2. The Ethics Challenge
• Corporate officers are now subject to high
accountability standards and harsh
penalties under the Sarbanes-Oxley Act of
2002
• Experts have estimated that U.S.
companies lose about $600 billion a year
from unethical and criminal behavior
LM-2
3. Ethics
• Ethics
- Study of moral issues
- Concerned with right versus wrong
- Many shades of gray
LM-3
4. Corporate Social Responsibility
Pyramid
Source: Carroll, A. B. “Managing Ethically with Global Stakeholders: A present
and future challenge, Academy of Management Executive, May 2004, p. 116.
Figure A-1
LM-4
5. Corporate Social Responsibility
• Corporate social responsibility
- corporations are expected to go above and
beyond following the law and making a profit
LM-5
6. A Model of Ethical Behavior
in the Workplace
Figure A-2
LM-6
7. Internal Organizational Influences
• Positive relationship between
organizational size and unethical behavior
• Larger firms more likely to behave illegally
• Managers more likely to behave unethically
in decentralized organizations
• Tendency among middle and lower-level
managers to act unethically in the face of
perceived pressure for results
LM-7
8. Neutralizing/Enhancing Factors
• Top Management Team (TMT) - consists
of the CEO and his or her direct reports.
• Prior military experience favorably
influences the ethical behavior of
executives
• Organizations are encouraged to increase
the diversity of its TMT if they want to
reduce the chances of unethical decision
making
LM-8
10. Do Moral Principles Vary by Gender?
• Males perceived
moral problems in
terms of a justice
perspective
- Based on the ideal
of reciprocal rights
and driven by rules
and regulations
• Women relied on a
care perspective
- Involves
compassion and an
ideal of attention
and response to
need
LM-10
11. General Moral Principles
• There are no absolute ethical answers for
decision makers
• Goal for managers should be to rely on
moral principles so decisions are
principled, appropriate, and defensible
LM-11
13. How to Improve the Organization’s
Ethical Climate
• Behave ethically yourself
• Screen potential employees
• Develop a meaningful code of ethics
• Provide ethics training
LM-13
14. How to Improve the Organization’s
Ethical Climate (cont.)
• Reinforce ethical behavior
• Create positions, units, and other structural
mechanisms to deal with ethics
• Create a climate in which whistle-blowing
becomes unnecessary
LM-14
Editor's Notes
This pyramid is important because it triangulates three major trends: 1)economic globalization, 2) expanding CSR expectations, and 3) the call for improved business ethics. This CSR pyramid advises organizations to: Make a profit consistent with expectations for international business Obey the law of the host countries as well as international law Be ethical in its practices , taking host-country and global standards into consideration Be a good corporate citizen , especially as defined by the host country’s expectations. Source: Carroll, A. B. “Managing Ethically with Global Stakeholders: A present and future challenge, Academy of Management Executive , May 2004, p. 116.
