1. © 2005 Prentice-Hall, Inc. 3-1 Chapter 3 Ethics and Social Responsibility

2. © 2005 Prentice-Hall, Inc. 3-2 Learning Objectives Define ethics and understand the importance of ethical behavior for organizations Discuss four perspectives on ethics and arguments for ethical relativism and universalism Understand the efficiency and social responsibility perspectives of corporate social responsibility Know how ethics affect individual behavior in organizations Consider ways of scientifically studying organizational ethics Know methods for resolving cross-cultural ethical conflicts Analyze your ethics and how they affect your understanding of management and organizational behavior.

3. © 2005 Prentice-Hall, Inc. 3-3 Ethics Moral standards, not governed by law, that focus on the human consequences of actions

4. © 2005 Prentice-Hall, Inc. 3-4 Four Perspectives on Ethics Descriptive Approach Uses methods and theories of social science Conceptual Approach Focuses on the meaning of key ideas in ethics Normative Approach Involves constructing arguments in defense of basic moral positions and prescribing correct ethical behavior Practical Approach Involves developing a set of normative guidelines for resolving conflicts of interest to improve societal well-being

5. © 2005 Prentice-Hall, Inc. 3-5 Relativism Vs. Universalism Individual ethical relativism No absolute principle of right and wrong, good or bad, in any social situation Cultural ethical relativism What is right or wrong, good or bad, depends on one's culture Ethical universalism Universal and objective ethical rules located deep within a culture that also apply across societies

6. © 2005 Prentice-Hall, Inc. 3-6 The Social Responsibility of Corporations The Efficiency Perspective The obligation of business is to maximize profits for shareholders The Social Responsibility Perspective Managers bear a fiduciary relationship to stakeholders

7. © 2005 Prentice-Hall, Inc. 3-7 Kohlberg’s Theory of Moral Development Stage 1 - Obedience and Punishment Obedience to those in authority who have the power to punish Stage 2 - Individualism and Reciprocity The greatest good for the individual person making the decision Stage 3 - Interpersonal Conformity Expectations of others, including friends, family members, and people in general

8. © 2005 Prentice-Hall, Inc. 3-8 Kohlberg’s Theory of Moral Development (cont.) Stage 4 - Social System/Law and Order Play one's role in the social system, do one's duty, obey rules Stage 5 - Social Contract “The greatest good for the greatest number" Stage 6 - Universal Ethical Principles Principles selected freely by a person and that the individual is willing for everyone to live by

9. © 2005 Prentice-Hall, Inc. 3-9 Face and Ethical Behavior Displays an individual’s understanding of culturally defined moral codes as they apply to and maintain a particular social situation Behavior that sustains the definition of the situation supports a person's face

10. © 2005 Prentice-Hall, Inc. 3-10 Organizational Ethics Internal Ethical Issues Discrimination Safety Compensation Child Labor

11. © 2005 Prentice-Hall, Inc. 3-11 Organizational Ethics (cont.) Cross-Cultural Ethical Issues Theft of Intellectual Property Bribery and Corruption Intentionally Selling Dangerous Products Environmental Pollution Intentional Misrepresentation in Negotiations

12. © 2005 Prentice-Hall, Inc. 3-12 Studying Ethics Social science methods Study comparing U.S. and U.K. Corporations vary in the emphasis on different aspects of ethics and how they manage them Differences in perceptions of corruption among countries

13. © 2005 Prentice-Hall, Inc. 3-13 Resolving Cross-Cultural Ethical Conflicts U.S. approach Transform ethics into laws Global approach OECD views corruption in developing countries to be particularly harmful to their prospects for economic growth Convention on Combating Bribery of Foreign Public Officials in International Business Transactions Caux Round Table and the Conference Board standards for global business ethics and social responsibility

14. © 2005 Prentice-Hall, Inc. 3-14 Resolving Cross-Cultural Ethical Conflicts (cont.) Codes of ethics Codify behavior that is unacceptable under certain conditions Reduce ambiguity by specifying appropriate behavior

15. © 2005 Prentice-Hall, Inc. 3-15 Kohls and Buller’s Approaches for Resolving Ethical Conflict Avoiding One party ignores or does not deal with the conflict Forcing One party forces its will upon the other Education-Persuasion One party attempts to convert others to its position through providing information, reasoning, or appeals to emotion

16. © 2005 Prentice-Hall, Inc. 3-16 Kohls and Buller’s Approaches for Resolving Ethical Conflict (cont.) Infiltration One party introduces its cultural values to another society hoping that an appealing idea will spread Negotiation-Compromise Both parties give up something to negotiate a settlement Accommodation One party adapts to the ethics of the other Collaboration-Problem Solving Both parties work together to achieve a mutually satisfying solution

17. Values: Core and Periphery Human Life Honesty Job security Knowledge Leisure Freedom Peace Stockholder values Job satisfaction Power Health Trust Property rights Living standards Efficiency Family Friends Society Customer satisfaction Status Worker safety

18. © 2005 Prentice-Hall, Inc. 3-18 Ethics as a Competitive Advantage in Global Business Ethical capability related to perceiving interdependence, thinking ethically, responding effectively Trust as a value among multinational corporations

19. © 2005 Prentice-Hall, Inc. 3-19 Convergence or Divergence? A Bureaucratic Ethic International Regulatory Agencies Diffusion of Capitalism Worldwide Religious Differences Reassertion of National and Ethnic Cultures Varying Economic Systems and Levels of Development

20. © 2005 Prentice-Hall, Inc. 3-20 Implications for Managers Develop a Framework for Evaluating Ethical Codes and Determining Personal Ethics Understand Behaviors and Ethics of Other Societies Consider Approaches to Resolving Cross-Cultural Ethical Conflicts