Ch 3-Slides

Chapter 3
Management’s
Social and Ethical
Responsibilities
Microsoft clip art photos reprinted with permission from Microsoft Corporation.

Copyright © Houghton Mifflin Company. All rights reserved. 3 | 2
Chapter Objectives
1. Define corporate social responsibility and
summarize the arguments for and against it.
2. Identify and describe the four social
responsibility strategies and explain the role
of enlightened self-interest in CSR.
3. Summarize the three practical lessons from
business ethics research. Then identify and
describe at least four of the ten general
ethical principles.
4. Discuss what management can do to
improve business ethics

Social Responsibility:
Definition and Debate
• Corporate Social
Responsibility
– The idea that business
has social obligations
above and beyond
making a profit.
– Business has an
obligation to constituent
groups in society other
than stockholders and
beyond that prescribed
by law.

Social Responsibility:
Definition and Debate (cont’d)
• What Does Social Responsibility Involve?
– Voluntary action
• Action before lawsuits or other actions that are taken
to force a firm to take action on a matter.
– An emphasis on means, not ends
• How the decision to act was reached, not the decision
itself.

Figure 3.1 A Sample Stakeholder Audit
for Wal-Mart, the World’s Largest Retailer

Arguments for and Against
Social Responsibility
• Arguments for:
– Business is unavoidably involved in social issues.
– Business has the resources to tackle today’s complex
societal problems.
– A better society means a better environment for doing
business.
– Corporate social action will prevent government action.

Arguments for and Against
Social Responsibility (cont’d)
• Arguments Against:
– Profit maximization ensures the efficient use of
society’s resources.
– As an economic institution, business lacks the ability
to pursue social goals.
– Business already has enough power.
– Because business managers are not elected, they
are not directly accountable to the people.

Figure 3.2 A Continuum of Social
Responsibility Strategies

Social Responsibility Strategies
Reactive Strategy
– Denying responsibility
while striving to
maintain the status quo
by resisting change.
• Defensive Strategy
– Resisting additional
social responsibilities
with legal and public
relations tactics.

Social Responsibility
Strategies (cont’d)
• Accommodation Strategy
– Assuming social responsibility only in response to
pressure from interest groups or the government.
• Proactive Strategy
– Taking the initiative in formulating and putting in place
new programs that serve as role models for industry.

Who Benefits from
Corporate Social Responsibility?
• Altruism
– The unselfish devotion to the interests
of others.
• Research Findings
– There is a positive correlation
between industry leadership on
a socially responsible issue
(pollution control) and profitability.
– Corporate social responsibility is a competitive
advantage in recruiting talented people.

Who Benefits from Corporate
Social Responsibility? (cont’d)
• Enlightened Self-Interest
– A business ultimately helps itself by helping solve
social problems.
• An Array of Benefits for the Organization
– Tax-free incentives to employees.
– Retention of talented employees.
– Help in recruiting the talented and socially conscious.
– Help in swaying public opinion.
– Improved community living standards.
– …Others.

The Ethical Dimension
of Management
• Ethics
– The study of moral obligation
involving the distinction between
right and wrong.
• Business Ethics
– The study of the complex
business practices and
behaviors that give rise to
ethical issues in organizations.

Practical Lessons from Business
Ethics Research: Ethical Hot Spots
• Balancing work and
family
• Poor internal
communications
• Poor leadership
• Work hours, work load
• Lack of management
support
• Need to meet sales,
budget, or profit goals
• Little or no recognition of
achievements
• Company politics
• Personal financial worries
• Insufficient resources

Practical Lessons from
Business Ethics Research (cont’d)
• Pressure from Above
– The problem of superiors pressuring subordinates
is widespread.
• Responding to Pressure from Above
– Consciously avoid putting undue pressure on
subordinates.
– Be prepared to deal with excessive organization
pressure.

Practical Lessons from
Business Ethics Research (cont’d)
• Ambiguous Situations
– Situations where there are no clear-cut ethical
guidelines.
– Ethical codes can help satisfy employees’ need for
formal guidelines.
• A Call to Action
– The deliberate and conscious actions of a manager
to do the right thing is an ethical and personal matter.

General Ethical Principles
• Self-Interests
• Personal virtues
• Religious injunctions
• Government
requirements
• Utilitarian benefits
• Universal rules
• Individual rights
• Economic efficiency
• Distributive justice
• Contributive liberty

Encouraging Ethical Conduct
• Ethics Training
– Amoral managers: managers who are neither
moral or immoral, but ethically lazy.
– Key features of effective ethics training programs
• Top management support.
• Open discussion.
• A clear focus on ethical issues.
• Integration of ethics into the
organization.
• A mechanism for anonymously
reporting ethical violations.
• Reward ethical conduct.

Encouraging Ethical Conduct (cont’d)
• Whistle-Blowing
– The reporting of perceived unethical matters.
– Reducing the fear of retaliation against whistleblowers
• Encourage free expression of controversial views
• Insure grievances receive a prompt and fair hearing
• Adjust the organization’s social responsibility policies to
employees expectations
• Inform employees that the organization respects and is sensitive
to their point of view
• Ethical Advocate
– An ethics specialist who plays a role of critical questioner in top-
management’s decision-making.
– Serves as the Board of directors’ social conscience.
– Helps prevent groupthink and blind conformity

Encouraging Ethical Conduct (cont’d)
• Code of Ethics
– A published statement of moral expectations for
employee conduct.
– Requirements for an effective ethics code
• Must describe specific practices as unethical
(e.g., kickbacks, payoffs, gifts, falsification of records,
and misleading product claims).
• Must be firmly supported and fairly enforced by
top management.

Ch 3-Slides

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