Principal of management 9erobbins ppt05 lecture_3

Social Responsibility and Managerial Ethics Chapter 5

L E A R N I N G O U T L I N E Follow this Learning Outline as you read and study this chapter . What is Social Responsibility? Contrast the classical and socioeconomic views of social responsibility. Discuss the role that stakeholders play in the four stages of social responsibility. Differentiate between social obligation, social responsiveness, and social responsibility. Social Responsibility and Economic Performance Explain what research studies have shown about the relationship between an organization’s social involvement and its economic performance. Define social screening. Explain what conclusion can be reached regarding social responsibility and economic performance. 5–

L E A R N I N G O U T L I N E (cont’d) Follow this Learning Outline as you read and study this chapter. The Greening of Management Describe how organizations can go green. Relate the approaches to being green to the concepts of social obligation, social responsiveness, and social responsibility. Values-Based Management Discuss what purposes shared values serve. Describe the relationship of values-based management to ethics. 5–

L E A R N I N G O U T L I N E (cont’d) Follow this Learning Outline as you read and study this chapter. Managerial Ethics Discuss the factors that affect ethical and unethical behavior. Describe the important roles managers play in encouraging ethical behavior. 5–

What Is Social Responsibility? The Classical View Management’s only social responsibility is to maximize profits (create a financial return) by operating the business in the best interests of the stockholders (owners of the corporation). Expending the firm’s resources on doing “social good” unjustifiably increases costs that lower profits to the owners and raises prices to consumers. 5–

What Is Social Responsibility? (cont’d) The Socioeconomic View Management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare. Corporations are not independent entities responsible only to stockholders. Firms have a moral responsibility to larger society to become involved in social, legal, and political issues. “ To do the right thing” 5–

Exhibit 5–1 To Whom is Management Responsible? 5–

Exhibit 5–2 Arguments For and Against Social Responsibility 5– For Public expectations Long-run profits Ethical obligation Public image Better environment Discouragement of further governmental regulation Balance of responsibility and power Stockholder interests Possession of resources Superiority of prevention over cure Against Violation of profit maximization Dilution of purpose Costs Too much power Lack of skills Lack of accountability

From Obligation to Responsiveness to Responsibility Social Obligation The obligation of a business to meet its economic and legal responsibilities and nothing more. Social Responsiveness When a firm engages in social actions in response to some popular social need. Social Responsibility A business’s intention, beyond its legal and economic obligations, to do the right things and act in ways that are good for society. 5–

Does Social Responsibility Pay? Studies appear to show a positive relationship between social involvement and the economic performance of firms. Difficulties in defining and measuring “social responsibility” and “economic performance raise issues of validity and causation in the studies. A general conclusion is that a firm’s social actions do not harm its long-term performance. 5–

The Greening of Management The recognition of the close link between an organization’s decision and activities and its impact on the natural environment. Global environmental problems facing managers: Air, water, and soil pollution from toxic wastes Global warming from greenhouse gas emissions Natural resource depletion 5–

How Organizations Go Green Legal (or Light Green) Approach Firms simply do what is legally required by obeying laws, rules, and regulations willingly and without legal challenge. Market Approach Firms respond to the preferences of their customers for environmentally friendly products. Stakeholder Approach Firms work to meet the environmental demands of multiple stakeholders — employees, suppliers, and the community. Activist Approach Firms look for ways to respect and preserve environment and be actively socially responsible. 5–

Exhibit 5–5 Approaches to Being Green 5– Source: Based on R.E. Freeman. J. Pierce, and R. Dodd. Shades of Green: Business Ethics and the Environment (New York: Oxford University Press, 1995).

Evaluating the Greening of Management Organizations become “greener” by (Global Reporting Initiative) Using the Sustainability Reporting Guidelines to document “green” actions. Adopting ISO 14001 standards for environmental management Being named as one of the 100 Most Sustainable Corporations in the World. 5–

Values-Based Management Values-Based Management An approach to managing in which managers establish and uphold an organization’s shared values. The Purposes of Shared Values Guiding managerial decisions Shaping employee behavior Influencing the direction of marketing efforts Building team spirit The Bottom Line on Shared Corporate Values An organization’s values are reflected in the decisions and actions of its employees. 5–

Exhibit 5–6 Purposes of Shared Values 5–

Managerial Ethics Ethics Defined Principles, values, and beliefs that define what is right and wrong behavior. 5–

Exhibit 5–8 Factors That Affect Ethical and Unethical Behavior 5–

Factors That Affect Employee Ethics Moral Development A measure of independence from outside influences Levels of Individual Moral Development Preconventional level Conventional level Principled level Stage of moral development interacts with: Individual characteristics The organization’s structural design The organization’s culture The intensity of the ethical issue 5–

Exhibit 5–9 Stages of Moral Development 5– Source : Based on L. Kohlberg, “Moral Stages and Moralization: The Cognitive-Development Approach,” in T. Lickona (ed.). Moral Development and Behavior: Theory, Research, and Social Issues (New York: Holt, Rinehart & Winston, 1976), pp. 34–35.

Factors That Affect Employee Ethics (cont’d) Moral Development Research Conclusions: People proceed through the stages of moral development sequentially. There is no guarantee of continued moral development. Most adults are in Stage 4 (“good corporate citizen”). 5–

Individual Characteristics Affecting Ethical Behaviors Values Basic convictions about what is right or wrong on a broad range of issues 5–

Individual Characteristics Personality Variables Ego strength A personality measure of the strength of a person’s convictions Locus of Control A personality attribute that measures the degree to which people believe they control their own life. Internal locus: the belief that you control your destiny. External locus: the belief that what happens to you is due to luck or chance. 5–

Other Variables Structural Variables Organizational characteristics and mechanisms that guide and influence individual ethics: Performance appraisal systems Reward allocation systems Behaviors (ethical) of managers 5– An Organization’s Culture Intensity of the Ethical Issue

Exhibit 5–10 Determinants of Issue Intensity 5–

Principal of management 9erobbins ppt05 lecture_3

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