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Chapter 3
Social Responsibility and Ethics
Pamela S. Lewis
Stephen H. Goodman
Patricia M. Fandt
Slides Prepared by
Bruce R. Barringer
University of Central Florida
©2001 South-Western College Publishing
Learning Objectives
Slide 1 of 4
1.Discuss the stakeholder view of the firm
and discuss the impact of the globalization
of business on social responsibility and
ethics.
2.Describe the concept of corporate social
responsibility and the primary premises
upon which it is based.
3.Distinguish among the three perspectives
of corporate social responsibility.
© 2001 South-Western Publishing
Transparency 3-2
Learning Objectives
Slide 2 of 4
4.Identify and evaluate different strategies for
responding to social issues.
5.Discuss the 10 commandments of social
responsibility.
6.Explain what values are, how they form the
basis of an individual’s ethical behavior,
and how they may vary in a global business
environment.
© 2001 South-Western Publishing
Transparency 3-3
Learning Objectives
Slide 3 of 4
7.Describe how advances in information
technology have created new ethical
challenges.
8.Identify and discuss the differences in the
utility, human rights, and justice approaches
to ethical dilemmas.
9.Explain the methods used by an
organization to encourage ethical business
behavior.
© 2001 South-Western Publishing
Transparency 3-4
Learning Objectives
Slide 4 of 4
10. Describe the different approaches
used in ethics training programs.
11.Discuss what is meant by whistleblowing
in monitoring ethical behavior.
© 2001 South-Western Publishing
Transparency 3-5
Stakeholders
Stakeholders are all those who are affected
by or can affect the activities of the firm.
© 2001 South-Western Publishing
Transparency 3-6
Primary and Secondary Stakeholders
• Primary Stakeholders
– Those who have a formal, official, or
contractual relationship with the organization.
• Secondary Stakeholders
– Other societal groups that are affected by the
activities of the firm.
© 2001 South-Western Publishing
Transparency 3-7
The Stakeholder View of the Firm
Secondary
Stakeholders
Environmental
Group
Local
Community
Group
Consumer Group
Primary
Stakeholders
Owners
Suppliers
Organization
Employees
Media
© 2001 South-Western Publishing
Other Special
Interest
Groups
Customers
ACLU
Transparency 3-8
Corporate Social Responsibility
Defined
Slide 1 of 2
The interaction between business and the
social environment in which it exists.
© 2001 South-Western Publishing
Transparency 3-9
Corporate Social Responsibility
Defined
Slide 2 of 2
What specifically does social
responsibility mean?
Does it mean that
the corporation’s
actions must not
harm society?
© 2001 South-Western Publishing
or
Does it mean that
a corporation’s
actions should
benefit society?
Transparency 3-10
The Premises of the Social
Responsibility Debate
• Social contract
– An implied set of rights and obligations that are
inherent in social policy and assumed by
business.
• Moral agent
– The obligation of a business to act honorably
and to reflect and enforce values that are
consistent with those of society.
© 2001 South-Western Publishing
Transparency 3-11
Three Perspectives of Social
Responsibility
Slide 1 of 2
• Economic Perspective
– The responsibility of business is to make a
profit within the “rules of the game.”
– Organizations cannot be moral agents. Only
individuals can serve as moral agents.
• Public Responsibility
– Businesses should act in a way that is consistent
with society’s view of responsible behavior, as
well as with established laws and policies.
© 2001 South-Western Publishing
Transparency 3-12
Three Perspectives of Social
Responsibility
Slide 2 of 2
• Social Responsiveness
– Business should proactively seek to contribute
to society in a positive way.
– Organizations should develop an internal
environment that encourages and supports
ethical behavior at an individual level.
© 2001 South-Western Publishing
Transparency 3-13
The Four Faces of Social
Responsibility
Legal/Responsible
Legal/Irresponsible
Illegal/Responsible
Illegal/Irresponsible
© 2001 South-Western Publishing
Transparency 3-14
Social Responsibility Strategies
Slide 1 of 3
Continuum of strategies based on the
organization’s tendency to be socially
responsible or responsive.
Reaction
Defense
Do Nothing
© 2001 South-Western Publishing
Accommodation
Proaction
Do Much
Transparency 3-15
Social Responsibility Strategies
Slide 2 of 3
• Reaction
– An organization that assumes a reaction stance
simply fails to act in a socially responsible
manner.
• Defense
– Organizations that pursue a defense strategy
respond to social challenges only when it is
necessary to defend their current position.
© 2001 South-Western Publishing
Transparency 3-16
Social Responsibility Strategies
Slide 3 of 3
• Accommodation
– Corporations with an accommodation strategy
readily adapt behaviors to comply with public
policy and regulation where necessary and,
more importantly, attempt to be responsive to
public expectations.
• Proaction
– Organizations that assume a proaction strategy
subscribe to the notion of social responsiveness.
© 2001 South-Western Publishing
Transparency 3-17
Ten Commandments of Social
Responsibility
Slide 1 of 4
• Commandment I
– Thou shall take corrective action before it is
required.
• Commandment II
– Thou shall work with affected constituents to
resolve mutual problems.
• Commandment III
– Thou shall work to establish industry-wide
standards and self-regulation.
© 2001 South-Western Publishing
Transparency 3-18
Ten Commandments of Social
Responsibility
Slide 2 of 4
• Commandment IV
– Thou shall publicly admit your mistakes.
• Commandment V
– Thou shall get involved in appropriate social
programs.
• Commandment VI
– Thou shall help correct environmental
problems.
© 2001 South-Western Publishing
Transparency 3-19
Ten Commandments of Social
Responsibility
Slide 3 of 4
• Commandment VII
– Thou shall monitor the changing social
environment.
• Commandment VIII
– Thou shall establish and enforce a corporate
code of ethics.
• Commandment IX
– Thou shall take needed public stands on social
issues.
© 2001 South-Western Publishing
Transparency 3-20
Ten Commandments of Social
Responsibility
Slide 4 of 4
• Commandment X
– Thou shall strive to make profits on an ongoing
basis.
© 2001 South-Western Publishing
Transparency 3-21
Ethics
• Ethics
– The established customs, morals, and
fundamental human relationships that exist
throughout the world.
• Ethical Behavior
– Behavior that is morally accepted as good or
right as opposed to bad or wrong.
© 2001 South-Western Publishing
Transparency 3-22
Foundations of Ethics
Values
The relatively permanent and deeply held
preferences of individuals or groups.
Instrumental Values
Terminal Values
Standards of conduct
or methods for
attaining an end.
Goals an individual
will ultimately strive
to achieve.
© 2001 South-Western Publishing
Transparency 3-23
Business Ethics Defined
The application of the general ethical rules
to business behavior.
© 2001 South-Western Publishing
Transparency 3-24
Ethical Dilemma Defined
A situation in which a person must decide
whether or not to do something that, although
beneficial to oneself or the organization, may be
considered unethical and perhaps illegal.
© 2001 South-Western Publishing
Transparency 3-25
Examples of Ethical Dilemmas Faced
by Managers
Should I conduct
personal business
on company time?
If I find out that my
boss took a bribe,
should I tell someone?
Should we spend more
on pollution control?
Is it O.K. to give a
friend a special rate?
© 2001 South-Western Publishing
Transparency 3-26
Managerial Guidelines for Ethical
Dilemmas
Slide 1 of 2
• Utility Approach
– A situation in which decisions are based on an
evaluation of the overall amount of good that
will result.
• Human Rights Approach
– A situation in which decisions are made in
light of the moral entitlements of human beings.
© 2001 South-Western Publishing
Transparency 3-27
Managerial Guidelines for Handling
Ethical Dilemmas
Slide 2 of 2
• Justice Approach
– A situation in which decisions are based on an
equitable, fair, and impartial distribution of
benefits and costs among individuals and
groups.
© 2001 South-Western Publishing
Transparency 3-28
Fostering Improved Business Ethics
To foster improved business ethics in an
organization, action must be directed at
five levels:
International
Organizational
Societal
Individual
Association
© 2001 South-Western Publishing
Transparency 3-29
Ways In Which Organizations Foster
Business Ethics
Slide 1 of 2
• Code of Ethics
– Describes the general value system, ethical
principles, and specific ethical rules that a
company tries to apply.
• Ethics Training Programs
– Training designed to help managers clarify their
ethical framework and practice self-discipline
when making decisions in difficult
circumstances.
© 2001 South-Western Publishing
Transparency 3-30
Ways In Which Organizations Foster
Business Ethics
Slide 2 of 2
• Whistleblowing
– A whistleblower is someone who exposes
organizational misconduct or wrongdoing to the
public.
© 2001 South-Western Publishing
Transparency 3-31
Checklist for Managers To Use When
Facing Ethical Dilemmas
Slide 1 of 2
•
•
•
•
Recognize and clarify the dilemma.
Get all possible facts.
List all your options.
Test each option by asking:
– “Is it legal? It is right? Is it beneficial?”
• Make your decision.
© 2001 South-Western Publishing
Transparency 3-32
Checklist for Managers To Use When
Facing Ethical Dilemmas
Slide 2 of 2
• Double-check your decision by asking…
– “How would I feel if my family found out
about this? How would I feel if my decision
was printed in the local newspaper?”
• Take action.
© 2001 South-Western Publishing
Transparency 3-33