Management Ethics & Social Responsibility: Prepared By: Prince Dudhatra

Management
Ethics & Social

Responsibility
Prepared by: Prince Dudhatra
Planning Ahead — Chapter 3 Study
Questions
 What is ethical behavior?
 How do ethical dilemmas complicate the
workplace?
 How can high ethical standards be
maintained?
 What is corporate social responsibility?
 How do organizations and governments
work together in society?
prince dudhatra-9724949948
Study Question 1: What is ethical behavior?
 Ethics
– Code of moral principles.
– Set standards of “good” and “bad” as opposed
to “right” and “wrong.”
 Ethical behavior
– What is accepted as good and right in the
context of the governing moral code.
 Law, values, and ethical behavior:

– Legal behavior is not necessarily ethical
behavior.
– Personal values help determine individual
ethical behavior.
• Terminal values
• Instrumental values
 Utilitarian view of ethics — greatest good to the

greatest number of people.
 Individualism view of ethics — primary
commitment is to one’s long-term self-interests.
 Moral-rights view of ethics — respects and
protects the fundamental rights of all people.
 Justice view of ethics — fair and impartial
treatment of people according to legal rules and
standards.
Figure 3.1 Four views of ethical behavior.
 Cultural issues in ethical behavior:

– Cultural relativism
• Ethical behavior is always determined by cultural
context.
– Cultural universalism
• Behavior that is unacceptable in one’s home
environment should not be acceptable anywhere
else.
Figure 3.2 The extremes of cultural
relativism and ethical imperialism in
international business ethics.
Source: Developed from Thomas Donaldson, “Values in Tension: Ethics Away from Home,”
Harvard Business Review, vol. 74 (September-October 1996), pp. 48-62.
How international businesses can respect core or universal values:

Respect for human dignity
• Create culture that values employees, customers, and suppliers.
• Keep a safe workplace.
• Produce safe products and services.
Respect for basic rights
• Protect rights of employees, customers, and communities.
• Avoid anything that threatening safety, health, education, and living
standards.
Be good citizens
• Support social institutions, including economic and educational systems.
• Work with local government and institutions to protect environment.
Study Question 2: How do ethical dilemmas
complicate the workplace?
 An ethical dilemma occurs when choices, although
having potential for personal and/or organizational
benefit, may be considered unethical.
 Ethical dilemmas include:
– Discrimination
– Sexual harassment
– Conflicts of interest
– Customer confidence
– Organizational resources
 Ethical behavior can be rationalized by convincing
yourself that:
– Behavior is not really illegal.
– Behavior is really in everyone’s best interests.
– Nobody will ever find out.
– The organization will “protect” you.
 Factors influencing ethical behavior include:

– The person
• Family influences, religious values, personal standards, and
personal needs.
– The organization
• Supervisory behavior, peer group norms and behavior, and
policy statements and written rules.
– The environment
• Government laws and regulations, societal norms and values,
and competitive climate in an industry.
Figure 3.3 Factors influencing ethical
managerial behavior—the person,
organization, and environment.
Study Question 3: How can high ethical
standards be maintained?
 Ethics training:
– Structured programs that help
participants to understand ethical aspects
of decision making.
– Helps people incorporate high ethical
standards into daily life.
– Helps people deal with ethical issues
under pressure.
 Whistleblowers
– Expose misdeeds of others to:

• Preserve ethical standards
• Protect against wasteful, harmful, or illegal acts
 Laws protecting whistleblowers vary
 Barriers to whistleblowing include:
– Strict chain of command
– Strong work group identities
– Ambiguous priorities
 Organizational methods for overcoming
whistleblowing barriers:
– Ethics staff units who serve as ethics advocates
– Moral quality circles
 Ethical role models:

– Top managers serve as ethical role models.
– All managers can influence the ethical behavior of

people who work for and with them.
– Excessive pressure can foster unethical behavior.
– Managers should be realistic in setting performance

goals for others.
 Codes of ethics:
– Formal statement of an organization’s values and
ethical principles regarding how to behave in situations
susceptible to the creation of ethical dilemmas.
 Areas often covered by codes of ethics:
– Bribes and kickbacks
– Political contributions
– Honesty of books or records
– Customer/supplier relationships
– Confidentiality of corporate information
Study Question 4: What is corporate social
responsibility?
 Corporate social responsibility:

– Looks at ethical issues on the organization
level.
– Obligates organizations to act in ways that
serve both its own interests and the interests of
society at large.
responsibility?
 Organizational stakeholders
– Those persons, groups, and other organizations directly affected by
the behavior of the organization and holding a stake in its
performance.
 Typical organizational stakeholders
– Employees
– Customers
– Suppliers
– Owners
– Competitors
– Regulators
– Interest groups
Figure 3.4 Multiple stakeholders in the
environment of an organization.
responsibility?
 Beliefs that guide socially responsible business

practices:
– People do their best with a balance of work and family
life.
– Organizations perform best in healthy communities.
– Organizations gain by respecting the natural
environment.
– Organizations must be managed and led for long-term
success.
– Organizations must protect their reputations.
responsibility?
 Perspectives on social responsibility:

– Classical view—
• Management’s only responsibility is to maximize
profits.
– Socioeconomic view—
• Management must be concerned for the broader
social welfare, not just profits.
responsibility?
 Arguments against  Arguments in favor of
social responsibility: social responsibility:
– Reduced business
– Adds long-run profits
profits
– Higher business costs – Improved public image
– Dilution of business – Avoids more
purpose government regulation
– Too much social power – Businesses have
for business resources and ethical
– Lack of public obligation
accountability
responsibility?
 Criteria for evaluating corporate social

performance:
– Is the organization’s …
• Economic responsibility met?
• Legal responsibility met?
• Ethical responsibility met?
• Discretionary responsibility met?
Figure 3.5 Criteria for evaluating
corporate social performance.
responsibility?
 Strategies for pursuing social responsibility:

– Obstructionist — meets economic
responsibilities.
– Defensive — meets economic and legal
responsibilities.
– Accommodative — meets economic, legal, and
ethical responsibilities.
– Proactive — meets economic, legal, ethical,
and discretionary responsibilities.
Figure 3.6 Four strategies of corporate
social responsibility—from obstructionist to
proactive behavior.
Study Question 5: How do organizations and
governments work together in society?
 How government influences organizations:

– Common areas of government regulation of
business affairs:
• Occupational safety and health
• Fair labor practices
• Consumer protection
• Environmental protection
 How organizations influence governments:

– Personal contacts and networks
– Public relations campaigns
– Lobbying
– Political action committees
– Sometimes by illegal acts, such as bribery or illegal
financial contributions to political campaigns
Figure 3.7 Centrality of ethics and social
responsibility in leadership and the
managerial role.
 Corporate governance:
– The oversight of the top management of an
organization by a board of directors.
 Corporate governance involves:
– Hiring, firing, and compensating the CEO.
– Assessing strategy.
– Verifying financial records.

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Management

Ethics & Social

 Law, values, and ethical behavior:

 Utilitarian view of ethics — greatest good to the

 Cultural issues in ethical behavior:

How international businesses can respect core or universal values:

 Ethical behavior can be rationalized by convincing

– Behavior is really in everyone’s best interests.

– Nobody will ever find out.

– The organization will “protect” you.

 Factors influencing ethical behavior include:

– Expose misdeeds of others to:

• Protect against wasteful, harmful, or illegal acts

 Laws protecting whistleblowers vary

 Ethical role models:

– All managers can influence the ethical behavior of

– Managers should be realistic in setting performance

 Corporate social responsibility:

 Beliefs that guide socially responsible business

 Perspectives on social responsibility:

 Criteria for evaluating corporate social

 Strategies for pursuing social responsibility:

 How government influences organizations:

 How organizations influence governments:

– Verifying financial records.

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