MANAGEMENT:

A GLOBAL AND ENTREPRENEURIAL PERSPECTIVE

by Weihrich, Cannice, and Koontz

Chapter

2
Management and Society: The External
Environment, Social Responsibility, and Ethics
© 2008 Weihrich and Cannice Chapter 2. Management and Society 1
 Fig. 2-1 The Organization and Its
External Environment

© 2008 Weihrich and Cannice Chapter 2. Management and Society 2

 Operating in a Pluralistic Society

• Managers operate in a pluralistic

society, in which many organized
groups represent various interests.
• Each group has an impact on other
groups, but no one group exerts an
inordinate amount of power. Many
groups exert some power over
business.
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 The Technological Environment

• Technology is the sum total of the

knowledge we have of ways to do
things.

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 The Ecological Environment

• Ecology pertains to the relationship of people

and other living things with their environment,
such as soil, water, and air.
• Land may be polluted by industrial waste
such as packaging.
• Water pollution may be caused, for example,
by hazardous waste and sewage.
• Air pollution can be caused by acid rain,
vehicle exhaust fumes, carcinogens from
manufacturing processes, and other sources.

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 The Social Responsibility of Managers

• Corporate social responsibility is

“seriously considering the impact of the
company's actions on society”.
• Social responsiveness is "the ability of
a corporation to relate its operations
and policies to the social environment in
ways that are mutually beneficial to the
company and to society”.
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 11 Arguments for involvement

• Public Needs have changed, leading to changes in

expectations. Business, it is suggested, received its charter from
society and consequently had to respond to the needs of
society.
• The creation of a better social environment benefits both society
and business as well. Society gains through better
neighborhoods and employment opportunities; business
benefits from a better community since the community is the
source of its workforce and the consumer of its product and
services.
• Social involvement discourages government regulation and
intervention
• Business has a great deal of power that, it is reasoned should
be accompanied by an equal amount of responsibility

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 • Modern Society is an interdependent system, and the
internal activities of the enterprise have an impact on
the external environment
• Social involvement may be in the interests of
stockholders
• Problems can become profits
• Social involvement creates a favorable public image
• Business should try to solve the problems that other
institutions have not been able to solve
• Business has the resources to solve a few social
problems
• It is better to prevent social problems through
business involvement than to cure them.
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 Arguments against involvement

• The primary task of business is to maximize profit by focusing

strictly on economic activities
• In the final analysis, society must pay for the social involvement
of business through higher prices.
• Social involvement can create a weakened international
balance of payment situation.
• Business has enough power and an additional social
involvement would further increase its power and influence
• Business people lack the social skills to deal with the problems
of the society
• There is lack of accountability of business to society
• There is no full support for involvement in social actions.

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 Ethics in Managing

• Ethics is the discipline dealing with what

is good and bad and with moral duty
and obligation.
• Business ethics is concerned with truth
and justice.

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 Ethical Theories

• The utilitarian theory suggests that

plans and actions should be evaluated
by their consequences.
• The theory based on rights holds that all
people have basic rights.
• The theory of justice demands that
decision makers be guided by fairness
and equity, as well as impartiality.

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 Institutionalizing Ethics

• A code is a statement of policies,

principles, or rules that guide behavior.

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 Factors that May Raise Ethical
Standards (a study)

• Public disclosure and publicity

• The increased concern of a
well‑informed public
• Government regulations
• Education to raise the professionalism
of business managers

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 Definition of Whistle-Blowing

• Whistle-blowing is making known to

outside agencies what are considered
unethical company practices.

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 Trust as the Basis for Change
Management

• Traditionally, the concept of trust is equated

with integrity, loyalty, caring, and keeping
promises in the relationships between and
among individuals.
• Belardo points out that trust should go
beyond individual relationships and extend to
the organization by creating a culture of trust
that transcends individual leadership.

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