Ethics and Social Ethics and Social Responsibility in Responsibility in

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I. Ethics I. Ethics

What are ethics?What are ethics?

Moral principles and values that Moral principles and values that govern the actions of an individual govern the actions of an individual or group.or group.

II.II. Factors Influencing Ethical Factors Influencing Ethical Marketing BehaviorMarketing Behavior

A.A. Societal CultureSocietal Culture The set of values, ideas, and attitudes The set of values, ideas, and attitudes

that are learned and shared among that are learned and shared among members of a group.members of a group.

Western culture: Judeo-Christian valuesWestern culture: Judeo-Christian values Diverse Indian cultureDiverse Indian culture

Values and standards: reflected in lawsValues and standards: reflected in lawsExample – protection of Example – protection of

propertyproperty

MARKETING NEWSNET

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Internet Piracy and Campus PiratesInternet Piracy and Campus Pirates

II. Factors (cont.)II. Factors (cont.)

B.B. Business Culture Business Culture 1. Ethics of Exchange1. Ethics of Exchange

*Prior to 1960’s: caveat emptor*Prior to 1960’s: caveat emptor*Consumer Bill of Rights (changed business culture) *Consumer Bill of Rights (changed business culture)

Safety Safety Be informedBe informed

ChooseChooseBe heardBe heard

2. Ethics of Competition2. Ethics of Competition*Economic espionage – collecting competitor trade *Economic espionage – collecting competitor trade

secrets and proprietary information. secrets and proprietary information. *Economic espionage differs from competitive analysis*Economic espionage differs from competitive analysis

II. Factors (cont.)II. Factors (cont.)

C.C. Corporate CultureCorporate Culture• Management tries to communicate ethical Management tries to communicate ethical

standards through the corporate code of standards through the corporate code of ethics.ethics.

• Code of Ethics- a formal written statement Code of Ethics- a formal written statement of ethical principles and rules of conduct to of ethical principles and rules of conduct to guide employee decision making. guide employee decision making.

• What does it address?What does it address?• Will it ensure ethical behavior within the Will it ensure ethical behavior within the

organization?organization?

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FIGURE 4-3FIGURE 4-3 American Marketing American Marketing Association Code of EthicsAssociation Code of Ethics

III. Social ResponsibilityIII. Social Responsibility

The idea that organizations are part of The idea that organizations are part of a larger society and are accountable to a larger society and are accountable to that society for their actions.that society for their actions.

Concepts of Social ResponsibilityConcepts of Social ResponsibilityProfit responsibilityProfit responsibilityStakeholder responsibilityStakeholder responsibilitySocietal responsibilitySocietal responsibility

Green marketing – the marketing of products Green marketing – the marketing of products that are presumed to be environmentally safethat are presumed to be environmentally safe

Social ResponsibilitySocial Responsibility

Companies that show societal Companies that show societal responsibility have been rewarded.responsibility have been rewarded.

1.1. Benefits from favorable word of Benefits from favorable word of mouthmouth

2.2. Typically outperform less Typically outperform less responsible responsible

companies on financial companies on financial performanceperformance

PHILANTHROPIC Responsibilities Be a good Corporate Citizen. Contribute resources to the community; improve quality of life.

ETHICAL Responsibilities Be ethical.Obligation to do what is right,

just and fair; Avoid harm.

LEGAL Responsibilities

Obey the Law Law is society’s codification of right and wrong;

Play by the rules

ECONOMIC Responsibilities

Be Profitable The foundation upon which all others rest

Source: Carroll (1991)

The Pyramid of Social Responsibility

Level 1 Level 1 ECONOMICECONOMIC

ResponsibilitiesResponsibilities

Be profitableBe profitable

The foundation upon which all The foundation upon which all other levels restother levels rest

Economic ComponentsEconomic Components It is important to perform in a manner It is important to perform in a manner

consistent with maximising earnings per consistent with maximising earnings per shareshare

It is important to be committed to being as It is important to be committed to being as profitable as possibleprofitable as possible

It is important to maintain a strong It is important to maintain a strong competitive positioncompetitive position

It is important to maintain a high level of It is important to maintain a high level of operational efficiencyoperational efficiency

It is important that a successful firm be It is important that a successful firm be defined as one that is consistently profitable.defined as one that is consistently profitable.

Level 2 LEGAL

ResponsibilitiesObey the Law

Law is society’s codification of right and wrong; Play by the rules

Legal ComponentsLegal Components It is important to perform in a manner It is important to perform in a manner

consistent with expectations of government consistent with expectations of government and the law.and the law.

It is important to comply with various national It is important to comply with various national and supra-national laws and regulations.and supra-national laws and regulations.

It is important to be a law-abiding corporate It is important to be a law-abiding corporate citizen.citizen.

It is important that a successful firm be It is important that a successful firm be defines as one that fulfils its legal obligations.defines as one that fulfils its legal obligations.

It is important to provide goods and services It is important to provide goods and services that at least meet the minimal legal that at least meet the minimal legal requirements.requirements.

Level 3 ETHICAL

ResponsibilitiesBe Ethical

Obligation to do what is right, just and fair; Avoid harm.

Ethical ComponentsEthical Components It is important to perform in a manner that is It is important to perform in a manner that is

consistent with the expectations of societal consistent with the expectations of societal mores and ethical norms.mores and ethical norms.

It is important to recognise and respect new or It is important to recognise and respect new or evolving ethical/moral norms adopted by society.evolving ethical/moral norms adopted by society.

It is important to prevent ethical norms from It is important to prevent ethical norms from being compromised in order to achieve corporate being compromised in order to achieve corporate goals.goals.

It is important that good corporate citizenship be It is important that good corporate citizenship be defined as doing what is expected morally or defined as doing what is expected morally or ethically.ethically.

It is important to recognise that corporate It is important to recognise that corporate integrity and ethical behaviour go beyond mere integrity and ethical behaviour go beyond mere compliance with laws and regulations.compliance with laws and regulations.

Level 4 PHILANTHROPIC

ResponsibilitiesBe a Good Corporate Citizen

Contribute resources to the community; improve quality of life

Philanthropic Philanthropic ComponentsComponents It is important to perform in a manner It is important to perform in a manner

consistent with the philanthropic and consistent with the philanthropic and charitable expectations of society.charitable expectations of society.

It is important to assist the fine and It is important to assist the fine and performing arts.performing arts.

It is important that managers and employees It is important that managers and employees participate in voluntary and charitable participate in voluntary and charitable activities within their local communities.activities within their local communities.

It is important to provide assistance to public It is important to provide assistance to public and private educational institutions.and private educational institutions.

It is important to assist voluntarily those It is important to assist voluntarily those projects that enhance a community’s ‘quality projects that enhance a community’s ‘quality of life’.of life’.

Moral Management and Moral Management and StakeholdersStakeholders

Three Moral Types:Three Moral Types:Immoral ManagersImmoral ManagersAmoral ManagersAmoral ManagersMoral ManagersMoral Managers

Immoral ManagersImmoral Managers

Characterised by:Characterised by: managers whose decisions, actions and managers whose decisions, actions and

behaviour suggest an active opposition to behaviour suggest an active opposition to what is deemed to be right and ethicalwhat is deemed to be right and ethical

These managers care only about their or These managers care only about their or their organisation’s profitability or successtheir organisation’s profitability or success

Legal issues are there to be circumventedLegal issues are there to be circumvented Strategy is to exploit opportunities for Strategy is to exploit opportunities for

personal or organisational gain at any costpersonal or organisational gain at any cost

Amoral ManagersAmoral Managers Amoral Managers are neither immoral Amoral Managers are neither immoral

nor moral but are not sensitive to the nor moral but are not sensitive to the fact that their everyday business fact that their everyday business decisions may have a deleterious effect decisions may have a deleterious effect on others.on others.

These managers may lack an ethical These managers may lack an ethical perspective in their organisational lives.perspective in their organisational lives.

Typically their orientation is to the Typically their orientation is to the ‘letter of the law’ as their ethical guide.‘letter of the law’ as their ethical guide.

Sometimes we can have a sub category Sometimes we can have a sub category - the - the unintentionalunintentional amoral manager amoral manager

Un-intentional Amoral Un-intentional Amoral ManagerManager

These managers are un-intentionally These managers are un-intentionally amoral in their behaviour. They tend to amoral in their behaviour. They tend to see ethical issues are for their private see ethical issues are for their private lives not their business lives, where lives not their business lives, where different rules apply.different rules apply.

They tend to believe that business They tend to believe that business activity resides outside the sphere to activity resides outside the sphere to which moral judgements may apply.which moral judgements may apply.

Amoral managers here may not Amoral managers here may not consider a role for ethics in business.consider a role for ethics in business.

The Moral ManagerThe Moral Manager

In moral management, ethical norms that In moral management, ethical norms that adhere to a high standard of right adhere to a high standard of right behaviour are employedbehaviour are employed

Moral managers not only conform to Moral managers not only conform to accepted and high levels of professional accepted and high levels of professional conduct, they also lead on issues of ethical conduct, they also lead on issues of ethical behaviour.behaviour.

The law is seen as giving a minimal guide The law is seen as giving a minimal guide to ethical behaviour. The ‘spirit of the law’ to ethical behaviour. The ‘spirit of the law’ in more important than the ‘letter of the in more important than the ‘letter of the law’. The objective is to operate well above law’. The objective is to operate well above what the law mandates the firm to do.what the law mandates the firm to do.

The Moral ManagerThe Moral Manager

Moral mangers want to be profitable and Moral mangers want to be profitable and ethical.ethical.

Moral mangers will use ethical principles Moral mangers will use ethical principles to base their judgements upon - justice, to base their judgements upon - justice, rights, the Golden Rule, utilitarianism etc.rights, the Golden Rule, utilitarianism etc.

When ethical dilemmas arise, moral When ethical dilemmas arise, moral managers and moral companies will tend managers and moral companies will tend to assume leadership in their companies to assume leadership in their companies and industries.and industries.

Compare this model with the Reidenbach & Robin Model

FinallyFinally

Though the concept of social Though the concept of social responsibility may change from time responsibility may change from time to time, the pyramid model gives us to time, the pyramid model gives us a framework for understanding the a framework for understanding the evolving nature of the firm’s evolving nature of the firm’s economic, legal, ethical and economic, legal, ethical and philanthropic performance.philanthropic performance.

Marketing and EthicsMarketing and Ethics

From Buyer Beware to Seller From Buyer Beware to Seller BewareBeware

See:See:Smith, N.C., (1995) Marketing Strategies Smith, N.C., (1995) Marketing Strategies for the Ethics Era, for the Ethics Era, Sloan Management Sloan Management ReviewReview, Summer, pp. 85-97., Summer, pp. 85-97.

Marketing Ethics ContinuumMarketing Ethics Continuum

Producer Interests Producer InterestsFavoured Less favoured

Consumer Interests Consumer InterestsLess Favoured More Favoured

Caveat Industry Ethics Consumer CaveatEmptor Practice Codes Sovereignty Venditor

Profit General business Codes of Capability Consumermaximisation practice (average individual satisfaction

across all firms) firms Information

Subject to Practices of Industry Choicelegal constraints specific industries codes

Practice of Professional best firms codes

Source: N C Smith (1995)

Some Ethical MaximsSome Ethical Maxims

Marketers often rely on simple maxims to evaluate their Marketers often rely on simple maxims to evaluate their marketing practices. While useful, they generally lack marketing practices. While useful, they generally lack

specific guidance.specific guidance.

Do unto others as you would have them do unto you.Do unto others as you would have them do unto you. Would you be embarrassed in front of your family/ friends/ Would you be embarrassed in front of your family/ friends/

colleagues if the media publicised your decision ?colleagues if the media publicised your decision ? Good ethics is in the long term interests of the firm.Good ethics is in the long term interests of the firm. Would an objective panel of professional colleagues view Would an objective panel of professional colleagues view

my actions as proper ?my actions as proper ? When in doubt, don’t.When in doubt, don’t.

Read the article in the reading list entitled Read the article in the reading list entitled ‘Ethics - a view from the ‘Ethics - a view from the trenches’trenches’