Chapter 4

Ethics and Social Responsibility

Managerial Ethics

• Ethics - code of moral principles and values that govern

the behaviors of right or wrong
• Standards about good/bad
• Ethical issues can be complex
• People in organizations have divergent views about
right/wrong

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 The Nature of Ethics

• Ethical dilemma The quandary people find themselves in when they have to
decide if they should act in a way that might help another person or group
even though doing so might go against their own self-interest.
• Ethics The inner guiding moral principles, values, and beliefs that people use
to analyze or interpret a situation and then decide what is the right or
appropriate way to behave.
• “Do unto others as you would have them do unto you” is a common ethical
or moral rule that people apply in such situations to decide what is the
right thing to do.
5.1 Three Domains of
Human Action

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Ethical Management Today

• Ethical scandals during the last decade have been

pervasive
• Corporations and people have become associated with
greed, deceit, irresponsibility, and lack of moral
conscience
• Managers carry a big responsibility for setting an ethical
climate
• Ethical crises have brought ethical management to the
forefront

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Examples of Unethical and Illegal Organizational Behavior

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Ethical Dilemmas

You are the moral agent, what would you do?

Your company requires a terrorist watch list that screens
all new customers and takes approximately 24 hours from
the time an order is placed. You can close a lucrative deal
with a potential long-term customer overnight, even
though that means the required watch-list screening will
have to be done after the fact.

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Criteria for Ethical
Decision Making

• Utilitarian Approach – moral behavior produces the

greatest good for the greatest number

• Individualism Approach – acts are moral if they promote

the individual’s long-term interest

• Moral-Rights Approach – humans have fundamental

rights and liberties that cannot be
taken away by an individual's decision

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 Criteria for Ethical
Decision Making

• Justice Approach – moral decisions must be based on standards of equity,

fairness, and impartiality

• Virtue Ethics Approach– moral behavior stems from personal virtues

• Practical Approach– bases decisions on prevailing standards, society, and all

stakeholders

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A Manager’s Ethical Choices

✔ Individuals bring their own personality and traits to

organizations

✔ Personal needs, family influence, and religious

background shape individuals

✔ Personality characteristics like ego, confidence, and

independence

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 Three Levels of Personal Moral Development

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Ethics and Social Responsibility
 What is Corporate Social
Responsibility (CSR)?

• Distinguishing right from wrong; doing right

• Good corporate citizenship

• Make choices that contribute to society and stakeholders

• Stakeholders – any group within or outside

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The Green Movement

• Going GREEN is a new business imperative

• Change in social attitudes
• New governmental policies
• Climate change
• Information technology immediately spreads the
negative decisions of corporations
• More organizations are embracing sustainability

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The Ethic of Sustainability

Sustainability – economic development that

generates wealth and meets the needs of current
population while preserving the environment for
the needs of future generations

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 Criteria of Corporate Social Performance

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Approaches to Social Responsibility
 Managing Company Ethics
and Social Responsibility

Code of Ethics – a formal statement of the

company’s values regarding ethics and social
issues

Ethical Structures – systems, positions, and

programs like ethics training

Whistle-blowing – employee disclosure of illegal,

immoral, or illegitimate practices

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 Building an Ethical Organization

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The Business Case for Ethics and Social
Responsibility

✔ Ethics and social responsibility

are important business issues

✔ Stakeholders are pushing more

initiatives and issues

✔ The connection between ethics and

financial performance has been
widely debated

✔ What do you THINK?

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