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Study Guide to Go
Chapter 3: Management's Social and Ethical
Responsibilities
Chapter Outlines
Social Responsibility: Definition and Debate
What Does Social Responsibility Involve?
Arguments for and Against Corporate Social Responsibility
Toward Greater Social Responsibility
Social Responsibility Strategies
Who Benefits from Corporate Social Responsibility?
The Ethical Dimension of Management
Practical Lessons from Business Ethics Research
General Ethical Principles
Encouraging Ethical Conduct
Ethics Training
Ethical Advocates
Codes of Ethics
Whistle-Blowing
Glossary
corporate social responsibility the idea that business has social obligations
above and beyond making a profit.
stakeholder audit identifying all parties possibly impacted by the organization.
iron law of responsibility those who do not use power in a socially responsible
way will eventually lose it.
reactive social responsibility strategy denying responsibility and resisting
change.
defensive social responsibility strategy resisting additional responsibilities
with legal and public relations tactics.
accommodative social responsibility strategy assuming additional
responsibilities in response to pressure.
proactive social responsibility strategy taking the initiative with new programs
that serve as models for the industry.
altruism unselfish devotion to the interests of others.
enlightened self-interest a business ultimately helping itself by helping to solve
societal problems.
corporate philanthropy charitable donation of company resources.
ethics the study of moral obligation involving right versus wrong.
amoral managers managers who are neither moral nor immoral, but ethically
lazy.
ethical advocate ethics specialist who plays a role in top-management decision
making.
whistle-blowing reporting perceived unethical organizational practices to
outside authorities.
Learning Objective Summary
Learning Objective 1: Define corporate social responsibility (CSR), and
summarize the arguments for and against it.
• Corporate social responsibility is the idea that management has broader responsibilities
than just making a profit.
- A strict interpretation holds that an action must be voluntary to qualify as socially
responsible.
- Accordingly, reluctantly submitting to court orders or government coercion is not social
responsibility.
• The arguments for corporate responsibility say businesses are members of society with
the resources and motivation to improve society and avoid government regulation.
• Those arguing against it call for profit maximization because businesses are primarily
economic institutions run by unelected officials who have enough power already.
Learning Objective 2: Identify and describe the four social responsibility
strategies, and explain the role of enlightened self-interest in CSR.
• Management scholars who advocate greater corporate social responsibility cite the iron
law of responsibility. This law states that if business does not use its socioeconomic
power responsibly, society will take away that power.
• A continuum of social responsibility includes four strategies: reaction, defense,
accommodation, and proaction.
- The reaction strategy involves denying social responsibility.
- The defense strategy involves actively fighting additional responsibility with political
and public relations tactics.
- Accommodation occurs when a company must be pressured into assuming additional
social responsibilities.
- Proaction occurs when a business takes the initiative and becomes a positive model for
its industry.
• In the short run, proactive social responsibility usually costs the firm money. But,
according to the notion of enlightened self-interest, both society and the company will
gain in the long run.
• Research indicates that corporate philanthropy actually is a profit-motivated form of
advertising.
Learning Objective 3: Summarize the three practical lessons from
business ethics research. Then identify and describe at least four of the
ten general ethical principles.
• Business ethics research has taught these three practical lessons:
- A large percentage of surveyed workers report engaging in illegal or unethical
practices.
- Perceived pressure from above can erode ethics.
- Employees desire clear ethical standards in ambiguous situations
• The call for better business ethics is clearly a personal challenge.
• The ten general ethical principles that consciously and unconsciously guide behavior
when ethical questions arise are:
- Self-interests (protect your long-term self-interests)
- Personal virtues (always be open, honest, and truthful)
- Religious injunctions (work together for a common goal)
- Government requirements (always follow the law)
- Utilitarian benefits (work for the greater good)
- Universal rules (act as others should)
- Individual rights (don’t hamper the rights of others)
- Economic efficiency (legally maximize profits)
- Distributive justice (don’t harm the least fortunate)
- Contributive liberty (don’t interfere with others’ right to self-fulfillment)
Learning Objective 4: Discuss what managers can do to improve business
ethics.
• The typical manager is said to be amoral—neither moral or immoral—just ethically lazy
or indifferent.
• Management can encourage ethical behavior in the following four ways:
- Conduct ethics training.
- Use ethical advocates in high-level decision making.
- Formulate, disseminate, and consistently enforce specific codes of ethics.
- Create an open climate for dissent in which whistle-blowing becomes unnecessary.
Test Preppers
Test Prepper 3.1
True or False?
_____ 1. By definition, socially responsible acts must be government mandated.
_____ 2. An argument favoring corporate social responsibility is that government will
force business to do what it fails to do voluntarily.
_____ 3. Those who argue against corporate social responsibility worry that business
already has enough power.
Multiple Choice
_____ 4. Before corporate actions can be called socially responsible, they must be
a. legal.
b. ethical.
c. contractual.
d. voluntary.
e. unprofitable.
_____ 5. _____ refers to systematically identifying all parties that could possibly be
impacted by a company’s performance.
a. Social responsibility profile
b. Stakeholder audit
c. Corporate domain audit
d. External audit
e. Capability profiling
_____ 6. _____ ensures the efficient use of society’s resources, according to the
arguments against corporate social responsibility.
a. The threat of government intervention
b. Public pressure
c. Governmental legislation
d. Profit maximization
e. The political process
Test Prepper 3.2
True or False?
_____ 1. The iron law of responsibility states that “in the long run, those who do not
use power in a way that society considers responsible will tend to lose it.”
_____ 2. An example of a reactive social responsibility strategy is a blue jeans maker
switching to organically grown cotton.
_____ 3. Proaction means aggressively taking the initiative in the corporate social
responsibility area.
_____ 4. Managers who believe in enlightened self-interest think that ultimately the best
way to help themselves is to help create a better society.
Multiple Choice
_____ 5. According to the iron law of responsibility,
a. power corrupts.
b. absolute power is dangerous.
c. nothing gets accomplished without power.
d. economic power prevails.
e. we need to use power responsibly or lose it.
_____ 6. A(n) _____ social responsibility strategy uses legal maneuvering and/or a
public relations campaign to avoid assuming additional responsibilities.
a. accommodation
b. reactive
c. defensive
d. proactive
e. protective
_____ 7. Aggressively taking the initiative on the social responsibility continuum is called
a. empowerment.
b. proaction.
c. altruism.
d. reaction.
e. decentralization.
_____ 8. Researchers found which sort of relationship between industry leadership in
environmental protection/pollution control and profitability?
a. Positive correlation
b. Negative correlation
c. Inconsistent
d. No impact
e. Inverse
_____ 9. The realization that business ultimately helps itself by helping to solve societal
problems defines
a. profit-motivation.
b. corporate philanthropy.
c. ethics.
d. social-motivation.
e. enlightened self-interest.
Test Prepper 3.3
True or False?
_____ 1. Business ethics involves a simple obligation of choosing right versus wrong.
_____ 2. One of the top-ten workplace hot spots that trigger unethical and illegal
conduct is little or no recognition of achievements.
_____ 3. High levels of pressure to act unethically were more often reported by college
graduates than by those with a high school diploma or less.
_____ 4. Among the ten general ethical principles are universal rules, personal virtues,
and government requirements.
Multiple Choice
_____ 5. Ethics refers to the study of
a. moral obligation.
b. social trade-offs.
c. cross-cultural value conflict.
d. black-and-white political issues.
e. economic trade-offs.
_____ 6. Discomfort with _____ was found in surveys of purchasing and sales
personnel.
a. overly specific ethical codes
b. any type of ethical code
c. moralistic managers
d. ambiguous situations
e. immoral managers
_____ 7. Which statement best represents the general ethical principle of contributive
liberty?
a. Never take any action that violates the law.
b. Never take any action that is not in the long-term self-interest of yourself.
c. Never take any action that will interfere with the right of all of us for selfdevelopment and self-fulfillment.
d. Never take any action that does not result in greater good than harm for the
society of which you are a part.
e. Always act to maximize profits subject to legal and market constraints.
Test Prepper 3.4
True or False?
_____ 1. An ethical advocate is assigned the specific role of critical questioner, and he
or she may also be asked to sit in on top-management decision deliberations.
_____ 2. An effective code of ethics needs to be stated in general terms rather than
getting bogged down in the details of specific behaviors.
_____ 3. The first step to reduce the need for whistle-blowing is encouraging the free
expression of controversial and dissenting viewpoints.
Multiple Choice
_____ 4. An amoral manager can be described as one who is
a. devoted to others.
b. above criticism.
c. strictly selfish.
d. indifferent to ethical implications.
e. consistently unethical.
_____ 5. Which statement about ethics training is true?
a. It is a waste of time.
b. It is becoming less popular.
c. It lacks hard evidence of effectiveness.
d. It is practically universal today.
e. It is out of date.
_____ 6. _____ is the practice of reporting perceived unethical practices to outsiders
such as the media or government agencies.
a. Ethical conscience
b. Whistle-blowing
c. Devil’s advocacy
d. Functional conflict
e. Ombudsmanship
Test Prepper Answer Key
3.1
1. F
2. T
3. T
4. d
3.2
1. T
2. F
3. T
4. T
3.3
1. F
2. T
3. F
4. T
3.4
1. T
2. F
3. T
4. d
5. b
6. d
5. e
6. c
7. b
5. a
6. d
7. c
5. c
6. b