Ethics & Social Responsibility Meeting 2 Ethics & Social Responsibility STRATEGIC MANAGEMENT & BUSINESS POLICY Prentice Hall 2006
Ethics & Social Responsibility Prentice Hall 2006
Broader responsibility -- Corporate Governance Broader responsibility -- Private corporations have responsibility to society that extend beyond making a profit Prentice Hall 2006
Social Responsibility Milton Friedman There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud. Prentice Hall 2006
Carroll’s 4 Responsibilities Corporate Governance Carroll’s 4 Responsibilities Economic Legal Ethical Discretionary Prentice Hall 2006
Carroll’s 4 Responsibilities Prentice Hall 2006
Corporate Stakeholders Affect or are affected by the achievement of the corporation’s objectives Prentice Hall 2006
Stakeholder Analysis – Corporate Stakeholders Stakeholder Analysis – Primary stakeholder Sufficient bargaining power to affect outcomes Secondary stakeholder Indirect stake but are affected by corporation’s actions Stakeholder Input Determine whether input is necessary Prentice Hall 2006
Ethical Behavior “business ethics” Argument that there is no such thing … it is an oxymoron Prentice Hall 2006
Corporate practices -- Ethical Decision Making Corporate practices -- Massive write-downs and restatements of profit Misclassification of expenses as capital expenditures Pirating corporate assets for personal gain Prentice Hall 2006
Provocative Question -- Reasons for Unethical Behavior Provocative Question -- Why are businesspeople perceived to be acting unethically? Prentice Hall 2006
Perceptions caused by -- Not aware of impropriety Reasons for Unethical Behavior Perceptions caused by -- Not aware of impropriety Cultural norms and values vary Governance systems based on rule or relationships Differences in values between businesspeople and key stakeholders Prentice Hall 2006
Allport-Vernon-Lindzey Study of Values -- Aesthetic Economic Political Reasons for Unethical Behavior Allport-Vernon-Lindzey Study of Values -- Aesthetic Economic Political Religious Social Theoretical Prentice Hall 2006
Most common reasons for bending rules -- Reasons for Unethical Behavior Most common reasons for bending rules -- Organizational performance required it Ambiguous or out of date rules Pressure from others – everyone else does it Prentice Hall 2006
Moral Relativism Morality is relative to some personal, social, or cultural standard and there is no method for deciding whether one decision is better than another. Prentice Hall 2006
1. Preconventional level Kohlberg’s Levels of Moral Development 1. Preconventional level Characterized by a concern for self Personal interest Avoidance of punishment Prentice Hall 2006
2. Conventional level Characterized consideration of society’s values Kohlberg’s Levels of Moral Development 2. Conventional level Characterized consideration of society’s values External code of conduct Prentice Hall 2006
3. Principled level Characterized by adherence to internal moral code Kohlberg’s Levels of Moral Development 3. Principled level Characterized by adherence to internal moral code Universal values or principles Prentice Hall 2006
Encouraging Ethical Behavior Codes of Ethics Specifies how an organization expects its employees to behave on the job. Prentice Hall 2006
Guidelines for Ethical Behavior Encouraging Ethical Behavior Guidelines for Ethical Behavior Ethics Morality Law Prentice Hall 2006
Approaches to Ethical Behavior Encouraging Ethical Behavior Approaches to Ethical Behavior Utilitarian Judged by consequences Individual Rights Fundamental rights in all decisions Justice Distribution in equitable fashion Prentice Hall 2006
Approaches to Ethical Behavior Encouraging Ethical Behavior Approaches to Ethical Behavior Categorical imperative “golden rule” Means - Ends Prentice Hall 2006
192 U.S. companies surveyed -- Strategy Bits 192 U.S. companies surveyed -- 92% monitored employees use of e-mail/Internet 26% monitored employees electronic activities all the time Almost none had checks in place to protect employees privacy Prentice Hall 2006