Social Responsibility and Managerial Ethics

Chapter 4
Social Responsibility and Managerial

Ethics
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition.
Copyright © 2005 Pearson Education Canada Inc. 1
What Is Social Responsibility?
“a business’s obligation, beyond that required by law
and economics, to pursue long-term goals that are good
for society” Robbins, et. al., 2006, P. 96
• The Classical View

– Maximize profits for the benefit of the stockholders
– Doing “social good” unjustifiably increases costs
• 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”
Exhibit 4.1 Approaches to Social
Responsibility
Obstructionist Defensive Accommodative Proactive

Approach Approach Approach Approach
Disregard Minimal Moderate Strong

for social commitment commitment commitment
responsibility to social to social to social
responsibility responsibility responsibility
No Social Responsibility High Social Responsibility
Source: Adapted from S.L. Wartick and P.L. Cochran, “The Evolution of the Corporate
Social Performance Model,” Academy of Management Review, October 1985, p. 766.
Values-based Management
• 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 are reflected in the decisions and
actions of its employees
Exhibit 4.3 Purposes of Shared
Values
SHARED
ORGANIZATIONAL
VALUES
Guide Managers' Shape Employee Influence Build Team Spirit

Decisions and Actions Behaviour Marketing Efforts
Managerial Ethics
• Ethics:
“The rules and principles that define right and
wrong conduct” Robbins, et. al., 2006, p. 103
• Four Views of Ethics
– Utilitarian view
– Rights view
– Theory of justice view
– Integrative social contracts theory
Managerial Ethics (cont’d)
• Utilitarian View
– Greatest good is provided for the greatest
number
• Encourages efficiency and productivity and is
consistent with the goal of profit maximization
• Rights View
– Respecting and protecting individual liberties
and privileges
• Seeks to protect individual rights of conscience, free
speech, life and safety, and due process
Managerial Ethics (cont’d)
• 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
• 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
Factors That Affect Employee Ethics
• Stages of moral development
• Individual characteristics
• Structural variables
• Organizational culture
• Issue intensity
Factors That Affect Employee Ethics
• Stages of moral development
• Individual characteristics
• Structural variables
• Organizational culture
• Issue intensity
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
1. Write down which applies most to you (Internal or External)
and explain why.
2. Get into your groups and try to figure out on average how
the group as a whole is motivated?
Exhibit 4.7 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
of Effect Consequences
Proximity to
How concentrated Victim(s)
is the effect of the Will harm be felt
action on the victim(s)? immediately?
How close are the

potential victims?
Ethics in an International Context
• Ethical standards are not universal

– Social and cultural differences determine acceptable
behaviours
– LIST THREE ITEMS YOU FEEL ARE OF
UTMOST IMPORTANCE TO YOU in regards to
ethics!
– IN YOUR GROUPS DISCUSS TWO ethics you all
have in COMMON
– IN YOUR GROUP find ONE ethic that you have
DIFFERENT
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.
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
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.
Ethical Leadership
• Managers must provide a good role model by:

– Being ethical and honest at all times
– Telling the truth
– Admitting failure and not trying to cover it up
– Communicating shared ethical values to employees
through symbols, stories, and slogans
– Rewarding employees who behave ethically and
punishing those who do not
– Protecting employees (whistleblowers) who bring to light
unethical behaviours or raise ethical issues
The Value of Ethics Training
• Training can make a difference in ethical

behaviours
• Training increases employee awareness of
ethical issues in business decisions
• Training clarifies and reinforces the standards
of conduct
• Employees are more confident of support when
taking unpopular but ethically correct stances
Thank You!

Social Responsibility and Managerial Ethics

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Chapter 4

Social Responsibility and Managerial

• The Classical View

• The Socio-economic View

Obstructionist Defensive Accommodative Proactive

Disregard Minimal Moderate Strong

No Social Responsibility High Social Responsibility

Guide Managers' Shape Employee Influence Build Team Spirit

• The Theory of Justice

How close are the

• Ethical standards are not universal

• A formal statement of an organization’s

• Managers must provide a good role model by:

• Training can make a difference in ethical

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