Chapter 4: Ethics and Social Responsibility

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Chapter 4Ethics and Social Responsibility
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Learning Objectives
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• Define ethics and explain how ethical behavior
  relates to behavior governed by law and free
  choice.
• Explain the utilitarian, individualism,
  moral-rights, and justice approaches for
  evaluating ethical behavior.
• Describe how both individual and organizational
  factors shape ethical decision making.
• Define corporate social responsibility and how to
  evaluate it along economic, legal, ethical, and
  discretionary criteria.
• Describe four organizational approaches to
  environmental responsibility, and explain the
  philosophy of sustainability.
• Discuss how ethical organizations are created
  through ethical leadership and organizational
  structures and systems.
• Identify important stakeholders for an
  organization and discuss how managers balance the
  interests of various stakeholders.

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Ethics
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• The code of moral principles and values that
  govern the behaviors of a person or group with
  respect to what is right or wrong.

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Three Domains of Human Action
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Domain of Codified Law (Legal Standard)
Domain of Ethics (Social Standard)
Domain of Free Choice (Personal Standard)
Amount of
Explicit Control
High
Low
Exhibit 5.1
Ethics lies between these domains.
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Ethical Dilemma
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• Right and wrong cannot be clearly identified
• All choices or alternatives are undesirable

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Criteria For Ethical Decision Making
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• Most ethical dilemmas involve conflict between
  needs of the part whole
• Individual versus the organization
• Organization versus society as a whole
• Managers benefit from a normative strategy to
  guide their decision making
• Norms and values

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Ethical Decision Making Approaches
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• Utilitarian Approach
• Individualism Approach
• Moral-Rights Approach
• Justice Approach

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Utilitarian Approach
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• Moral behavior produces the greatest good for the
  greatest number
• Focus on decisions that optimize the satisfaction
  for the greatest number of people

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Individualism Approach
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• Acts promote the individual's best long-term
  interests, which ultimately leads to the greater
  good
• Individual self-direction paramount
• Individualism is believed to lead to honesty
  integrity since that works best in the long run

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Moral-Rights Approach
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• Maintain the rights of those affected
• Avoid interfering with the fundamental rights of
  others.

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Six Moral Rights
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1. The right of free consent
2. The right to privacy
3. The right of freedom of conscience
4. The right of free speech
5. The right to due process
6. The right to life and safety
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Justice Approach
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Moral decisions are based on standards of equity,
fairness, impartiality

• Three types of Justice Approaches
• Distributive Justice
• Procedural Justice
• Compensatory Justice

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Three Types of Justice
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Distributive Justice different treatment of
people should not be based on arbitrary
characteristics.
Procedural Justice rules should be administered
fairly and enforced consistently and impartially.
Procedural Justice individuals should be
compensated for the cost of their injuries by the
party responsible.
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Factors Affecting Ethical Choices
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The Manager
The Organization
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Levels of Personal Moral Development
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Exhibit 4.2
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The Organization
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• Values adopted within the organization are highly
  important
• Most people believe their duty is to fulfill
  obligations and expectations of others
• Corporate culture provides a framework of beliefs
  and behaviors the company supports
• or will not tolerate

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Corporate Social Responsibility
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• Decisions and actions that will enhance the
  welfare and interests of society and the
  organization
• Being a good corporate citizen
• Ambiguous issues can make social responsibility
  hard to grasp

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Organizational Stakeholders
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• Any group within or outside the organization that
  has a stake in the organizations performance

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Stakeholders at Monsanto Company
Exhibit 4.5
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The Ethics of Sustainability and The Environment
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The Shades of Corporate Green
Exhibit 4.6
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Evaluating CorporateSocial Responsibility
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Exhibit 4.7
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The Ethical Organization
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The Three Pillars of an Ethical Organization
Exhibit 4.9
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Code of Ethics
A formal statement of the organizations values
regarding ethics and social issues.
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Ethics in Turbulent Times

• Many companies today employ systems, positions
  and programs to support ethics
• Ethics Committee
• Chief Ethics Officer
• Ethics Training
• Whistle-blowing has become an encouraged strategy
• There is growing business case and demand for
  ethics and social responsibility