1. Corporate Social Responsibility
Obligation corporations have to constituencies and the nature and extent of those obligations
Focus on the “oughts” of conducting business
Constituencies include:
shareholders, customers, employees, specific communities, society at large, governments
Issue: constituencies may not share same expectations
Two Fundamental Perspectives
Efficiency vs. Social Responsibility

2. Efficiency Perspective
Maximize profits for the owners of the business
MANAGERS AS OWNERS
Self-interests of the
manager-owner are best
achieved by serving the
needs of society
MANAGERS AS AGENTS
Managers have no
obligation to act
on behalf of society
if it does not
maximize value for
the shareholders

3. Social Responsibility Perspective
Firms have responsibilities and obligations to society as a whole, not just shareholders
Key Stakeholders

4. regulate our activities Fight new restrictions
Corporate Responses
Defenders
Accommodators
Belief
We must fight against
efforts to restrict or
regulate our activities
and profit-
making potential.
We will change when
legally compelled to
do so.
Focus
Maximize profits.
Find legal loopholes.
Fight new restrictions
and regulations.
Maximize profits.
Abide by
the letter of the law.
Change when
legally compelled to
do so.
Adapted from Exhibit 2.2

5. Corporate Responses (cont.)
Reactors
Anticipators
Belief
We should respond to
significant pressure even
if we are not legally
required to.
We owe it to society to
anticipate and avoid
actions with harmful
consequences, even if
we are not pressured or
legally required to do so.
Focus
Protect profits. Abide
by the law. React to
pressure that could
affect business results.
Obtain profits, Abide
by the law. Anticipate
harmful consequences
independent of
pressures and laws.
Adapted from Exhibit 2.2

6. Strategic Corporate Social Responsibility Perspective
Three fundamental criteria guide managers:
Outside-In
Approach
Outside-Out
Approach
Inside-Out
Approach
Look outside
company at
issues
that
company has
an impact
upon
Look at social
issues in
general in
terms of the
extent to
which they
are
problematic
Look inside
company at
issues
that are
important
to the
company

7. Ethics What are ethics? What is managerial ethics?
A set of principles governing right and wrong behavior by individuals and groups
What is managerial ethics?
Concerned with morality and standards of business behavior
Why is it important to consider business ethics?
Good ethical behavior can result in positive consequences for the organization
Unethical behavior results in negative consequences

8. The Development of Individual Ethics

9. Basic Approaches to Ethics
Ethical Dilemmas
The choice between two competing but arguably valid options
Ethical Lapses
Decisions that are contrary to an individual’s stated beliefs and policies of the company
Frameworks for ethical decision making:
Utilitarian approach
Moral rights approach
Universalism approach
Justice approach

10. Utilitarian Approach Which will result in the “greatest good?”
Focused on the consequences of an action
Cost/benefit analysis – choose decision in which benefits most outweigh costs
Different people may see the outcome differently in terms of good or bad

11. Moral Rights Approach
Focused on moral standing of actions, independent of their consequences
Some things are simply “right” or “wrong”
When two actions have moral standing, then the positive or negative consequences of each will determine the more ethical one

12. Universal Approach
“Do unto others as you would have them do unto everyone, including yourself.”
The “Golden Rule”
Choose a course of action you believe can apply to all people under all situations
Decisions or actions that limit rights like freedom and autonomy generally lack moral justification and are unethical

13. Justice Approach
Focuses on the how equitable the process and outcomes are
Distributive justice
Costs and benefits should be equitably distributed
Equitable distribution is based on performance
Procedural justice
Rules should be impartially applied
Ensure that people consent to the decision-making process
Ensure that the process is administered impartially
Compensatory justice
Those damaged should be compensated
If distributive and procedural justice fail, those hurt by inequitable distribution of rewards are compensated

14. Moral Intensity in Ethical Decision Making
Consequences
Social
Moral intensity
The degree to which people see an issue as an ethical one
6 components
Magnitude of the
Consequences
Probability
of Effect
Moral
Intensity
Concentration
of Effect
Temporal
Immediacy
Proximity

15. How Managers Make Better Ethical Decisions
By improving the ethical climate through improving their own facility with ethical reasoning.
By becoming more aware of the factors of moral intensity and the basic ethical reasoning systems
By developing their skill at ethical decision making and making more ethically consistent decisions.

16. How Firms Make Better Ethical Decisions
Code of ethics: a formal one-to-three page statement outlining the types of behavior that are and are not acceptable
Codes generally stress:
Being a good “organization citizen”
Guiding employee behavior away from unlawful or improper acts that could harm the organization

17. Successfully Implementing Codes of Ethics

18. The Government: Foreign Corrupt Practices Act
Cannot corrupt actions of foreign officials, politicians, or candidates
Cannot make payments to any person when they have "reason to know" that the payments might be used to corrupt the behavior of officials
Must take steps to provide "reasonable assurance" that transactions are in compliance with the law and to keep detailed records of them