Chapter 4

Ethics and Social Responsibility

• Ethics – The set of moral principles or values that
defines right and wrong for a person or group.

• Ethical behavior
Conforms to a society’s accepted principles of right
and wrong.

Examples of ethical behaviors in the workplace includes:

Obeying the company's rules
Effective communication
Taking responsibility and accountability
Trust and mutual respect for your colleagues at work. 
 Workplace deviance (deviation)

Unethical behavior that violates organizational

norms.

Four type of Workplace deviance.

1. Production deviance
2. Property deviance
3. Political deviance
4. Personal aggression
1.Production Deviance : Unethical Behavior hurts
the quality and quantity of work produced.
Leaving the work early, taking too long work
breaks, intentionally working more slowly, or
wasting resources.

2. Property Deviance : - Unethical Behavior aimed

at company property or products.
Stealing or damaging equipment or products and
overcharging for services and then pocketing the
difference. Theft of company merchandise by
employees.
3. Political Deviance – It is using one’s influence
to harm others in the company.
Examples include making decisions based on
favouritism rather than performance, spreading
rumours about co workers, and blaming others for
mistakes they didn’t make

4. Personal Aggression - Aggressive Behavior

toward others.
Examples include sexual harassment, verbal abuse,
stealing from co-workers, and personally
threatening co-workers
Types of Workplace Deviance
Factors Influencing on Ethical Decision
Making

1. Ethical intensity of the decision

2. Stages of moral development

3. Principles of Ethical Decision Making

 I. Ethical Intensity
A high or extreme degree
 The degree of concern people have about an ethical
issue.
Six factors must be taken into account when determining
the ethical intensity of an action.

1. Magnitude (extent of something) of consequences -

The total harm or benefit derived from an ethical
decision.
2. Social consensus – An agreement on whether
behavior is good or bad.
3. Probability(the extent to which something is likely to
happen) of effect – the chance that any action will
result into good or bad result.

4. Temporal immediacy – refers to the length of time

between an act and the consequences resulting from the
act.
5. Proximity of effect – the social, psychological
cultural distance between a decision maker and
those affected by his decision.

6. Concentration of effect- the total harm or benefit

that an act produces on an average.
 II. Stages of Moral Development -by Lawrence Kohlberg

According to psychologist Lawrence Kohlberg, your

decision will be based on your level of moral (concerned
with the principles of right and wrong
behaviour)development.

Kohlberg identified three phases of moral development.

Kohlberg stages of Moral Development
1. Pre conventional (conforming or adhering to
accepted standards) level of moral development
2. Conventional Level
3. Post conventional level of moral development
1. Pre conventional level of moral development:
People decide based on selfish reasons or self-
interest
Stage One –Punishment and obedience (The
primary concern will be to avoid trouble for
yourself –You wont copy the software afraid
Punishment)
Stage Two –Instrumental exchange (You worry
less about punishment and more about doing things
that directly advance your wants and needs-So you
copy the software)
2. Conventional Level –Make decisions that
conform to societal expectations.

• Stage Three –Good boy, Nice girl (In this

stage normally do what the other good boy and
nice girl are doing-You too copy the software).

• Stage Four –Law and order (You again look

for external guidance and do whatever the law
permits –So you wont copy the software).
3. Post conventional level of moral development
-Use adopted ethical principles to solve ethical
dilemmas.

• Stage Five –Social contract ( You refuse to

copy the software because you never want to
violate law).

• Stage Six –Universal principal (You might or

might not copy the software depending on your
principle of right or wrong)
 III. Principles of Ethical Decision Making

• Principle of long-term self-interest: You should

never take any action that is not in your or your
organization’s long-term self-interest.

• Principle of personal virtue (benefit): You should

never do any thing that is not honest, open, and
truthful.
• Principle of religious injunctions (orders): You
should never take an action that is unkind or that
harms a sense of community, such as the positive
feelings that come from working together to
accomplish a commonly accepted goal

• Principle of government requirements: The law

represents the minimal moral standards of society,
and so you should never take any action that
violates the law.
• Principle of utilitarian (designed to be useful)
benefits: You should never take an action that does
not result in greater good for society. In short, you
should do what ever creates the greatest good for the
greatest number.

• Principle of individual rights: You should never

take an action that infringes(oversteps)on others’
agreed-up on rights.

• Principle of distributive justice: You should never

take any action that harms the least fortunate
among us in some way.
 Steps to ethical decision making

1. Selecting and hiring ethical employee:

• Overt integrity(honesty)tests- A written test that

directly estimates job applications feel about
theft or punishment for unethical behavior.

• Personality-based integrity tests- A written test

that indirectly estimates job applications honest
by measuring psychological traits.
2. Codes of Ethics: A written set of guidelines
issued by an organization to its workers and
management to help them conduct their actions in
accordance with its primary values and ethical
standards.

A company must communicate its code inside

and outside the company.
• Management must develop practical ethical
standards and procedures specific to the
company’s line of business.
3. Ethics of Training:
Develop employees’ awareness of ethics
Achieve credibility with employees
Teach employees a practical model of ethical decision making.

4. Ethical Climate:
Organizational culture is key to nurturing ethical decision
making.
Management needs to be active in and committed to the ethics
program.
Encourage managers and employees to report ethical
violations (whistleblowing)
A person who exposes any kind of information or activity that is
deemed illegal or unethical
 What Is Social Responsibility?
• Social Responsibility - It is business obligation to
pursue polices, make decision and take action that
benefit society
• Wipro Chairman Azim Premji has earmarked 34% of
Wipro Ltd shares worth INR 52,750 crore($7.5 billion)
for his philanthropic(charitable) activities.

• CSR: Sachin Tendulkar comes forward to electrify

25,000 homes
• SHIF: ‘Spreading Happiness In Diya Foundation‘. They
have electrified 25,000 households through their various
solar based interventions.
 To Whom Are Organizations Socially Responsible?

Shareholder Model
• The only social responsibility that businesses
have is to maximize profits
• Stakeholder –persons or group with a stake or
reasonable interest in a company action.
Stakeholder Model
• Management’s most important responsibility is
not just maximizing profits, but the firm’s long
term-survival
• Primary stakeholders: The group on which the
organization depends for its long term survival.
Example-customer, government, suppliers.

• Secondary stakeholders: Such as the media and

special interest group, can influence or be
influenced by the company.
• Example-media, trade association.
 Stakeholder Model of
Corporate Social Responsibility