MANAGERIAL

ETHICS AND
SOCIAL
RESPONSIBILITY

GURU SRINIVASAN

@COPYRIGHTS LSC GROUP. ALL RIGHTS

RESERVED
SOCIETY’S EXPECTATIONS FROM ORGANIZATIONS AND
MANAGERS

Managers regularly make decisions about In competitive environment, organisations

issues with a social dimension cannot afford to be seen as socially irresponsible

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

DEVELOPMENT OF ETHICS

Family

Life
Life Friends
Friends
Experiences

Individual
Job Ethics
Ethics
Job Peers
Peers
Experiences

Religion Teachers

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

WHAT IS SOCIAL RESPONSIBILITY?

Two Opposing Views of Social Responsibility

Classical view - management’s only social responsibility is to maximise profits

• Milton Friedman - managers’ primary responsibility is to serve the
interests of the stockholders
– doing “social good” adds to the cost of doing business
– costs must be passed on to consumers

Socioeconomic view - businesses are not just economic institutions

• According to Edward Freeman - management’s social responsibility goes beyond
making profits to include protecting and improving society’s welfare
• businesses have responsibility to a society that:
– endorses their creation through laws and regulations
– supports them by buying their products/services
• more organisations around the world have increased their social responsibility
@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED
CARROLL’S PYRAMID
Phil
anth Philanthropic Responsibility: Responsibility towards being
ropi responsible towards society, planet and improve quality of life
c
Ethical Responsibility: Responsibility towards what
Ethical is acceptable, just and fair

Legal Responsibility: Responsibility

Legal towards what is Right and Wrong

Economic Responsibility: Responsibility

towards all stakeholders
Economic

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

 •Social Responsibility
– A business firm’s intention, beyond its legal and
economic obligations, to do the right things and act in
ways that are good for society

DEMONSTRATIN •Social Obligation

G SOCIAL – When a business firm engages in social actions
RESPONSIBILITY because of its obligation to meet certain economic and
legal responsibilities

•Social Responsiveness
– When a business firm engages in social actions in
response to some popular social need

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

RELATIONSHIP BETWEEN SOCIAL
RESPONSIBILITY AND ECONOMIC
PERFORMANCE

Research studies show positive relationship General public perception that companies who
behave in a socially responsible way have better
business performance

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

STRATEGIC CORPORATE SOCIAL RESPONSIBILITY
PERSPECTIVE
Three fundamental criteria guide managers:

Inside-Out Outside-In Outside-Out

Approach Approach Approach

Look inside Look outside Look at social

company at company at issues in
issues issues general in
that are that terms of the
important company has extent to
to the an impact which they
company upon are
problematic
@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED
 It is the collective behaviour and
MANAGERS actions of managers that make a
BECOMING company socially responsible
MORE SOCIALLY
RESPONSIBLE Managers who make the right decisions
are described as being or behaving
ethically

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

MANAGERIAL ETHICS
Ethical dilemmas
The choice between two competing but arguably valid options

Rules and principles that define right and wrong

conduct

Three Views of Ethics

 Utilitarian view - ethical decisions are made on the
basis of their outcomes or consequences
 Rights view - respects and protects individual
liberties and privileges
 Theory of justice view - managers impose and
enforce rules fairly and impartially

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

VALUES

BASIC CONVICTIONS INFLUENCE ETHICAL VALUES ARE DEVELOPED

ABOUT WHAT IS RIGHT BEHAVIOUR IN EARLY YEARS
AND WRONG

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

 Organisational Factors That Affect Ethical And Unethical Behaviour

Organizational
Culture

Ethical/Unethical
Moderators Behaviour

Structural
Variables

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

 Hire Hire individuals with high ethical standards

MANAGERS Establish Establish codes of ethics and decision rules

IMPROVING Lead Lead by example

ETHICAL
BEHAVIOUR Delineate Delineate job goals and performance review mechanisms

Provide Provide ethics training

Conduct Conduct social audits

Provide Provide support to individuals facing ethical dilemmas

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

MORAL INTENSITY IN ETHICAL
DECISION MAKING

Moral intensity
The degree to which people
see an issue as an ethical one

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

MORAL INTENSITY IN ETHICAL DECISION
MAKING

M
Maa
ggn
Coon niittuudd
C
nsseeq ee oo
quue ff tthh
Magnitude of the consequences enncc e
eess e
 Level of impact anticipated
Moral
 Impact is independent of whether
consequences are positive or Intensity
negative

Adapted from Mullins (2017)

Adapted from Exhibit 2.4
MORAL INTENSITY IN ETHICAL DECISION
MAKING

Consequences
Social
Ma
g
Co nitud
nse e o
Social consequences qu f th
enc e
es
 The extent to which members of a
society agree that an act is either
good or bad Moral
Intensity
 Population diversity weakens
social consensus

Adapted from Mullins (2017)

MORAL INTENSITY IN ETHICAL DECISION MAKING

Consequences
Social
Ma
g y
Co nitud bi lit
nse e o a
qu f th rob ffect
Probability of effect enc e P fE
es o
 How likely people think the
consequences are Moral
Intensity
 The higher the probability of the
consequence, the more intense the
sense of ethical obligation

Adapted from Mullins (2017)

MORAL INTENSITY IN ETHICAL DECISION
MAKING

Consequences
Social
Ma
g y
Co nitud bi lit
nse e o a
Temporal immediacy qu f th rob ffect
enc e P fE
es o
 Interval between the time the action
occurs and the onset of its
consequences Moral
Intensity
 The greater the time interval, the less
Te
intensity people typically feel toward Im mpo
me ral
the issue dia
cy

Adapted from Mullins (2017)

Adapted from Exhibit 2.4
MORAL INTENSITY IN ETHICAL DECISION
MAKING

Consequences
Social
Ma
g y
Proximity Co nitud bi lit
nse e o a
qu f th rob ffect
enc e P fE
 The closeness the decision maker es o
feels to those affected
 Closeness leads to more Moral
consideration of the consequences Intensity
Te
 Closeness increases feeling that it Im mpo
me ral
has ethical implications dia
cy

Proximity
Adapted from Mullins (2017)
MORAL INTENSITY IN ETHICAL DECISION
MAKING

Consequences
Social
Ma
y
g nit
ud bi lit
a
Co
nse the
eo rob ffect
Concentration of effect qu
f P fE
en o
 Focus of effect on only a few or c es
disbursed across many individuals Moral
 Higher concentration leads to Intensity
feelings of greater ethical a t io n Te
tr
en fect Im mpo
responsibility n c f me ral
Co of E dia
cy

Proximity
Adapted from Mullins (2017)
 CODE OF ETHICS
Formal statement of an organisation’s
primary values and ethical rules it expects
employees to follow

Usually written

Must state in detail acceptable behaviours

and actions

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

SUCCESSFULLY IMPLEMENTING CODES OF ETHICS

Implementing a
Code of Ethics

Reward
Communication Training Whistle-blowing
& Recognition

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED

 Th a nk Yo u

@COPYRIGHTS LSC GROUP. ALL RIGHTS RESERVED