Mgmt 371

Chapter Four

The Ethical and Social Environment

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Much of the slide content was created by Dr, Charlie Cook, Houghton Mifflin, Co.©
Individual Ethics In Organizations
 Ethics
 An individual’s values and personal beliefs regarding
what is right and wrong or good and bad.
 Ethical Behavior
 “Eye of the beholder” or behavior that conforms to
generally accepted social norms.
 Examples of Unethical Behavior
 “Borrowing” office supplies for personal use, “Surfing
the Net” on company time.
 Filing falsified or inflated business expense reports.
 Pretextual terminations

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Values
 Values – a personal conviction about lifelong
goals or objectives.
 Our basis for right or wrong [ethics]

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Types of Values
 Terminal Values -a personal conviction about
lifelong goals or objectives. Core moral beliefs.
 Freedom (independence, free choice)
 Religious convictions
 Sense of accomplishment (purposeful life)
 Instrumental Values -a mode of conduct an
individual seeks to follow.
 Ambitiousness (hard-working, aspiring)
 Independent (self-reliant, self-sufficient)
 Trustworthy (honest, dependable)
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Types of Values
 Together, terminal values and instrumental
values form the individual’s value system,
the guiding principles of the individual’s life.
 A manager’s conduct in an organization is not
only affected by his/her value system but
organizational norms as well.

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Professional Ethics
 Professional ethics – standards that govern
how members of a given profession are to
make decisions.
 Medical ethics.
 Legal ethics (an oxymoron).
 Business ethics
 Professional Ethics provide a basis for
decision-making when situations are
ambiguous.

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Managerial Ethics

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 Ethics in Organizations

Individual Organizational Managerial

+ =
Values Values Values

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Applying Ethical Judgments
 Model for deciding whether or not a particular action
or decision is ethical
 Gather relevant factual information.
 Determine the most appropriate moral values.
 Make a judgment.
 Ethical Norms Affecting Actions
 Utility
 Rights
 Justice
 Caring

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 Threats to Ethical Decision
Making
 Moral relativism - morality is relative to some
personal, social, or cultural standard.
 No standard is better than another.
 Argument made in many universities.
 The following are often used to justify
questionable behavior:
 Naïve relativism
 Role relativism
 Social group relativism
 Cultural relativism
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Threats to Ethical Decision
Making
 Naïve relativism - moral decisions are
deeply personal, hence individual should be
allowed to act on the basis of their own
individual moral values.
 “Who are you to judge.”
 Role relativism - social roles carry with them
certain obligations to the role only. One must
set aside personal beliefs and do what their
role in the organization requires them to do.

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Threats to Ethical Decision
Making
 Social group relativism - morality
determined merely by following the norms of
ones peer group. What’s accepted by the
group is moral. “Everyone does it.”
 “Don’t be a sucker, everyone cheats.”

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 Threats to Ethical Decision
Making
 Cultural relativism - morality is relative
particular culture, society, or community. If
another cultural believes that a certain
behavior is permissible, what right do you
have to criticize them. Businesses must be
“all things to all people.”
 “Don’t be a cultural imperialist.”
 “The only thing necessary for evil to triumph is
for good men to do nothing.” Edmund Burke

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Social Responsibility and
Organizations
 Organizational Stakeholders
 People and organizations directly affected by the
behaviors of an organization and that have a stake
in its performance.
 Social Responsibility
 The set of obligations to behave responsibly.
 Areas of Social Responsibility
 Stakeholders
 The natural environment
 The general social welfare

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Organizational Stakeholders

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Arguments for Social Responsibility
 Business creates problems and therefore
should help solve them.
 Corporations as citizens in our society have
responsibilities.
 Business possesses the resources to solve
social problems.
 Business is a partner in our society along with
government and the general population.

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Arguments Against Social
Responsibility
 Business lack the expertise for social problems.
 The purpose of business is to generate profit for
owners.
 The business of business is business – Calvin
Coolidge.
 Society enjoys social spillover benefits.
 Involvement in social program gives business
too much power.
 Potential conflicts of interest are created.

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Approaches to Social Responsibility

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Approaches to Social Responsibility

 Obstructionist Stance
 Do as little as possible
 Deny or avoid accepting responsibilities for
their action.
 Stonewall and delay through legal actions
 Defensive Stance
 Do only what is legally required and nothing
more.

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Approaches to Social Responsibility

 Accommodative Stance
 Meet legal and ethical obligations and go
beyond that in selected cases.
 Contributions to charities
 They respond to requests and do not active
seek charitable opportunities.
 Proactive Stance
 Organization views itself as a citizen and
proactively seeks opportunities to contribute to
society. 20
How Business and the Government
Influence Each Other

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Government and SR

 How government influences organizations to

shape socially responsible practices.
 Enacts EPA laws & regulations.
 Enacts consumer protection legislation.
 Enacts employee protection legislation.
 Regulates security and exchange.
 Administers the tax codes.

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Government and SR

 How business organizations influence the

government.
 Personal contacts & networks.
 Lobbying.
 Political action committees (PAC).
 Favors and influence tactics.

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Managing Social Responsibility:
Formal Organizational Dimensions
 Legal Compliance
 Extent to which the organization conforms to
local, state, federal, and international laws.
 Remember that there is right, there is wrong
and there is the law.
 Ethical Compliance
 Extent to which members of the organization
follow basic ethical/legal standards of
behavior.

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Managing Social Responsibility:
Formal Organizational Dimensions
 Philanthropic Giving
 Awarding of funds or gifts to charities and
other social programs.

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Managing Social Responsibility:
Informal Organizational Dimensions
 Organization Leadership and Culture
 Leadership practices and the culture of the
organization can help define the social
responsibility stance an organization and its
members will adopt.
 Whistle Blowing
 The organizational response to the
disclosure by an employee of illegal or
unethical conduct on the part of others within
the organization is indicative of the
organization’s stance on social responsibility.
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Evaluating Social Responsibility
 Concept of Control
 Evaluating responses to questionable
legal or ethical conduct
 Initiate an immediate follow-up response

to events?
 Seek punishment for those involved?

 Engage in delay or cover-up tactics ?

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Evaluating Social Responsibility
 Concept of Control
 Corporate Social Audit - Formal analysis
of the effectiveness of social performance
conducted by a task force of high-level
managers from within the firm.
 Based on clearly defined social goals.
 Measures resources allocated to each social goal.
 Determines how well social goals were achieved.
 Makes recommendations.

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Closing Thought
 If we do not have moral leaders in
our organizations, we will not have
ethical decisions.
 The great moral fallacy of our time,
that the collective virtue may be
pursued without reference to
personal behavior.
Malcolm Muggeridge

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