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Chapter 3: Management's Social and Ethical Responsibilities

Chapter Outlines

Social Responsibility: Definition and Debate

[pic]What Does Social Responsibility Involve?

Arguments for and Against Corporate Social Responsibility

Toward Greater Social Responsibility

Social Responsibility Strategies

[pic]Who Benefits from Corporate Social Responsibility?

The Ethical Dimension of Management

Practical Lessons from Business Ethics Research

General Ethical Principles

Encouraging Ethical Conduct

[pic]Ethics Training

Ethical Advocates

Codes of Ethics

Whistle-Blowing

Glossary

corporate social responsibility the idea that business has social obligations above and beyond making a profit.

stakeholder audit identifying all parties possibly impacted by the organization.

iron law of responsibility those who do not use power in a socially responsible way will eventually lose it.

reactive social responsibility strategy denying responsibility and resisting change.

defensive social responsibility strategy resisting additional responsibilities with legal and public relations tactics.

accommodative social responsibility strategy assuming additional responsibilities in response to pressure.

proactive social responsibility strategy taking the initiative with new programs that serve as models for the industry.

altruism unselfish devotion to the interests of others.

enlightened self-interest a business ultimately helping itself by helping to solve societal problems.

corporate philanthropy charitable donation of company resources.

ethics the study of moral obligation involving right versus wrong.

amoral managers managers who are neither moral nor immoral, but ethically lazy.

ethical advocate ethics specialist who plays a role in top-management decision making.

whistle-blowing reporting perceived unethical organizational practices to outside authorities.

Learning Objective Summary

Learning Objective 1: Define corporate social responsibility (CSR), and summarize the arguments for and against it.

• Corporate social responsibility is the idea that management has broader responsibilities than just making a profit.

- A strict interpretation holds that an action must be voluntary to qualify as socially responsible.

- Accordingly, reluctantly submitting to court orders or government coercion is not social responsibility.

• The arguments for corporate responsibility say businesses are members of society with the resources and motivation to improve society and avoid government regulation.

• Those arguing against it call for profit maximization because businesses are primarily economic institutions run by unelected officials who have enough power already.

Learning Objective 2: Identify and describe the four social responsibility strategies, and explain the role of enlightened self-interest in CSR.

• Management scholars who advocate greater corporate social responsibility cite the iron law of responsibility. This law states that if business does not use its socioeconomic power responsibly, society will take away that power.

• A continuum of social responsibility includes four strategies: reaction, defense, accommodation, and proaction.

- The reaction strategy involves denying social responsibility.

- The defense strategy involves actively fighting additional responsibility with political and public relations tactics.

- Accommodation occurs when a company must be pressured into assuming additional social responsibilities.

- Proaction occurs when a business takes the initiative and becomes a positive model for its industry.

• In the short run, proactive social responsibility usually costs the firm money. But, according to the notion of enlightened self-interest, both society and the company will gain in the long run.

• Research indicates that corporate philanthropy actually is a profit-motivated form of advertising.

Learning Objective 3: Summarize the three practical lessons from business ethics research. Then identify and describe at least four of the ten general ethical principles.

• Business ethics research has taught these three practical lessons:

- A large percentage of surveyed workers report engaging in illegal or unethical practices.

- Perceived pressure from above can erode ethics.

- Employees desire clear ethical standards in ambiguous situations

• The call for better business ethics is clearly a personal challenge.

• The ten general ethical principles that consciously and unconsciously guide behavior when ethical questions arise are:

- Self-interests (protect your long-term self-interests)

- Personal virtues (always be open, honest, and truthful)

- Religious injunctions (work together for a common goal)

- Government requirements (always follow the law)

- Utilitarian benefits (work for the greater good)

- Universal rules (act as others should)

- Individual rights (don’t hamper the rights of others)

- Economic efficiency (legally maximize profits)

- Distributive justice (don’t harm the least fortunate)

- Contributive liberty (don’t interfere with others’ right to self-fulfillment)

Learning Objective 4: Discuss what managers can do to improve business

ethics.

• The typical manager is said to be amoral—neither moral or immoral—just ethically lazy or indifferent.

• Management can encourage ethical behavior in the following four ways:

- Conduct ethics training.

- Use ethical advocates in high-level decision making.

- Formulate, disseminate, and consistently enforce specific codes of ethics.

- Create an open climate for dissent in which whistle-blowing becomes unnecessary.

Test Preppers

Test Prepper 3.1

True or False?

_____ 1. By definition, socially responsible acts must be government mandated.

_____ 2. An argument favoring corporate social responsibility is that government will force business to do what it fails to do voluntarily.

_____ 3. Those who argue against corporate social responsibility worry that business already has enough power.

Multiple Choice

_____ 4. Before corporate actions can be called socially responsible, they must be

a. legal.

b. ethical.

c. contractual.

d. voluntary.

e. unprofitable.

_____ 5. _____ refers to systematically identifying all parties that could possibly be impacted by a company’s performance.

a. Social responsibility profile

b. Stakeholder audit

c. Corporate domain audit

d. External audit

e. Capability profiling

_____ 6. _____ ensures the efficient use of society’s resources, according to the arguments against corporate social responsibility.

a. The threat of government intervention

b. Public pressure

c. Governmental legislation

d. Profit maximization

e. The political process

Test Prepper 3.2

True or False?

_____ 1. The iron law of responsibility states that “in the long run, those who do not use power in a way that society considers responsible will tend to lose it.”

_____ 2. An example of a reactive social responsibility strategy is a blue jeans maker switching to organically grown cotton.

_____ 3. Proaction means aggressively taking the initiative in the corporate social responsibility area.

_____ 4. Managers who believe in enlightened self-interest think that ultimately the best way to help themselves is to help create a better society.

Multiple Choice

_____ 5. According to the iron law of responsibility,

a. power corrupts.

b. absolute power is dangerous.

c. nothing gets accomplished without power.

d. economic power prevails.

e. we need to use power responsibly or lose it.

_____ 6. A(n) _____ social responsibility strategy uses legal maneuvering and/or a public relations campaign to avoid assuming additional responsibilities.

a. accommodation

b. reactive

c. defensive

d. proactive

e. protective

_____ 7. Aggressively taking the initiative on the social responsibility continuum is called a. empowerment.

b. proaction.

c. altruism.

d. reaction.

e. decentralization.

_____ 8. Researchers found which sort of relationship between industry leadership in environmental protection/pollution control and profitability?

a. Positive correlation

b. Negative correlation

c. Inconsistent

d. No impact

e. Inverse

_____ 9. The realization that business ultimately helps itself by helping to solve societal problems defines

a. profit-motivation.

b. corporate philanthropy.

c. ethics.

d. social-motivation.

e. enlightened self-interest.

Test Prepper 3.3

True or False?

_____ 1. Business ethics involves a simple obligation of choosing right versus wrong.

_____ 2. One of the top-ten workplace hot spots that trigger unethical and illegal conduct is little or no recognition of achievements.

_____ 3. High levels of pressure to act unethically were more often reported by college graduates than by those with a high school diploma or less.

_____ 4. Among the ten general ethical principles are universal rules, personal virtues, and government requirements.

Multiple Choice

_____ 5. Ethics refers to the study of

a. moral obligation.

b. social trade-offs.

c. cross-cultural value conflict.

d. black-and-white political issues.

e. economic trade-offs.

_____ 6. Discomfort with _____ was found in surveys of purchasing and sales personnel.

a. overly specific ethical codes

b. any type of ethical code

c. moralistic managers

d. ambiguous situations

e. immoral managers

_____ 7. Which statement best represents the general ethical principle of contributive liberty?

a. Never take any action that violates the law.

b. Never take any action that is not in the long-term self-interest of yourself.

c. Never take any action that will interfere with the right of all of us for self-development and self-fulfillment.

d. Never take any action that does not result in greater good than harm for the society of which you are a part.

e. Always act to maximize profits subject to legal and market constraints.

Test Prepper 3.4

True or False?

_____ 1. An ethical advocate is assigned the specific role of critical questioner, and he or she may also be asked to sit in on top-management decision deliberations.

_____ 2. An effective code of ethics needs to be stated in general terms rather than getting bogged down in the details of specific behaviors.

_____ 3. The first step to reduce the need for whistle-blowing is encouraging the free expression of controversial and dissenting viewpoints.

Multiple Choice

_____ 4. An amoral manager can be described as one who is

a. devoted to others.

b. above criticism.

c. strictly selfish.

d. indifferent to ethical implications.

e. consistently unethical.

_____ 5. Which statement about ethics training is true?

a. It is a waste of time.

b. It is becoming less popular.

c. It lacks hard evidence of effectiveness.

d. It is practically universal today.

e. It is out of date.

_____ 6. _____ is the practice of reporting perceived unethical practices to outsiders such as the media or government agencies.

a. Ethical conscience

b. Whistle-blowing

c. Devil’s advocacy

d. Functional conflict

e. Ombudsmanship

Test Prepper Answer Key

3.1

1. F 2. T 3. T 4. d 5. b 6. d

3.2

1. T 2. F 3. T 4. T 5. e 6. c 7. b

3.3

1. F 2. T 3. F 4. T 5. a 6. d 7. c

3.4

1. T 2. F 3. T 4. d 5. c 6. b

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