Amity Business

School
Learning Objectives
1. Define social responsibility and trace its historical
development.
2. Name and discuss three levels of commitment to social
responsibility.
3. Compare and contrast two divergent views on corporate
social responsibility.
4. Define and distinguish ethics from social responsibility.
5. Discuss individuals’ and organizations’ responsibility for
ethical behavior and list sources of unethical behavior.
6. Identify the three ethical standards and discuss how
they affect decision making.
 Amity Business
School
Learning Objectives
7. Discuss steps managers can take to encourage ethical
behavior in organizations.
8. Discuss the ethical challenge associated with efforts to
“manage” employee work-related attitudes, motivation,
and behavior.
9. Discuss the ethical issues associated with workplace
diversity.
 Amity Business
School
The Nature of Social Responsibility
• Social responsibility
– An organization’s obligation to engage in activities that
protect and contribute to the welfare of society.
• The law and social responsibility

Social
SocialResponsibility
Responsibility

illegal
illegaland
and legal
legaland
and illegal
illegaland
and legal
legaland
and
irresponsible
irresponsible irresponsible
irresponsible responsible
responsible responsible
responsible
 Amity Business
School
An Historical Perspective
• Principle of charity
– Suggests that those who have plenty should give to
those who do not.
• Principle of stewardship
– Suggests that organizations have an obligation to see
that the public’s interests are served by corporate action
and the ways in
which profits are spent.
 Amity Business
School
Historical Phases of Social
Responsibility
Social
SocialResponsibility
Responsibility
1900’s
1900’s 1930’s
1930’s 1960’s
1960’s

Phase
PhaseOne:
One: Phase
PhaseTwo:
Two: Phase
PhaseThree:
Three:
Profit -Maximizing
Profit-Maximizing Trusteeship
Trusteeship Quality- of -Life
Quality-of-Life
Management
Management Management
Management Management
Management
Business’s
Business’sprimary
primary Corporate
Corporatemanagers
managers Managers
Managershave havetotodo
do
responsibility to
responsibility tosociety
society need to maintain
need to maintainan an more than achieve
more than achieve
isisto underwrite
to underwritethe
the equitable balance
equitable balance economic
economicgoals, goals,but
but
country’s economic
country’s economic among
amongthe thecompeting
competing they should manage
they should managethe the
growth
growthandandto
tooversee
oversee interests of all
interests of allgroups
groups quality-
quality- of-
of- life by helping
quality-of-life by helping
the accumulation
the accumulationof of with a stake in
with a stake inthethe develop
developsolutions
solutionsforfor
wealth.
wealth. organization.
organization. society’s ills.
society’s ills.
 Amity Business
School
An Historical Perspective on Social
Responsibility
100%
Phase Three: Quality of Life

75%

Proportion of Phase Two:

Firms Adopting Trusteeship
Each Perspective 50%

Phase One:
Profit Maximization
25%

1800 1900 2000

FIGURE 3–
3–1
 Amity Business
School

Employees Society
at Large
Organizational
Suppliers of:
Stakeholders Capital Allies
Raw Materials
Human Resources Organization
Information

Customers Competitors

Regulatory Agencies and

Influence Groups:
Governments
Unions
Professional Associations
Interest Groups
FIGURE 3–
3–2
 The Social Audit
The Needs
Amity Business
of Society School

An Organization’s Gap Analysis

Social Goals Measurement Goal Successes
(e.g. Improving
of Social Goal Failures
Environment,
Performance Changes Needed
Increasing
Employment)

A detailed
examination and
evaluation of an Organizational
Resources
organization’s
social performance

Report to Report to Internal Report to External

Management Stakeholders Stakeholders
Organizational Goals Organizational Goals Organizational Goals
Goal Successes Goal Successes Goal Successes
Goal Failures Goal Failures Goal Failures
Social Exposures Changes Needed Future Goals
Changes Needed

FIGURE 3–
3–3
 Amity Business
School
Levels and Types of Social Commitment

Social Social Social

Obligation Responsibility Responsiveness

Low High

Reactive Prescriptive Proactive

Proscriptive* Does more than Anticipates and
required by law prevents problems
Adheres to legal Does more than Searches for socially
requirements required by economic responsible acts
considerations
Adheres to economic Avoids public stands Takes public stands on
considerations on issues issues
*Proscriptive means the firm reacts when its action is called (or threatened to be called) to the public’s attention.

TABLE 3–
3–3
 Recognizing that all human activities affect the natural
Minnesota
environment, the people of Minnesota PowerAmity are Business
sensitive
School
to the environmental effects of our conduct as individuals
Power’s
and collectively as a company.
We will be leaders in environmental stewardship. And,
Environmental
consistent with public policy, we will:
Ethic
• Meet or surpass all environmental compliance criteria.
• Seek and adopt safeguards to prevent injury to the
environment, and be prepared to respond quickly should
an accident occur.
• Promote land, air, water and energy conservation by
encouraging customers and employees to use our
products and services efficiently.
• Solicit public and regulatory agency views about
environmental concerns and company activities.
In addition, we seek ways to:
• Reduce adverse environmental impacts of our activities.
• Prevent waste by stressing efficiency, recycling and
reduced consumption.
• Enhance the environment as we carry out our
responsibilities.
Source: Minnesota Power—
Environmental Ethic, 1998. • Demonstrate conservation of land, air, water and energy.
FIGURE 3–
3–4
 Amity Business
School
Diverging Views on Social
Responsibility
• Arguments for social responsibility
– The assumption of social responsibility balances
corporate power with corporate responsibilities.
– The voluntary assumption of social responsibility
discourages the creation and imposition of of
government regulations.
– Acts of social responsibility by organizations help correct
the social problems that organizations create.
– Organizations, as members of society, have a moral
obligation to help society deal with its problems and to
contribute to its welfare.
 Amity Business
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Diverging Views… (cont’d)
• Arguments against social responsibility
– Socially responsible behavior lowers operating efficiency
and weakens the ability to offer goods and services at
the lowest possible competitive cost.
– Socially responsible behavior costs reduce dividends,
lower wages, and increase consumer prices.
– Social responsibility may conflict with organizational
goals for profit making.
– Assuming social responsibilities makes organizations too
powerful.
– Business persons are not trained to deal with social
problems.
 Amity Business
The Growth of Attention to Social Issues School

Much

Amount of Attention
Little

1950 1960 1970 1980 1990

Phase I Phase II Phase III

Gestation and Innovation Development Maturity and
and Expansion Institutionalization

Source: L. E. Preston. 1986. Social issues in management: A evolutionary perspective. In D. A. Wren and J. A. Pearce (eds.), Papers
dedicated to the development of modern management. Chicago: Academy of Management, 52. Copyright 1986 by Academy of
Management. Reproduced with permission of Academy of Management in the format Textbook via Copyright Clearance Center. FIGURE 3–
3–5
 Amity Business
School
The Nature of Managerial Ethics
• Ethics
– The set of standards and code of conduct that defines
what is right, wrong, and just in human actions.
• Sources of ethics
– Socialization—the process through which people develop
beliefs (social values, norms, and mores) about what is
right, wrong, and just.
• Organizations teaching ethics: religious, educational,
cultural, and family.
 Amity Business
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Moral Development Models
• Ethic of care
– An act is judged as ethical depending on whether the act
derives from feelings, emotions, and empathy for
others.
• Ethic of justice
– Abstract rules (personal
moral principles) are used
to define which actions are
fair and which actions are
not.
 Amity Business
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Managerial Ethics
• Managerial ethics and responsibilities
– The application of personal ethics within the context of
the management of organizations.
– Ethical responsibilities:
• Personal decisions and actions
• Actions taken at the direction of superior
• Actions taken by subordinates following orders
• Inaction that allows unethical behavior to occur
 Amity Business
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An Organization’s Ethical
Responsibility
• Top management’s responsibilities
– Infuse ethical behavior into the organizational culture.
– Provide role models for ethical behavior.
– Punish unethical behavior when it occurs.
– Make explicit statements of what ethical conduct is.
– Establish a ethical code of conduct.
– Encourage the reporting of unethical conduct
(whistleblowing) and protect those who report it.
 Amity Business
School
Theories Affecting Ethical Standards
• Utilitarian theory
– An action is considered morally right if its consequences
for everyone affected by the action are greater than
those which would be realized by a different action.
• Rights theory
– Decision makers’ paramount concern is respecting the
moral and/or legal rights to which people are entitled.
• Procedural justice is applied to ensure that, while all
individual outcomes may not be equal, the process of
outcome allocation is perceived as fair and impartial.
 Amity Business
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Ethical Dilemmas
• Ethical dilemmas
– Situations that arise when managers attempt to balance
the utilitarian (future-oriented) ethic and the formalistic
(perpetuating rights and the status quo) ethic.
 Amity Business
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Encouraging Ethical Behavior
• Encourage ethical behavior in short-term by:
– Hiring persons who are not prone to unethical behavior.
– Making public statements (e.g., a code of ethics) about
the importance of ethical behavior.
– Developing policies that specify ethical objectives.
– Rewarding ethical behavior; punishing unethical
behavior.
– Avoiding competitive situations where there is a
potential for unethical behavior.
– Using groups to make decisions requiring moral
judgment.
 Amity Business
Individual Belief Systems
Locus of Control
School

Cognitions
Ethical/
Ethical Stage of
Unethical
Dilemma Cognitive Moral
Behavior
Development

The SITUATIONAL FORCES

Interactionist Immediate Job Context

Reinforcement
Model of Ethical Job Pressures

Decision Making Organizational Culture

Responsibility for
in Organizations Consequences

Characteristics of the Work

Role Taking
Resolution of Moral Conflict
Source: Modified from L. K. Trevino. 1986. Ethical
Decision Making in Organizations: A Person-Situation
Interactionist Model. Academy of Management
Review 11:603. FIGURE 3–
3–7
 Amity Business
School
Diversity—A Contemporary Issue of Ethics and
Social Responsibility

• Organizational diversity
– The goal of having a heterogeneous work group where
no one group occupies a majority position, and all
members are expected to work effectively with people
different from themselves.
• Why value diversity?
– Diversity is ethical.
– Diversity is socially responsible.
– Diversity is good business (competitive advantage).