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Chapter 4
Ethics and Social Responsibility
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Organizational Stakeholders
The individuals and groups that have an interest
or claim in an organization and in what it does
Shareholders
 Managers
 Nonmanagerial employees
 Customers
 Suppliers
 Local community

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Ethics
Moral principles or beliefs about what is
right or wrong
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Ethical Dilemmas
Managers confront ethical dilemmas
every time they have to balance the
claims of one stakeholder group against
the claims of another.
– They might feel tempted to engage in
unethical acts if the harm done to
stakeholders is indirect or seems
insignificant relative to the benefits they
receive from the unethical activity.
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Reputation – A Valuable Asset
 An important safeguard against unethical
behavior is the potential for loss of
reputation.
 Behaving unethically in the short run can
have serious long-term consequences.
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Ethics Around the World
Ethics -the study of morality and
standards of conduct
– Unethical Business Practices
Insider Trading Scandals
 Bribes
 “Mad” Syndrome

– mergers, acquisitions, divestitures
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Ethical Concerns in Japan
 Political
and Business Scandals
 Prejudice and Discrimination
 Social responsibility Implications from
Lobbying
 Status of women managers
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Ethical Concerns in Europe
The Status of Women Managers
– France
 women
are underrepresented in the corporate
management
– glass ceiling
– enforcement of equal opportunity is weak
– Germany
 has introduced laws that mandate equal
opportunity positions throughout the public
sector
– legislation hard to enforce
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Great Britain
– Great Britain

women are still not well represented at the
highest levels of most organizations
– legislation is weak
– women’s associations are being established to
increase political power
– British companies are proactively trying to recruit and
promote more women
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Ethical Concerns in China
 Piracy,
Industrial Spying, and
Counterfeit Problems
– Chinese backed industrial spying has
increased against u.s. businesses
– illegal production of counterfeit cd-roms,
music -cd’s, and video-cd’s
– patent violations
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 Women
managers
– Cultural stereotypes,
restricted
opportunities, and
discrimination limit
women managers in
China
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Regulating Foreign Investment
 Regulation
of Acquisitions
– MNC’s must obtain host government
clearance prior to establishing new
operations or purchasing ongoing
businesses

Purpose: To control own economies
and gain independence from foreign
companies
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 Reciprocity
– Is their an ethical and social responsibility
to engage in reciprocal trade?

Example: obligations to maintain an
import/export balance with trading partner?
– retaliation?
• ongoing issue between Japan and the
U.S., and between Japan and Taiwan
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Response to Social Obligations
Foreign Corrupt Practices Act (1977)
makes it illegal to influence foreign officials
through personal payment or campaign
contributions
International Assistance
Provides assistance such as food, machinery, and
equipment to underdeveloped countries helps to
stimulate economies
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Social Responsibility
Social responsibility
A manager’s duty to make decisions that nurture,
protect, enhance, and promote the welfare and
well-being of stakeholders and society as a whole.
Approaches to Social Responsibility
 Obstructionist approach
 Defensive approach
 Accommodation approach
 Proactive approach
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