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Ethics and Social Responsibility
CHAPTER 5
Learning Objectives
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Define ethics and explain how ethical behavior
relates to behavior governed by law and free
choice.
Explain the utilitarian, individualism, moralrights, and justice approaches for evaluating
ethical behavior.
Describe how both individual and organizational
factors shape ethical decision making.
Define corporate social responsibility and how
to evaluate it along economic, legal, ethical,
and discretionary criteria.
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Learning Objectives (contd.)
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Describe four organizational approaches to
environmental responsibility, and explain the
philosophy of sustainability.
Discuss how ethical organizations are created
through ethical leadership and organizational
structures and systems.
Identify important stakeholders for an
organization and discuss how managers
balance the interests of various stakeholders.
Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved.
Ethics
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The code of moral principles and
values that govern the behaviors of a
person or group with respect to what
is right or wrong.
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Three Domains of Human Action
Exhibit 5.1
Domain of Codified Law
Domain of Ethics
Domain of Free Choice
(Legal Standard)
(Social Standard)
(Personal Standard)
Amount of
Explicit Control
High
5
Low
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Ethical Dilemma
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A situation that arises when all
alternative choices or behaviors have
been deemed undesirable because...
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Of potentially negative ethical
consequences, making it difficult to
distinguish right from wrong
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Criteria For
Ethical Decision Making
Most ethical dilemmas involve
Conflict between needs of the part &
whole
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Individual versus the organization
Organization versus society as a whole
Managers benefit from a normative
strategy to guide their decision
making - norms and values
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Ethical Decision Making Approaches
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Utilitarian Approach
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Individualism Approach
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Moral-Rights Approach
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Justice Approach
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Utilitarian Approach
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Moral behavior produces the greatest
good for the greatest number
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Example – recent trend among
companies to monitor employee use
of the Internet
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Individualism Approach
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Acts are moral when they promote the
individual's best long-term interests, which
ultimately leads to the greater good
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Individual self-direction paramount
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Individualism is believed to lead to honesty
& integrity since that works best in the long
run
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However, top executives from WorldCom,
Enron, Tyco demonstrate flaws of approach
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Moral-Rights Approach
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Moral decisions are those that best
maintain the rights of those people
affected by them.
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An ethical decision is one that avoids
interfering with the fundamental rights
of others.
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Six Moral Rights
1. The right of free consent
2. The right to privacy
3. The right of freedom of conscience
4. The right of free speech
5. The right to due process
6. The right to life and safety
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Justice Approach
Moral Decisions must be based on
standards of equity, fairness,
impartiality
Three types of Justice Approaches:
 Distributive Justice
 Procedural Justice
 Compensatory Justice
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Distributive Justice
14
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Different treatment of people should not
be based on arbitrary characteristics
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In case of substantive differences,
people should be treated differently in
proportion to the differences among
them
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Procedural Justice
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Rules should be clearly stated
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Rules should be consistently and
impartially enforced
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Compensatory Justice
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Individuals should be compensated for the
cost of their injuries by the party
responsible
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Individuals should not be held responsible
for matters they have no control over
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Factors Affecting Ethical Choices
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The Manager
Levels or stages of moral
development
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•
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Pre-conventional
Conventional
Post-conventional
The Organization
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Levels of Personal Moral Development
Exhibit 5.2
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The Organization
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Rarely can ethical or unethical corporate
actions be attributed solely to the
personal values of a single manager
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Values adopted within the organization
are highly important
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Most people believe their duty is to fulfill
obligations and expectations of others
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Corporate Social Responsibility
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Organization’s obligation to make
decisions and take actions that will
enhance the welfare and interests
of society and organization
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Being a good corporate citizen
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Difficulty in understanding – issues
can be ambiguous with respect to
right and wrong
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Organizational Stakeholders
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Any group within or outside the
organization that has a stake in the
organization’s performance
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Each stakeholder
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Has a different criterion of responsiveness
Has a different interest in the company
Monsanto
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Environmental Responsibility Commitment
Adapted from Exhibit 5.6
The Shades of
Corporate Green
Activist
Approach
Stakeholder
Approach
Market Approach
Legal Approach
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Total Corporate Social Responsibility
Total Corporate Social Responsibility
Exhibit 5.7
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The Ethical Organization
The Three Pillars of an Ethical Organization
Exhibit 5.9
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