1. Management’s Social and Ethical Responsibilities
Chapter Five
Management’s Social and Ethical Responsibilities
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2. Chapter Objectives
Define the term corporate social responsibility (CSR) and specify the four levels in Carroll’s global CSR pyramid.
Contrast the classical economic and socioeconomic models of business and summarize the arguments for and against CSR.
Identify and describe the four social responsibility strategies and explain the concept of enlightened self-interest.
Summarize the four practical lessons from business ethics research.
Distinguish between instrumental and terminal values and explain their relationship to business ethics.
Identify and describe at least four of the ten general ethical principles.
Discuss what management can do to improve business ethics.
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3. Social Responsibility: Definition and Perspectives
Corporate Social Responsibility (CSR)
The idea that business has:
Social obligations above and beyond making a profit
Social obligations to constituent groups in society other than stockholders and beyond that prescribed by law
Organizations include financial, environmental, and social responsibility in their core business strategies.
Triple bottom line:
People, planet, profits
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

4. Social Responsibility: Definition and Perspectives (cont’d)
CSR for global and transnational corporations
Working from the bottom up, the global corporation should:
Make a profit
Obey the law
Be ethical in its practices
Be a good corporate citizen
CSR requires voluntary action
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5. What Is the Role of Business in Society?
The Classical Economic Model (Adam Smith)
An “invisible hand” promoted the public welfare.
The public interest was served by individuals pursuing their own economic self-interests.
According to the classical economic model of business, profitability and social responsibility are the same thing. The Socioeconomic Model
Business has an obligation to meet the needs of the many groups in society besides stockholders in its pursuit of profit.
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6. Arguments For and Against Corporate Social Responsibility
Business is unavoidably involved in social issues.
Business has the resources to tackle today’s complex societal problems.
A better society means a better environment for doing business.
Corporate social action will prevent government intervention.
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7. Arguments For and Against Corporate Social Responsibility (cont’d)
Arguments Against
Profit maximization ensures the efficient use of society’s resources.
As an economic institution, business lacks the ability to pursue social goals.
Business already has enough power.
Because business managers are not elected, they are not directly accountable to society.
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8. Social Responsibility Strategies
Reactive Strategy
Denying responsibility while striving to maintain the status quo by resisting change
Defensive Strategy
Resisting additional social responsibilities with legal and public relations tactics
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9. Social Responsibility Strategies (cont’d)
Accommodation Strategy
Assuming social responsibility only in response to pressure from interest groups or the government
Proactive Strategy
Taking the initiative in formulating and putting in place new programs that serve as role models for the industry
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10. The Ethical Dimension of Management
Ethics
The study of moral obligation involving the distinction between right and wrong
Business Ethics
Narrows the frame of reference to productive organizations
Also referred to as management ethics or organizational ethics
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11. Practical Lessons from Business Ethics Research
Ethical Hot Spots
Balancing work and family
Poor internal communications
Poor leadership
Work hours, work load
Lack of management support
Need to meet sales, budget, or profit goals
Little or no recognition of achievements
Company politics
Personal financial worries
Insufficient resources
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

12. Practical Lessons from Business Ethics Research (cont’d)
Pressure from Above
The problem of superiors pressuring subordinates to achieve results is widespread.
Managers’ responses to pressure from above
Consciously avoid putting undue pressure on subordinates (who may act unethically to relieve the pressure).
Prepare to deal with excessive organizational pressure.
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13. Practical Lessons from Business Ethics Research (cont’d)
Ambiguous Situations
Situations where there are no clear-cut ethical guidelines or ethical codes
Rationalization: How Good People End Up Doing Bad Things
Perceiving an objectively questionable action as normal and acceptable
A Call to Action
The deliberate and conscious action of a manager to do the right thing is an ethical and personal matter
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14. Personal Values as Ethical Anchors
Abstract ideals that shape one’s thinking and behavior
Instrumental value: Enduring belief that a certain way (mode) of behaving is appropriate in all situations
Terminal value: Enduring belief that a certain end-state of existence (being admired) is worth striving for
Identifying and Acting Upon Your Own Values
Basic personal values are taken for granted.
They are not arranged consciously in order of priority.
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15. Managerial Ranking of Values
Terminal Values
Self-respect
Family security
Freedom
A sense of accomplishment
Happiness
Instrumental Values
Honesty
Responsibility
Capability
Ambition
Independence
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16. Summary
Corporate responsibility is the idea that management has broader responsibilities than just making a profit.
The debate over the basic purpose of the corporation is long-standing.
Management scholars who advocate greater corporate social responsibility cite the iron law of responsibility.
Ethics research indicates that many employees have acted unethically, have been pressured to act unethically, desire ethical standards, and engage in rationalization to defend their behaviors.
Managers must pay attention to the instrumental and terminal values that comprise employee’s personal value systems.
There are at least ten general ethical principles that guide behavior are self-interests, personal virtues, religious injunctions, government requirements, utilitarian benefits, universal rules, individual rights, economic efficiency, distributive justice, and contributive liberty.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

17. Terms to Understand Corporate social responsibility Stakeholder audit
Iron law of responsibility
Reactive social responsibility strategy
Defensive social responsibility strategy
Accommodative social responsibility strategy
Proactive social responsibility strategy
Altruism
Enlightened self-interest
Corporate philanthropy
Ethics
Values
Instrumental value
Terminal value
Amoral managers
Ethical advocate
Whistle-blowing
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.