Chapter 3 ©2001 South-Western College Publishing Pamela S. Lewis Stephen H. Goodman Patricia M. Fandt Slides Prepared by Bruce R. Barringer University of Central Florida Pamela S. Lewis Stephen H. Goodman Patricia M. Fandt Slides Prepared by Bruce R. Barringer University of Central Florida Social Responsibility and Ethics

Transparency 3-2 © 2001 South-Western Publishing Learning Objectives Slide 1 of 4 1.Discuss the stakeholder view of the firm and discuss the impact of the globalization of business on social responsibility and ethics. 2.Describe the concept of corporate social responsibility and the primary premises upon which it is based. 3.Distinguish among the three perspectives of corporate social responsibility.

Transparency 3-3 © 2001 South-Western Publishing Learning Objectives Slide 2 of 4 4.Identify and evaluate different strategies for responding to social issues. 5.Discuss the 10 commandments of social responsibility. 6.Explain what values are, how they form the basis of an individual’s ethical behavior, and how they may vary in a global business environment.

Transparency 3-4 © 2001 South-Western Publishing Learning Objectives Slide 3 of 4 7.Describe how advances in information technology have created new ethical challenges. 8.Identify and discuss the differences in the utility, human rights, and justice approaches to ethical dilemmas. 9.Explain the methods used by an organization to encourage ethical business behavior.

Transparency 3-5 © 2001 South-Western Publishing Learning Objectives Slide 4 of 4 11.Discuss what is meant by whistleblowing in monitoring ethical behavior. 10.Describe the different approaches used in ethics training programs.

Transparency 3-6 © 2001 South-Western Publishing Stakeholders Stakeholders are all those who are affected by or can affect the activities of the firm.

Transparency 3-7 © 2001 South-Western Publishing Primary and Secondary Stakeholders Primary Stakeholders –Those who have a formal, official, or contractual relationship with the organization. Secondary Stakeholders –Other societal groups that are affected by the activities of the firm.

Transparency 3-8 © 2001 South-Western Publishing The Stakeholder View of the Firm Primary Stakeholders Suppliers Employees Customers Owners Secondary Stakeholders Environmental Group Consumer Group MediaACLU Local Community Group Other Special Interest Groups Organization

Transparency 3-9 © 2001 South-Western Publishing Corporate Social Responsibility Defined Slide 1 of 2 The interaction between business and the social environment in which it exists.

Transparency 3-10 © 2001 South-Western Publishing Corporate Social Responsibility Defined Slide 2 of 2 What specifically does social responsibility mean? Does it mean that the corporation’s actions must not harm society? Does it mean that the corporation’s actions must not harm society? Does it mean that a corporation’s actions should benefit society? Does it mean that a corporation’s actions should benefit society? or

Transparency 3-11 © 2001 South-Western Publishing The Premises of the Social Responsibility Debate Social contract –An implied set of rights and obligations that are inherent in social policy and assumed by business. Moral agent –The obligation of a business to act honorably and to reflect and enforce values that are consistent with those of society.

Transparency 3-12 © 2001 South-Western Publishing Three Perspectives of Social Responsibility Slide 1 of 2 Economic Perspective –The responsibility of business is to make a profit within the “rules of the game.” –Organizations cannot be moral agents. Only individuals can serve as moral agents. Public Responsibility –Businesses should act in a way that is consistent with society’s view of responsible behavior, as well as with established laws and policies.

Transparency 3-13 © 2001 South-Western Publishing Three Perspectives of Social Responsibility Slide 2 of 2 Social Responsiveness –Business should proactively seek to contribute to society in a positive way. –Organizations should develop an internal environment that encourages and supports ethical behavior at an individual level.

Transparency 3-14 © 2001 South-Western Publishing The Four Faces of Social Responsibility Legal/Responsible Legal/Irresponsible Illegal/ResponsibleIllegal/Irresponsible

Transparency 3-15 © 2001 South-Western Publishing Social Responsibility Strategies Slide 1 of 3 Do NothingDo Much Reaction Defense AccommodationProaction Continuum of strategies based on the organization’s tendency to be socially responsible or responsive.

Transparency 3-16 © 2001 South-Western Publishing Social Responsibility Strategies Slide 2 of 3 Reaction –An organization that assumes a reaction stance simply fails to act in a socially responsible manner. Defense –Organizations that pursue a defense strategy respond to social challenges only when it is necessary to defend their current position.

Transparency 3-17 © 2001 South-Western Publishing Social Responsibility Strategies Slide 3 of 3 Accommodation –Corporations with an accommodation strategy readily adapt behaviors to comply with public policy and regulation where necessary and, more importantly, attempt to be responsive to public expectations. Proaction –Organizations that assume a proaction strategy subscribe to the notion of social responsiveness.

Transparency 3-18 © 2001 South-Western Publishing Ten Commandments of Social Responsibility Slide 1 of 4 Commandment I –Thou shall take corrective action before it is required. Commandment II –Thou shall work with affected constituents to resolve mutual problems. Commandment III –Thou shall work to establish industry-wide standards and self-regulation.

Transparency 3-19 © 2001 South-Western Publishing Ten Commandments of Social Responsibility Slide 2 of 4 Commandment IV –Thou shall publicly admit your mistakes. Commandment V –Thou shall get involved in appropriate social programs. Commandment VI –Thou shall help correct environmental problems.

Transparency 3-20 © 2001 South-Western Publishing Ten Commandments of Social Responsibility Slide 3 of 4 Commandment VII –Thou shall monitor the changing social environment. Commandment VIII –Thou shall establish and enforce a corporate code of ethics. Commandment IX –Thou shall take needed public stands on social issues.

Transparency 3-21 © 2001 South-Western Publishing Ten Commandments of Social Responsibility Slide 4 of 4 Commandment X –Thou shall strive to make profits on an ongoing basis.

Transparency 3-22 © 2001 South-Western Publishing Ethics –The established customs, morals, and fundamental human relationships that exist throughout the world. Ethical Behavior –Behavior that is morally accepted as good or right as opposed to bad or wrong.

Transparency 3-23 © 2001 South-Western Publishing Foundations of Ethics Values The relatively permanent and deeply held preferences of individuals or groups. Instrumental ValuesTerminal Values Standards of conduct or methods for attaining an end. Goals an individual will ultimately strive to achieve.

Transparency 3-24 © 2001 South-Western Publishing Business Ethics Defined The application of the general ethical rules to business behavior.

Transparency 3-25 © 2001 South-Western Publishing Ethical Dilemma Defined A situation in which a person must decide whether or not to do something that, although beneficial to oneself or the organization, may be considered unethical and perhaps illegal.

Transparency 3-26 © 2001 South-Western Publishing Examples of Ethical Dilemmas Faced by Managers Should I conduct personal business on company time? Should I conduct personal business on company time? Should we spend more on pollution control? Should we spend more on pollution control? Is it O.K. to give a friend a special rate? Is it O.K. to give a friend a special rate? If I find out that my boss took a bribe, should I tell someone? If I find out that my boss took a bribe, should I tell someone?

Transparency 3-27 © 2001 South-Western Publishing Managerial Guidelines for Ethical Dilemmas Slide 1 of 2 Utility Approach –A situation in which decisions are based on an evaluation of the overall amount of good that will result. Human Rights Approach –A situation in which decisions are made in light of the moral entitlements of human beings.

Transparency 3-28 © 2001 South-Western Publishing Managerial Guidelines for Handling Ethical Dilemmas Slide 2 of 2 Justice Approach –A situation in which decisions are based on an equitable, fair, and impartial distribution of benefits and costs among individuals and groups.

Transparency 3-29 © 2001 South-Western Publishing Fostering Improved Business Ethics To foster improved business ethics in an organization, action must be directed at five levels: International Societal Association Organizational Individual

Transparency 3-30 © 2001 South-Western Publishing Ways In Which Organizations Foster Business Ethics Slide 1 of 2 Code of Ethics –Describes the general value system, ethical principles, and specific ethical rules that a company tries to apply. Ethics Training Programs –Training designed to help managers clarify their ethical framework and practice self-discipline when making decisions in difficult circumstances.

Transparency 3-31 © 2001 South-Western Publishing Ways In Which Organizations Foster Business Ethics Slide 2 of 2 Whistleblowing –A whistleblower is someone who exposes organizational misconduct or wrongdoing to the public.

Transparency 3-32 © 2001 South-Western Publishing Checklist for Managers To Use When Facing Ethical Dilemmas Slide 1 of 2 Recognize and clarify the dilemma. Get all possible facts. List all your options. Test each option by asking: –“Is it legal? It is right? Is it beneficial?” Make your decision.

Transparency 3-33 © 2001 South-Western Publishing Checklist for Managers To Use When Facing Ethical Dilemmas Slide 2 of 2 Double-check your decision by asking… –“How would I feel if my family found out about this? How would I feel if my decision was printed in the local newspaper?” Take action.