1. Last Week… We looked at environmental influences on managing:
internally, it’s the organizational culture
externally, it’s about indirect and direct influences, including the role of uncertainty and various stakeholders
We examined the complexity of the interdependencies between a business and their stakeholders.
We also examined influences on management resulting from the “interconnectedness” of our world – the impact of “globalization”

2. This Week’s Objectives
Understand corporate social responsibility and it’s impact on management
Look at the role of values in management
Understand ethics and the movement to address ethics in management

3. Corporate Social Responsibility and Managerial Ethics
Chapter 4
Corporate Social Responsibility and Managerial Ethics
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

4. When managing, who do you answer to? and… Who is watching?
The Questions…
When managing, who do you answer to? and… Who is watching?

5. What Is Corporate Social Responsibility?
The Classical View
Maximize profits for the benefit of the stockholders
Doing “social good” unjustifiably increases costs
Learning Objective #1
Managers regularly face decisions that have a dimension of social responsibility. We define social responsibility as a business’s obligation, beyond that required by law and economics, to pursue long-term goals that are good for society.
This definition assumes that a business obeys laws and pursues economic interests. But also note that this definition views business as a moral agent. That is, in its effort to do good for society, it must differentiate between right and wrong. The more obvious examples include: employee relations, philanthropy, pricing, resource conservation, product quality, and doing business in countries that violate human rights.
There are two opposing views of what social responsibility is.
1. The classical view is the view that management’s only social responsibility is to maximize profits.
a. Milton Friedman is the most outspoken advocate of this view.
b. He argues that managers’ primary responsibility is to operate the business in the best interests of the stockholders—the true owners of the organization.
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

6. What Is Corporate Social Responsibility?
The Socio-economic View
Management should also protect and improve society’s welfare
Corporations are responsible not only to stockholders
Firms have a moral responsibility to larger society “to do the right thing”
2. The socio-economic view is the view that management’s social responsibility goes beyond the making of profits to include protecting and improving society’s welfare.
a. The argument behind this view is that corporations are not independent entities responsible only to stockholders.
b. Also, modern organizations are no longer just economic institutions. Society expects businesses to become involved in social, political, and legal issues.
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

7. Arguments For Social Responsibility
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
How do socially responsible activities affect a company’s economic performance?
A. The majority of studies found a positive relationship between social involvement and economic performance, but some caution is necessary because of methodological questions associated with trying to measure social responsibility and economic performance.
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

8. Arguments Against Social Responsibility
Violation of profit maximization
Dilution of purpose
Costs
Too much power
Lack of skills
Lack of accountability
How do socially responsible activities affect a company’s economic performance?
A. The majority of studies found a positive relationship between social involvement and economic performance, but some caution is necessary because of methodological questions associated with trying to measure social responsibility and economic performance.
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

9. The Range of Social Conscience
Social Obligation
You act to positively impact society because of obligations to meet certain economic and legal responsibilities
Social Responsiveness
You act to positively impact society in response to a popular social need. (Pragmatic, responsive, medium/short term).
Corporate Social Responsibility
You act to positively impact society because of held values about right and wrong, and organization’s social role. (Ethical, ends-focused, long term).
Values-based management is an approach to managing in which managers establish, promote, and practise an organization’s shared values.
A. Purposes of Shared Values (see Exhibit 4.3)
1. They act as guideposts for managerial decisions and actions.
2. They also serve to shape employee behaviour and to communicate what the organization expects of its members.
3. The shared corporate values also can influence the organization’s marketing efforts.
4. Finally, shared values are a way to build team spirit in organizations.
B. The Bottom Line on Shared Corporate Values
1. A 2002 survey on corporate values by the AMA showed that managers at a number of organizations have made a commitment to a set of core values (see Exhibit 4.4 for the survey results).
2. Only 64% said that their corporate values were linked to performance evaluations and compensation.
3. An organization’s values are revealed in the decisions and actions of employees.
4-9 9

10. Examples of Social Responsibility
Tom’s of Maine:
Herman Miller:
Timberland:
Meritas Mutual Funds:
Business Ethics Magazine:
Values-based management is an approach to managing in which managers establish, promote, and practise an organization’s shared values.
A. Purposes of Shared Values (see Exhibit 4.3)
1. They act as guideposts for managerial decisions and actions.
2. They also serve to shape employee behaviour and to communicate what the organization expects of its members.
3. The shared corporate values also can influence the organization’s marketing efforts.
4. Finally, shared values are a way to build team spirit in organizations.
B. The Bottom Line on Shared Corporate Values
1. A 2002 survey on corporate values by the AMA showed that managers at a number of organizations have made a commitment to a set of core values (see Exhibit 4.4 for the survey results).
2. Only 64% said that their corporate values were linked to performance evaluations and compensation.
3. An organization’s values are revealed in the decisions and actions of employees.
4-10 10

11. Values-Based Management
Managers establish and uphold an organization’s shared values
Purposes of Shared Values
Guiding managerial decisions
Shaping employee behaviour
Influencing the direction of marketing efforts
Building team spirit
The Bottom Line on Shared Corporate Values
An organization’s values (or lack of) are reflected in the decisions and actions of its employees
Values-based management is an approach to managing in which managers establish, promote, and practise an organization’s shared values.
A. Purposes of Shared Values (see Exhibit 4.3)
1. They act as guideposts for managerial decisions and actions.
2. They also serve to shape employee behaviour and to communicate what the organization expects of its members.
3. The shared corporate values also can influence the organization’s marketing efforts.
4. Finally, shared values are a way to build team spirit in organizations.
B. The Bottom Line on Shared Corporate Values
1. A 2002 survey on corporate values by the AMA showed that managers at a number of organizations have made a commitment to a set of core values (see Exhibit 4.4 for the survey results).
2. Only 64% said that their corporate values were linked to performance evaluations and compensation.
3. An organization’s values are revealed in the decisions and actions of employees.
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

12. Managerial Ethics
Ethics Defined: The rules and principles that define right and wrong conduct There are 4 views of ethics…
Learning Objective #5
Recent corporate scandals including Enron, WorldCom, Tyco, and ImClone may cause many to conclude that corporate America has no ethics. The term ethics refers to rules and principles that define right and wrong conduct.
Four Views of Ethics
1. Utilitarian view of ethics says that ethical decisions are made solely on the basis of their outcomes or consequences.
2. Rights view of ethics is concerned with respecting and protecting individual liberties and privileges such as the rights to privacy, free speech, and due process.
3. Theory of justice view of ethics is where managers impose and enforce rules fairly and impartially and do so by following all legal rules and regulations.
4. Integrative social contracts theory proposes that ethical decisions be based on existing ethical norms in industries and communities in determining what constitutes right and wrong.

13. Utilitarian View Greatest good is provided for the greatest number
Encourages efficiency and productivity and is consistent with the goal of profit maximization

14. Copyright © 2009 Pearson Education Canada
Rights View
Respecting and protecting individual liberties and privileges
Seeks to protect individual rights of conscience, free speech, life and safety, and due process
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

15. Copyright © 2009 Pearson Education Canada
The Theory of Justice
Organizational rules are enforced fairly and impartially and follow all legal rules and regulations
Protects the interests of underrepresented stakeholders and the rights of employees
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

16. Integrative Social Contracts Theory
Ethical decisions should be based on existing ethical norms in industries and communities
Based on integration of the general social contract and the specific contract between community members
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

17. Exhibit 4.6 Factors That Affect Ethical and Unethical Behaviour
Individual
Issue
Characteristics
Intensity
Ethical
Stage of Moral
Ethical/Unethical
Moderators
Dilemma
Development
Behaviour
Exhibit 4.6 shows the complex interactions that influence whether a person acts ethically or unethically when faced with an ethical dilemma.
Structural
Organizational
Variables
Culture
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

18. Factors That Affect Employee Ethics
Stages of moral development
Individual characteristics
Structural variables
Organizational culture
Issue intensity
1. Stages of Moral Development. Research confirms three levels of moral development (see Exhibit 4.6). Each level has two stages.
First level is preconventional. Person’s choice based on personal consequences involved.
b. Conventional level indicates that moral values reside in maintaining expected standards.
c. Principled level has individuals make a clear effort to define moral principles apart for the authority of the groups to which individuals belong.
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

19. Levels of Moral Development
Pre-conventional level (self-centred)
Conventional level (peer driven)
Principled level (value driven)
(Within each level are two stages)
Stages of Moral Development. Research confirms three levels of moral development (see Exhibit 4.7). Each level has two stages.
a. First level is preconventional. Person’s choice based on personal consequences involved.
b. Conventional level indicates that moral values reside in maintaining expected standards.
c. Principled level has individuals make a clear effort to define moral principles apart from the authority of the groups to which individuals belong.

20. Research Conclusions on Moral Development
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”)
Whether a person acts ethically or unethically when faced with an ethical dilemma is the result of complex interactions between the stage of moral development and several moderating variables, including individual characteristics, the organization’s structural design, the organization’s culture, and the intensity of the ethical issue. (See Exhibit 4.5.)
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

21. Individual characteristics
Values
Basic convictions about what is right or wrong on a broad range of issues
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
2. The second factor that influences managerial ethics is individual characteristics.
a. Our values are our basic convictions about what is right and wrong.
b. Ego strength is a personality measure of the strength of a person’s convictions. Individuals high in ego strength are likely to resist impulses to act unethically and instead do what they think is right.

22. Copyright © 2009 Pearson Education Canada
Structural Variables
Organizational characteristics and mechanisms that guide and influence individual ethics:
Performance appraisal systems
Reward allocation systems
Behaviours (ethical) of managers
3. The third factor that influences managerial ethics is structural variables. The existence of formal rules and regulations, job descriptions, written codes of ethics, performance appraisal systems, and reward systems can strongly influence ethical behaviour.
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

23. Exhibit 4.8 Determinants of Issue Intensity
How much agreement
is there that this
action is wrong?
How likely is it
How many people
that this action
will be harmed?
will cause harm?
Consensus
of Wrong
Greatness
Probability
of Harm
of Harm
Issue Intensity
Concentration
Immediacy of
5. Finally, the intensity of an issue can affect ethical decisions. There are six characteristics that determine issue intensity (see Exhibit 4.8).
a. Greatness of harm
b. Consensus of wrong
c. Probability of harm
d. Immediacy of consequences
e. Proximity to victim
f. Concentration of effect
According to these guidelines, the larger the number of people harmed, the more agreement that the action is wrong, the greater the likelihood that the action will cause harm, the more immediately that the consequences of the action will be felt, the closer the person feels to the victim(s), and the more concentrated the effect of the action on the victim(s), the greater the issue intensity. The more intense an issue is, the more we should expect employees to behave ethically.
of Effect
Consequences
Proximity to
How concentrated
Victim(s)
Will harm be felt
is the effect of the
immediately?
action on the victim(s)?
How close are the
potential victims?
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

24. Ethics in an International Context
Ethical standards are not universal
Social and cultural differences determine acceptable behaviours
Are ethical standards universal? Hardly! Social and cultural differences between countries are important environmental factors that determine ethical and unethical behaviour.
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

25. The Global Compact Initiated through the United Nations in 1999
Covers principles regarding Human Rights, Labour Standards, Environment and Anti-Corruption
Asks participants to incorporate these principles in their business activities
Over 3000 companies and organizations across the globe participate in this compact.
At the World Economic Forum in 1999, the United Nations secretary general challenged world business leaders to “embrace and enact” the Global Compact.
Global organizations have been asked to incorporate these guidelines into their business activities. The goal: a more sustainable and inclusive global economy.
Today, hundreds of companies and international labour organizations from all regions of the world are engaged in the Global Compact.

26. How Managers Can Improve Ethical Behaviour in an Organization
Hire individuals with high ethical standards.
Establish codes of ethics and decision rules.
Lead by example.
Delineate job goals and performance appraisal mechanisms.
Provide ethics training.
Conduct independent social audits.
Provide support for individuals facing ethical dilemmas.
1. The selection process for bringing new employees into organizations should be viewed as an opportunity to learn about an individual’s level of moral development, personal values, ego strength, and locus of control.
2. A code of ethics is a formal statement of an organization’s primary values and the ethical rules it expects employees to follow.
Ethical leadership is also an important element in fostering ethical behaviour. Top management’s leadership and commitment to ethical behaviour is extremely important because it’s the top managers who set the cultural tone.
4. Employees’ job goals should be tangible and realistic, because when goals are clear and realistic, they reduce ambiguity and motivate rather than punish. Job goals are usually a key issue in performance appraisal. If an organization wants its employees to uphold high ethical standards, it must include this dimension in its appraisal process. Performance appraisals should be comprehensive and not just focus on economic outcomes.
5. Ethics training should be used to help teach ethical problem solving and to present simulations of ethical situations that might arise. If it does nothing else, ethics training should increase awareness of ethical issues
6. Independent social audits evaluate decisions and management practices in terms of the organization’s code of ethics and can be used to deter unethical behaviour.
7. Finally, organizations can provide formal protective mechanisms so that employees with ethical dilemmas can do something about them without fear of reprisal. “Whistle-blowers” can be a key part of a company’s ethics program because they are willing to step forward and expose unethical behaviour, no matter what the cost professionally or personally. The company must limit these potential negative effects.
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

27. Copyright © 2009 Pearson Education Canada
Code of Ethics
A formal statement of an organization’s primary values and the ethical rules it expects its employees to follow
Be a dependable organizational citizen
Don’t do anything unlawful or improper that will harm the organization
Be good to customers
A code of ethics is a formal statement of an organization’s primary values and the ethical rules it expects employees to follow. Also, decision rules can be developed to guide managers in handling ethical dilemmas in decision-making.
A survey of companies’ codes of ethics found their content tended to fall into three categories:
1. Be a dependable organizational citizen;
2. Don’t do anything unlawful or improper that will harm the organization; and
3. Be good to customers.
Source: F.R. David, “An Empirical Study of Codes of Business Ethics: A Strategic Perspective.” Paper presented at the 48th Annual Academy of Management Conference, Anaheim, California, August 1988.
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

28. Copyright © 2009 Pearson Education Canada
Exhibit 4.9 provides the 12 questions developed by Laura Nash that can be used to examine the ethics of a business decision.
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition
Copyright © 2009 Pearson Education Canada

29. This Week’s Summary
Examined Social Responsibility: what is it, what are the range of approaches, the role of values management.
We also looked at perspectives on ethics, the factors that influence ethical behaviour, and international and practical trends for ethics in managing.