Download Social Responsibility

Lecture# 5
Management’s
Social and Ethical Responsibilities
Social Responsibility:
Definition and Perspectives
• Corporate Social Responsibility (CSR)
– The idea that business has:
• Social obligations above and beyond
making a profit
• Social obligations to constituent groups
in society other than stockholders and
beyond that prescribed by law
– Organizations include financial,
environmental, and social responsibility in
their core business strategies.
Social Responsibility:
Definition and Perspectives
• What Does Social Responsibility Involve?
– Voluntary action
• Action is taken before lawsuits or
other events force a firm to act on a
matter.
– An emphasis on means, not ends
• Emphasis is on how the decision to act
was reached, not on the decision itself.
Figure 1: A Sample Stakeholder Audit for
Wal-Mart, the World’s Largest Retailer
Arguments For and Against
Corporate 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
Corporate Social Responsibility
• 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 society.
Toward Greater
Social Responsibility
• Iron Law of Responsibility
– Those who do not use power in a
socially responsible way will eventually
lose it.
– If business does not meet the challenge
of social responsibility, then
government reform legislation will
force it to meet its obligations.
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
• 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
Figure 2: A Continuum
of Social Responsibility Strategies
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.
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 to
achieve results is widespread.
– Managers’ responses to pressure from above
• Consciously avoid putting undue pressure on subordinates
(who may act unethically to relieve the pressure).
• Prepare to deal with excessive organizational pressure.
Practical Lessons from
Business Ethics Research (cont’d)
• Ambiguous Situations
– Situations where there are no clear-cut ethical
guidelines or ethical codes that can satisfy
employees’ need for formal guidelines
• Rationalization: How Good People End Up
Doing Bad Things
– Perceiving an objectively questionable action as
normal and acceptable
• A Call to Action
– The deliberate and conscious action of a manager to
do the right thing is an ethical and personal matter.
Table 5.1: How Employees Tend to
Rationalize Unethical Conduct
Personal Values as Ethical Anchors
• Values
– Abstract ideals that shape one’s thinking and
behavior
• Instrumental value: Enduring belief that a certain way (mode)
of behaving is appropriate in all situations
• Terminal value: Enduring belief that a certain end-state of
existence (being admired) is worth striving for
• Identifying Your Own Values
– Basic personal values are taken for granted.
– They are not arranged consciously in order of priority.
Managerial Ranking of Values
• Terminal Values
–
–
–
–
Self-respect
Family security
Freedom
A sense of
accomplishment
– Happiness
• Instrumental Values
–
–
–
–
–
Honesty
Responsibility
Capability
Ambition
Independence
General Ethical Principles
•
•
•
•
Self-interests
Personal virtues
Religious injunctions
Government
requirements
• Utilitarian benefits
•
•
•
•
•
Universal rules
Individual rights
Economic efficiency
Distributive justice
Contributively liberty
Encouraging Ethical Conduct
• Ethics Training
– Amoral managers: Managers who are neither
moral nor immoral, but ethically lazy
– Key features of effective ethics programs
• Support of top management
• Open discussion
• A clear focus on ethical issues
• Integration of ethics into the organization
• A mechanism for anonymously reporting
ethical violations
• Rewarding of ethical conduct
Table 2: Twelve Questions for Examining the Ethics of a Business
Decision
Encouraging Ethical Conduct (cont’d)
• Ethical Advocate
– An ethics specialist who plays a role in top
management’s decision making
• Code of Ethics
– Requirements for an effective code
• Describes specific events as unethical
• Is supported and equitably enforced by top
management
• Whistle-Blowing
– The reporting of perceived unethical matters
Summary
• Corporate responsibility is the idea that
management has broader responsibilities than
just making a profit.
• The debate over the basic purpose of the
corporation is long-standing.
• Management scholars who advocate greater
corporate social responsibility cite the iron law of
responsibility.
Summary (cont’d)
• Ethics research indicates that many employees
have acted unethically, have been pressured to
act unethically, desire ethical standards, and
engage in rationalization to defend their
behaviors.
• Managers must pay attention to the instrumental
and terminal values that comprise employee’s
personal value systems.
Summary (cont’d)
• There are at least ten general ethical principles
that guide behavior are self-interests, personal
virtues, religious injunctions, government
requirements, utilitarian benefits, universal rules,
individual rights, economic efficiency, distributive
justice, and contributive liberty.
• The typical manager is considered to be amoral-neither moral nor immoral—just ethically lazy or
indifferent.