond to the preferences of their customers for environmentally friendly products

Legal (Light Green) Approach

firms simply do what is legally required by obeying laws, rules, and regs willingly and without legal challenge

Stakeholder Approach

firms work to meet the environmental demands of multiple stakeholders—employees, suppliers, and the community

4 way organizations go green

1. Legal (or Light Green) Approach 2. Market Approach 3. Stakeholder Approach 4. Activist Approach

Process for addressing ethical dilemma

1. What is the ethical dilemma? 2. Who are affected stakeholders? 3. What personal, organizational, and external factors important in decision? 4. What are alternatives? 5. What is my decision and how will I act?

Moral Development

> A measure of independence from outside influences > Stage of moral development interact with: > Individual characteristics > The organization's structural design > The organization's culture > The intensity of the ethical issue

Becoming an Ethical Leader

>Be a good role model by being ethical and honest. >Tell the truth always. >Don't hide or manipulate information. >Be willing to admit your failures. >Share your personal values by regularly communicating them to employees. >Stress the organization's or team's important shared values. >Use the reward system to hold everyone accountable to the values.

Value of Ethics Training

>Can make a difference in ethical behaviors Increases employee awareness of ethical issues in business decisions >Clarifies and reinforces the organization's standards of conduct >Helps employees become more confident that they will have the organization's support when taking unpopular but ethically correct stances

International Ethics

>Ethical standards are not universal Social and cultural differences determine acceptable behaviors. >Foreign Corrupt Practices Act It is illegal to corrupt a foreign official, yet "token" payments to officials are permissible when doing so is an accepted practice in that country.

Encouraging Ethical Behavior

>Hire individuals with high ethical standards. >Establish codes of ethics and decision rules. >Lead by example. >Set realistic job goals and include ethics in performance appraisals. >Provide ethics training. >Conduct independent social audits. >Provide support for individuals facing ethical dilemmas.

Classical View of Social Responsibility

>Management's only social responsibility is to maximize profits by operating the business in the best interests of the stockholders. >Expending the firm's resources on doing "social good" unjustifiably increases costs that lower profits to the owners and raises prices to consumers

Socioeconomic View of Social Responsibility

>Management's social responsibility includes protecting and improving society's welfare. > Corporations are not independent entities responsible only to stockholders. >Firms have a moral responsibility to larger society to become involved in social, legal, and political issues. >"to do the right thing"

Structural Variables

>Organizational characteristics and mechanisms that guide and influence individual ethics >performance appraisal systems, reward allocation systems, and behaviors (ethical) or managers

Values-Based Management

An approach to managing in which managers establish and uphold an organization's shared values.

Bottom Line on Shared Corporate Values

An organization's values are reflected in the decisions and actions of its employees

The Purposes of Shared Values

Guiding managerial decisions Shaping employee behavior Influencing the direction of marketing efforts Building team spirit

Arguments for Social Responsibility

Public Expectations, Long-run profits, ethical obligation, public image, better environment, discouragement of further governmental regulation, balance of responsibility and power, stockholder interests. possession of resources, and superiority of prevention over cures

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

Code of Ethics

a formal statement of an organization's primary values and the ethical rules it expects its employees to follow.

Values

basic convictions about what is right and wrong

Whistle-Blower

individuals who raise ethical concerns or issues to others.

Green Management

managers consider the impact of their organization on the natural environment

Ethics

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

Social Obligation

the obligation of a business to meet its economic and legal responsibilities and nothing more

Arguments Against Social Responsibility

violation of profit maximizations, dilution of purpose, costs, too much power, lack of skills, and lack of accountability

Social Responsiveness

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