Introduction to

Management
Dr. Menatallah Darrag & Dr. Dalia Abdelwahab

Lecture
4
Chapter 5: Social Responsibility and Managerial
Ethics
 Learning Objectives

) Milton Friedman: social responsibilities

 Understand what is meant by Corporate Social Responsibility

 Describe what is meant by green management

 Discuss what is ethical behavior and how to encourage it

 Describe ethics and CSR in the Arab Region

Individuals and groups affected by an organization's actions are ________.

A) beneficiaries
C) interested parties
Answer: D
B) consumers
D) stockholders
 What Is Social Responsibility?
Managers regularly face decisions that have a
dimension of social responsibility, such as those
involving:
 Employee relations
 Pricing
 Resource conservation
 Product quality and safety
 Doing business in countries that devalue human
rights

Employee relations, philanthropy, pricing, resource conservation, product quality and safety,
and doing business in countries that violate human rights are some obvious examples of
________.
A) social responsibility issues that employees must confront while at work
B) areas of social responsibility that influence managers, not employees
C) social responsibility ethics that managers must decide on a daily basis
D) decisions that managers face that have a social responsibility dimension
Answer:
 What Is Social Responsibility?
Which of the following is associated with the classical view of social responsibility?
A) stockholder financial return
B) concern for social welfare
C) voluntary activities
Answer: A
Classical View of
Social Obligation
Social responsibility

Socioeconomic View of Social Responsiveness

Social responsibility
Social Responsibility

Proponents of the socioeconomic view of social responsibility believe that business

organizations
are A) not just merely economic institutions
 Views of Social Responsibility

The Classical View The Socioeconomic View

 Management’s only social  Management’s social responsibility
responsibility is to maximize goes beyond making profits to
include protecting and improving
profits (create a financial return) society’s welfare
by operating the business in the
best interests of the stockholders  Corporations are not independent
(owners of the corporation) entities responsible only to
stockholders
 Expending the firm’s resources
on doing “social good”  Firms have a moral responsibility
unjustifiably increases costs that to larger society to become involved
lower profits to the owners and in social, legal, and political issues
raises prices to consumers
 “To do the right thing.”
SOCIAL RESPONSIBILITY is defined as a business firm's obligation, beyond that required by law and economics,
to pursue long-term goals that are good for society.
 From Obligation to Responsiveness to Responsibility
Though the outcomes are not perfectly measured, the majority of research studies show a
positive relationship between corporate social involvement and economic performance.
Answer: True

Social Obligation Social Responsibility

Social Responsiveness
When a firm engages A business’s intention,
When a firm beyond its legal and
in social actions
engages in social economic
because of its
actions in response obligations, to do the
obligation to meet
to some popular right things and act
certain economic and
social need in ways that are good
legal responsibilities
for society

When a firm advertises that it only uses recycled paper products, it is ________.
A) meeting social responsibilities
B) being socially responsive
C) paying attention to the bottom line
Answer: B
A business has fulfilled its social obligation when it meets economic, legal, and ethical
obligations. False
 Difference Social Responsiveness Social Responsibility

Major consideration Pragmatic Ethical

Focus Means Ends

Emphasis Responses Obligation

Decision framework Medium- and short-term Long-term

Source: Robbins & Coulter, 2021 - Adapted from Steven L. Wartick and Philip L. Cochran, “The Evolution of the Corporate Social
Performance Model,” Academy of Management Review (October 1985): p. 766.

The term "shades of green" refers to the level of environmental responsibility that a company
has. True
ENOC, Emirates National Oil Company, launched a training program Carroll’s CSR
called Enoc model (1991)
Challenge III, aimed at providing
disadvantaged teenagers with an opportunity to attain professional skills that is essential when embarking on new
careers. ENOC will provide training apprenticeships at its various departments for 20 candidates.
91) This initiative best comes under the category of ________.
A) social obligation
C) social responsibility
Answer: B ) social responsiveness
D) societal welfare
 Exhibit 5–2 Arguments For and Against Social Responsibility

FOR AGAINST
 Public expectations
 Violation of profit
 Long-run profits
maximization
 Ethical obligation
 Public image  Dilution of purpose
 Better environment  Costs
 Discouragement of
 Lack of skills
further
governmental  Lack of accountability
regulation
 Balance of
responsibility and
power
 Stockholder 55) the belief that businesses that help solve difficult
social problems create a desirable community
interests and attract and keep skilled employees is known as
 Possession of which argument for social responsibility?
A) public image
resources B) ethical obligation
 Superiority of
C) better environment
Answer:
prevention over
cures

One argument against businesses championing social responsibility issues is that businesses Robbins & Coulter, 2021
already have too much power. TRUE
 Does Social Responsibility Pay off?

 Studies appear to show a positive relationship

between social involvement and the economic
performance of firms

 Difficulties in defining and measuring “social

responsibility” and “economic performance” raise
issues of validity and causation in the studies

 A general conclusion is that a firm’s social actions do

not harm its long-term performance

In the Arab region, companies are not widely acknowledged for their social responsibilities or
green management actions. False
Corporate Social Responsibility and Trust

 The increased CSR efforts by

businesses appear to be effective
in increasing public opinion; more
than 50 percent of global
respondents to a recent Edelman
survey expressed trust in
business and government in
2016, reaching a record high

Source: Original graphic by Ben Littell under supervision of Professor Jonathan Doh based on data
from 2016 Edelman Trust Barometer, www.edelman.com/insights/intellectual-property/2016-
edelman-trust-barometer/.
13

https://www.edelman.com/sites/g/files/aatuss191/files/2024-02/2024%20Edelman%20Trust%20Barometer%20Global%20Report_FINAL.pdf
14

https://www.edelman.com/sites/g/files/aatuss191/files/2024-02/2024%20Edelman%20Trust%20Barometer%20Global%20Report_FINAL.pdf
15

https://www.edelman.com/sites/g/files/aatuss191/files/2024-02/2024%20Edelman%20Trust%20Barometer%20Global%20Report_FINAL.pdf
16

https://www.edelman.com/sites/g/files/aatuss191/files/2024-02/2024%20Edelman%20Trust%20Barometer%20Global%20Report_FINAL.pdf
1. Renewable Innovation: Johnson & Johnson
2. Social issues: Google
3. Sustainability: Coca-Cola
4. Carbon neutral & pay equity: Ford Motor Company
5. Employee rights: Spotify
6. Employee rights: Spotify
7. Access to healthcare: Pfizer
8. Philanthropic Donations: Wells Fargo
9. Grassroots campaigns: TOMS
10. Climate neutral: Bosch
11. Clean technology: GE
12. Workplace diversity & inclusion: Starbucks
13. Sustainability: New Belgium Brewing Company
14. Local communities: The Walt Disney Company
15. Packaging: LEGO
16. Social media & journalism: The Washington Post
https://digitalmarketinginstitute.com/blog/corporate-16-brands-doing-corporate-social-responsibility-successfully
https://digitalmarketinginstitute.com/blog/corporate-16-brands-doing-corporate-social-responsibility-successfully
The Greening of Management

 The recognition of the close link between an organization’s decision and

activities and its impact on the natural environment.

 Global environmental problems facing managers:

 Air, water, and soil pollution from toxic wastes

 Global warming from greenhouse gas emissions

 Natural resource depletion

How Organizations Go Green?

1. Legal (or Light Green)

Approach
• Firms simply do what is
legally required by obeying
laws, rules, and regulations
willingly and without legal
challenge. 2. Market Approach
Firms respond to the preferences of their
customers for environmentally friendly
products
 How Organizations Go Green?

3. Stakeholder Approach
• Firms work to meet the environmental
demands of multiple stakeholders ‒
employees, suppliers, and the
community.

4. Activist (or Dark Green) Approach

Firms look for ways to respect and preserve the
environment and be actively socially responsible.

Example:
 Masafi = e-friendly oxo-biodegradable plastic
 Aramex: plastic deliveries packages to biodegradable plastic / low
emission vehicles
Robbins & Coulter, 2021
 When we think of eco-friendly companies, tech
Nike, an American multinational corporation,
giants like Apple might not immediately spring
leads not just in sales of footwear, apparel,
to mind. However, nestled in Cupertino, CA, this
sports equipment, and accessories, but also in
renowned company diligently focuses on
environmental stewardship. Besides highlighting
sustainability. Their approach zeroes in on three
green initiatives in their advertising, this industry
key areas: reducing climate impact, conserving
giant sets a stellar example in eco-friendly
natural resources, and integrating safer
practices.
materials in products and workplaces.
In their quest for sustainability, Nike passionately
In line with this ethos, Apple has launched
champions a product line crafted from
several wind and solar farms. These green
environmentally-friendly materials, like recycled
powerhouses energetically fuel their data
polyester. Additionally, they're harnessing
centers, retail stores, and corporate offices.
renewable energy in manufacturing, showcasing
Transitioning to renewable energy, they set a
a commitment to the planet.
high bar for environmental responsibility in the
tech world.
At the heart of Nike's eco-conscious efforts is
their "Move to Zero" initiative, a bold response to
Moreover, Apple prioritizes material
climate challenges. This commitment involves
conservation. Through enhanced production
phasing out single-use plastics on all Nike
efficiency, use of renewable resources, and
campuses. Moreover, it sparks vital
design of long-lasting products, they
conversations in the global design community
significantly reduce waste. This strategy not
through the innovative Circular Design concept.
only preserves materials but also underscores
This approach not only reflects Nike's dedication
Apple's commitment to a sustainable future.
to sustainability but also inspires a broader
industry change. https://greencitizen.com/blog/green-companies/

IKEA, a household name for ready-
to-assemble furniture and
homeware, is also a trailblazer in
sustainable industry practices. This
Swedish company responsibly
sources nearly half of its wood from
sustainably managed forests and
ensures all its cotton meets the
rigorous Better Cotton standards.
These standards emphasize
reducing energy and water
consumption, along with strict
regulation of fertilizers and
pesticides use.
Powering its stores, IKEA
harnesses energy from over
700,000 solar panels worldwide.
The company is on a determined
path to achieve 100% renewable
energy usage, aligning with its
commitment to environmental
stewardship.
24
For many consumers, cars and sustainability
seem at odds, but Honda is challenging this
notion in the auto industry. In a significant
move, Honda initiated its Tree Fund
Program in 2004 to address growing carbon
emissions. This program has successfully
planted over 700,000 trees across New
Zealand, contributing significantly to carbon
sequestration.
Furthering their environmental commitment,
Honda aimed to reduce CO2 emissions by
30% across its range of motorcycles,
automobiles, and power products by 2021,
compared to levels from 2000 to 2020. This
goal highlights their dedication to producing
more eco-friendly vehicles and products.
In a substantial stride towards renewable
energy, Honda has entered a long-term
virtual power purchase agreement for wind
and solar energy. This agreement is set to
cover over 60% of the company's energy
needs in North America, marking a major
step in Honda's journey towards
sustainability. https://greencitizen.com/blog/green-companies/
 Evaluating the Greening of Management

Organizations become “greener” by:

 Using the Sustainability Reporting Guidelines to document “green”

actions.
 Adopting ISO 14000 standards for environmental management, or
ISO 9000 for quality management, or ISO 26000 for social
responsibility .
 Being named as one of the 100 Most Sustainable Corporations in the
World.
Managerial Ethics

Ethics are Principles, values, and beliefs that

define what is right and wrong behavior.

So, what is Being Ethical?

Doing the right things, at the right time in the right
way without being influenced with any internal or
external factor.
As this is not quite feasible, Ethical Dilemmas happen.
Exhibit 5–4 Factors That Determine Ethical and Unethical Behavior
 Factors That Affect Employee Ethics

 Moral Development is a measure of

independence from outside influences Stages of moral development interacts
with (moderators):
 Levels of Individual Moral
Development 1. Individual characteristics

 Preconventional level 2. The organization’s structural design

 Conventional level
3. The organization’s culture
 Principled level
4. The intensity of the ethical issue

People proceed through the six stages of moral development in lockstep fashion.
TRUE
 • People proceed through the stages of moral development sequentially.
• There is no guarantee of continued moral development.
• Most adults are in Stage 4 (“good corporate citizen”).

Exhibit 5–5 Stages of Moral Development

Source: Based on L. Kohlberg, “Moral Stages and Moralization: The Cognitive-Development Approach,” in T. Lickona (ed.). Moral Development
and Behavior: Theory, Research, and Social Issues (New York: Holt, Rinehart & Winston, 1976), pp. 34–35.
 Factors That Affect Employee Ethics

1. Individual Characteristics

 Values
 Basic convictions about what is right or wrong.
 Personality
 Ego Strength ‒ A personality measure of the strength of a
person’s convictions.
 Locus of Control
 A personality attribute that measures the degree to which
people believe they control their own life.
o Internal locus: the belief that you control your destiny.
o External locus: the belief that what happens to you is
due to luck or chance.
Sharing corporate values is an approach to managing in which managers establish,
promote, and practice an organization's shared values. FALSE
 Factors That Affect Employee Ethics

2. Organizational Structural Variables

 Organizational characteristics and mechanisms that guide and influence

individual ethics:
o Performance appraisal systems
o Reward allocation systems
o Behaviors (ethical) of managers
 Factors That Affect Employee Ethics

3. Organization’s Culture

 The Bottom Line rests on Shared Corporate Values

 An organization’s values are reflected in the
decisions and actions of its employees.

4. Intensity of the Ethical Issue

 Exhibit 5–6 Issue Intensity
Freedom of association and the effective recognition of the right to collective bargaining are
principles for doing business globally in the area of ________.
80) ______
A) the environment B) human rights
C) labor D) anticorruption
Answer: C

VALUES BASED MGT is an approach to managing in which managers establish, promote, and practice what
an organization stands for and believes in.
 • The Golden Rule Test: ‘Would I want people to do this to me’?

• The ‘What-If-Everybody-Did-This’ Test: Would I want everyone to do

this? Would I want to live in that kind of world?

When faced with an • The ‘Family’ Test: How would my parents/spouse/significant

other/children feel if they found out I did this?
ethical dilemma, what
can you do? • The ‘Conscience’ Test: Does this action go against my conscience?
Will I feel guilty afterwards?

• The ‘Front Page/Social Media’ Test: How would I feel if this action was
reported on the front page of my hometown newspaper or splashed
across social media outlets for all to see?
Source: Robbins & Coulter, 2021 - Based on T. Lickona, Character Matters: How to Help Our Children Develop Good Judgment Integrity, and Other Essential Virtues (New York: Touchstone Publishing,
2004); A. Goodman, “The Dilemma: Addicted and Conflicted About Laughing at the Afflicted,” Institute for Global Ethics, June 3, 2013, globalethics.org; and G. Enck, “Six-Step Framework for Ethical
Decision Making,” Journal of Health Services Research and Policy (January 2014): pp. 62–64.

34
 How Managers Can Improve Ethical Behavior in An
Organization An alternative for the organization to provide formal means that protect employees who face
ethical dilemmas so that they can do what is right without fear of reprimand would be ________.
A) independent social audits
C) formal protective mechanisms
Answer: C
B) informal behavior modification
D) ethical training sessions
1. Hire individuals with high ethical standards.

2. Establish codes of ethics and decision rules.

3. Lead by example.

4. Set realistic job goals and include ethics in performance appraisals.

5. Provide ethics training.

6. Conduct independent social audits.

7. Provide support for individuals facing ethical dilemmas.

The company brings in help from outside to evaluate the situation.The routine evaluations that
are performed regularly are called ________.
A) informal behavior modification B) ethical training sessions
D) formal protective mechanisms C) independent social audits
Answer: C
Codes of Ethics

 Is a formal statement of an organization’s values and the ethical rules it expects

employees to follow.

 What should it include?

 It should be specific enough to show employees the spirit in which they are
supposed to do things yet loose enough to allow for freedom of judgment.
 Unfortunately, the mere presence of a code of ethics does not guarantee
that people will follow it.
 Codes of Ethics Sample
Cluster 1. Be a Dependable
Organizational Citizen
1. Comply with safety, health, and
security regulations.
2. Demonstrate courtesy, respect,
honesty, and fairness.
3. Illegal drugs and alcohol at work are
prohibited.
4. Manage personal finances well.
5. Exhibit good attendance and
punctuality.
6. Follow directives of supervisors.
7. Do not use abusive language.
8. Dress in business attire.
Cluster 2. Do Not Do Anything Cluster 3. Be Good to Customers
Unlawful or Improper That Will Harm
the Organization
1. Convey true claims in product
1. Conduct business in compliance with advertisements.
all laws.
2. Perform assigned duties to the best
2. Payments for unlawful purposes are of your ability.
prohibited.
3. Bribes are prohibited. 3. Provide products and services of
the highest quality.
4. Avoid outside activities that impair
duties.
5. Maintain confidentiality of records.
6. Comply with all antitrust and trade
regulations.
7. Comply with all accounting rules and
controls.
8. Do not use company property for
personal benefit.
Effective Use of a Code of Ethics
The Organization for Economic Co-Operation and Development (OECD) developed a global
code of ethics. FALSE
1. Model appropriate behavior and reward those who act ethically.

2. Communicate the code regularly to all employees.

3. Managers should continually reaffirm the importance of the ethics code and
consistently discipline those who break it.

4. The organization’s stakeholders should be considered when an ethics code is

developed or improved.

5. Use the 12 questions approach

 Twelve Questions Approach

1. Have you defined the problem accurately?

2. How would you define the problem if you stood on
the other side of the fence?
3. How did this situation occur in the first place?
4. To whom and to what do you give your loyalty as a
person and as a member of the corporation?
5. What is your intention in making this decision?
6. How does this intention compare with the
probable results?
7. Whom could your decision or action injure?
8. Can you discuss the problem with the affected
parties before you make the decision?
9. Are you confident that your position will be as valid
over a long period of time as it seems now?
10. Could you disclose your decision or action to your
boss, your chief executive officer, the board of
directors, your family, society as a whole?
11. What is the symbolic potential of your action if
understood? If misunderstood?
12. Under what conditions would you allow exceptions
to your stand?
The Value of Ethics Training

 Can make a difference in ethical behaviors

 Increases employee awareness of ethical
issues in business decisions
 Clarifies and reinforces the organization’s
standards of conduct
 Helps employees become more confident
that they will have the organization’s support
when taking unpopular but ethically correct
stances

Fair trade proponents are examples of whistleblowers. False

 Managing Ethical Lapses and Social Irresponsibility

 Provide ethical leadership

 Tell the truth

always.
 Don’t hide or Stress on Put a
Role Model Share
manipulate
Personal Shared Reward
information.
 Be willing to Values Values System
admit your
failures.

 Protect employees who raise ethical issues (whistle-blowers)

 Ethics And CSR In The Arab Region
 The Corruption Perceptions Index (CPI) table shows a country's ranking and score.
The closer it gets to 100, the more transparent it is.

 Indicators for countries in the MENA region demonstrate that there is a problem of
ethics or an ethics crisis in the region.

https://www.transparency.org/en/cpi/2023
Benefits of Low Corruption:

•Low corruption leads to a higher quality

of life by ensuring proper use of
resources.

•Economic benefits accrue because:

• High trust reduces business
contracting costs
• Project cost risk is reduced
because briberies and
facilitation payments are less
likely
• Surveys indicate that
individuals and businesses will
pay premium prices to trade
with ethical partners

https://www.transparency.org/en/cpi/2023
44 https://www.transparency.org/en/cpi/2023/index/egy
 Applying social criteria to an investment decision refers to ________.
Wasta A) socioeconomic view
B) social responsiveness
C) social screening
Answer: C

 Wasta means “intermediary”

 It is a feature in Arab environments that has lots of implications for
managerial practice.
 Wasta, as a social process, has played a significant role in many Arab
societies.
 Wasta sometimes could give the benefiting person a head start over others.

 Is it only an Arab phenomenon?

 What consequences does Wasta have in your opinion?

provides a way for individual investors to support socially responsible companies.

A) A socially responsible investment fund
 Problem of ethics in MENA region

 Indicators for countries in the MENA region demonstrate that there is a problem of ethics.
Such low scores could be attributed to several factors. Such as:
 Red-tape (rigid commitment to redundant rules)
 Stringent bureaucracy
 Mismanagement and waste
 Inefficiencies
 Nepotism (favoritism given to friends and family irrespective of merit)
 Ineffective due process (weak laws or weak implementation of laws)
Awareness of Social Issues
Social Entrepreneurs
 Are individuals or organizations who seek out opportunities to improve society
by using practical, innovative, and sustainable approaches.
 Want to make the world a better place and have a driving passion to make that
happen.
Social Entrepreneurs in Egypt
Businesses Promoting Positive Social Change

 Corporate Philanthropy
 Campaigns
 Donations
 Funding own foundations

 Employee Volunteering Efforts

 Team volunteering
 Individual volunteering during work hours
CSR In The Arab World
Linking religion to CSR adoptions is very common among Arab managers. False

 Many managers link CSR to their religious upbringing as both Islam and
Christianity have deemed it necessary for people to help each other
 Zakat & Tethering (the Islamic & Christian religious requirement to give a
portion of one’s wealth to the poor and needy) is often linked to CSR.
 But religious charity has a private religious meaning whereas CSR reflects
corporate initiatives which go beyond personal drivers
 CSR in the region seems to be driven more by rational and political choices
rather than responding to societal expectations

Companies that work on green management and CSR are awarded by what well known
program in the
Arab region?
66) ______
A) CSR Summit Awards program B) Green management Awards program
C) Global 100 list D) Environmental Awards program
Answer: A
 So, what about CSR in Egypt?
Many practitioners in Egypt listed terms to be synonymous to CSR like: (social order, religious aspect, philanthropy and charity, being a good
neighbor/citizen, acquiring a license to operate, moral duty and finally the public image, legal compliance alongside the PR dimensions).

This conforms to WB’s definition of CSR in attributing Islam to play an impact on Egyptian business practices, and not merely philanthropy.

Source: Darrag & Crowther (2017)

https://www.egx.com.eg/en/ListedBonds.aspx
https://unglobalcompact.org/engage-locally/africa/egypt

https://www.unglobalcompact.org/engage-locally/mena/egypt
 Ethics in an International Context
Principle Number Principle Text
Human Rights blank
Principle 1 Business should support and respect the protection of internationally proclaimed human rights within their sphere of
influence; and
Principle 2 Make sure they are not complicit in human rights abuses.
Labor Standards blank
Principle 3 Business should uphold the freedom of association and the effective recognition of the right to collective bargaining;
Principle 4 The elimination of all forms of forced and compulsory labor;
Principle 5 The effective abolition of child labor; and
Principle 6 The elimination of discrimination in respect to employment and occupation.

Environment Blank

Principle 7 Business should support a precautionary approach to environmental challenges;

Principle 8 Undertake initiatives to promote greater environmental responsibility; and
Principle 9 Encourage the development and diffusion of environmentally friendly technologies.
Anti-Corruption blank

Principle 10 Business should work against corruption in all its forms, including extortion and bribery.

GLOBAL COMPACT is a document that outlines principles for doing business globally in the areas of
human rights, labor, the environment, and anticorruption.
Robbins & Coulter, 2021- Exhibit 6.8 shows the UN Global Compact, which asks companies to
embrace, support, and enact, within their sphere of infuence, a set of core values in the areas of human
rights, labor standards, the environment, and anti-corruption. 54
Thank you