Module 7

Subject: ABM 083: Introduction to Agribusiness Management

Chapter Title: Environments of Agribusiness

Lesson Title: The Ethical and Social Environment

Lesson Objectives:
1. Define ethics and discuss how they are formed.
2. Describe the relationship between ethics and management.
3. Understand the management of ethics, including the necessity for top-
management support and codes of conduct.
4. Define social responsibility, and identify the general areas of social
responsibility.
5. Discuss approaches to social responsibility.
6. Discuss the role of government in business’s social responsibility.

Overview/Introduction:

The debate about the role of business in protecting the natural and social environment
clearly demonstrates the increasingly important relationship between business and its
environment. If a company, large or small, is not socially responsible, it may receive well-
deserved criticism. But even companies that try their best to be socially responsible can
nevertheless quickly become embroiled in an event that captures the public’s attention (like
the projected demise of the spotted owl). Some organizations know how to function within
their social environments; others think they know how to function, only to occasionally
stumble. Still others have little clear understanding of what it means to function within the
social environment.

Activity:

1. Cite some of your experiences in doing social responsibility such as community

involvement, feeding program and the like.

Analysis:

1. What have you learned from your participation to such activity?

2. What are the other possible social involvement in the community you intend to
do? Why?

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Abstraction:

What are Ethics?

Ask any four experts and you’ll probably get four different answers—and maybe even more.
For our purposes, let us define ethics as those standards or morals a person sets for himself
or herself regarding what is good and bad or right and wrong. Thus, while some behavior is
clearly ethical or unethical, much of the behavior in an organization tends to be relatively
ethical or relatively unethical.

The Formation of Ethics

1. Family Influences
- Family influences play a key role in determining an individual’s beliefs as to what
is and is not right.
2. Peer Influences
- Peer influences are also quite important in determining a person’s ethics.
Childhood friends, classmates, and others in a person’s social network can shape
his or her ethics. Peer pressure, for instance, can help determine how much a
person will engage in such questionable activities as shoplifting, experimenting
with drugs, and so forth.
3. Past Experiences
- As individuals grow, their past experiences can also play a role in determining the
evolution of their ethical standards
4. Values and Morals
- At a more general level, basic values and morals influence ethics. A person who is
profoundly religious, for example, will almost certainly have strong feelings about
what is right and wrong—although these may differ from other people’s
definitions of right and wrong. Either way, such beliefs will probably carry over to
help shape his or her personal ethics.
5. Situational Factors
- Finally, situational factors are important. These are events that occur in a perhaps
random way and that have the potential to determine behavior that may or may
not be consistent with a person’s ethics.

Managerial Ethics
Managers of organizations are not robots. They are not programmed to always do the same
thing regardless of the circumstances. Indeed, one of the most important factors in the
behavior of managers is their ethics, because of the multitude of situations that confront
managers and the ethical context of their jobs. Managerial ethics, then, refers to the ethics
of a person performing in a managerial role.

1. Ethics and Management

- Managers face ethical dilemmas almost daily. They occur when a manager faces
two or more conflicting ethical issues. Those dilemmas occur in relationships of
the firm to its employees, of the employees to the firm, and of the firm to
its environment.
2. The Ethical Context of Management
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 - It is obvious from this discussion so far that many management activities occur
within an ethical context. First, the manager’s personal ethics, are a major
determinant of his or her ethical context. Values, predilections about right and
wrong, and sense of justice and fairness all come into play. Susceptibility to
situational factors is also relevant. Second, the specific organizational context is
important to the ethical managerial context. Of special interest are organizational
practices and the behavior of leaders and peers.

Managing Ethics
1. Top-Management Support
- For organizations to develop and maintain cultures in which ethical managerial
behavior can thrive, top management must support such behavior.
2. Codes of Conduct
- Another important step in the management of ethics is to establish codes of
conduct, which usually state the importance of following ethical business
practices in all areas of the organization’s activities. These codes are symbolic but
meaningful statements of the company’s concern.

The Nature of Social Responsibility

Whereas ethical behavior is a phenomenon primarily at the individual level, social
responsibility applies more to the organizational level. Social responsibility refers to the
obligations of the organization to protect and/or enhance the society in which it functions.

Areas of Social Responsibility

1. Organizational Constituents
- Another view of that same network is in terms of organizational constituents,
those people and organizations that are directly affected by the practices of an
organization and that have a stake in the organization’s performance.
2. The Natural Environment
- A second critical area of social responsibility relates to the natural environment.
Not long ago, many organizations indiscriminately dumped sewage, waste
products from production, and trash into streams and rivers, into the air, and on
vacant land. Now, however, many different laws regulate the disposal of waste
materials. In many instances, companies themselves have seen the error of their
ways and have become more socially responsible in their release of pollutants.
3. General Social Welfare
- Some people feel that in addition to treating constituents and the environment
responsibly, business organizations should promote the general welfare of
society.

Approaches to Social Responsibility

1. Social Obstruction
- The few organizations that take what might be called a social obstruction
approach to social responsibility usually do as little as possible to solve social or
environmental problems. When they cross the ethical or legal line that separates

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 acceptable from unacceptable practices, their typical responses are to deny or
cover up their actions.

2. Social Obligation
- The social obligation view is most consistent with the argument that any business
activity that is not directly aimed at profits is inadvisable. The company that takes
this approach is willing to meet its social obligations as mandated by societal
norms and government regulation, but nothing more. Thus, it meets its economic
and legal responsibilities but does not go beyond them.
3. Social Reaction
- The firm using a social reaction approach is one that meets its social obligations
but is also willing to react to appropriate societal requests and demands. That is,
the company will make limited and specific positive contributions to social
welfare.

The Government and Social Responsibility

1. Government Regulation of Business
- Much of government regulation has been concerned with enhancing the social
responsiveness and awareness of business and with protecting the best interests
of society from abuse by big business.
2. Business Influence on Government
- Just as the government regulates business, so does business attempt to influence
the government. Such efforts, of course, must be relatively subtle and are often
quite indirect. In general, there are four common approaches businesses use to
influence government

Application:

1. List five ways in which you feel it is ethical for students to behave. Then list five
ways in which you feel it is unethical for students to behave. What are the
strongest influences on your feelings about what is ethical and unethical student
behavior?
2. How useful are codes of conduct or codes of ethics to business firms? Explain your
response.

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Assessment:

1. Make a personal reaction paper about this chapter in terms of content, your
experience, your reflection and your application of this topic in the future.
- Use the CERA format for your reaction paper and one paragraph each. Hence, you four
paragraphs for this reaction paper.
C – content
E – experience
R – reflection
A - application

Prepared by:

Keno Jay M. Balogbog, PhD