spe3002 entrerpeneurship - education on ethics and socia (1)

7/30/2019 SPE3002 Entrerpeneurship - Education on Ethics and Socia (1)

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Week 7


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Social Responsibility and Managerial Ethics


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Social Responsibility andManagerial Ethics


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LEARNING OUTLINE .

What Is Social Responsibility?Contrast the classical and socio-economicviews of social responsibility.

Discuss the role that stakeholders play inthe four approaches to social

responsibility.


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LEARNING OUTLINE (cont d)

Social Responsibility and Economic

PerformanceExplain what research studies have shownabout the relationship between anorganizations social involvement and itseconomic performance.


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LEARNING OUTLINE (cont d) .

Values-based Management

Discuss the four purposes that sharedvalues serve.

Describe the relationship of values-basedmanagement to ethics.


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LEARNING OUTLINE (cont d) Managerial Ethics

Contrast the four views of ethics.

Discuss the factors that affect ethical and

unethical behavior.Discuss the six determinants of issue intensity.

Explain codes of ethics and how their effectiveness can be improved.

Describe the important roles managers play inencouraging ethical behavior.

Discuss how managers and organizations canprotect employees who raise ethical issues or

concerns.


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What Is Social Responsibility? The Classical View

Maximize profits for the benefit of the stockholdersDoing social good unjustifiablyincreases costs


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What Is Social Responsibility? (contd)

The Socio-economic View

Management should also protect andimprove societys welfare Corporations are responsible not onlyto stockholdersFirms have a moral responsibility tolarger society to do the right thing


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Approaches to Social Responsibility

Adapted from S.L. Wartick and P.L. Cochran, The Evolution of the Corporate Social PerformanceModel, Academy of Management Review , October 1985, p. 766.

Defensive Approach

Minimal commitment

to social responsibility

Accommodative Approach

Moderate commitment


Proactive Approach

Strong commitment


Obstructionist Approach

Disregard for social

responsibility


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Arguments For and Against Social Responsibility

For

Public expectationsLong-run profitsEthical obligationPublic image

Superiority of prevention over cure

For

Better environmentDiscouragement of further governmentalregulationBalance of responsibilityand powerStockholder interestsPossession of resources


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Arguments For and Against Social Responsibility

Against Violation of profit maximizationDilution of purposeCosts

Too much powerLack of skillsLack of accountability


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Values-based Management Values-based Management

Managers establish and uphold anorganizations shared values

Purposes of Shared ValuesGuiding managerial decisionsShaping employee behavior Influencing the direction of marketing effortsBuilding team spirit

The Bottom Line on Shared Corporate ValuesAn organizations values are reflected in thedecisions and actions of its employees


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Purposes of Shared Values

Build Team Spirit Guide Managers '

Decisions and Actions Shape Employee

behavior Influence

Marketing Efforts

SHARED ORGANIZATIONAL

VALUES


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Cust. satisfaction 77%

Ethics/integrity 76%Accountability 61%

Respect others 59%

Open comm. 51%

Profitability 49%

Teamwork 47%

Innovation 47%

Cont. learning 43%

Source : AMA Corporate Values Survey, (www.amanet.org), October 30, 2002.

Positive environ. 42%

Diversity 41%Community service 38%

Trust 37%

Social responsibility 33%

Security/safety 33%

Empowerment 32%

Job satisfaction 31%

Have fun 24%


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Managerial Ethics Ethics Defined

The rules and principles that define

right and wrong conductFour Views of Ethics

Utilitarian view

Rights viewTheory of justice viewIntegrative social contracts theory


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Managerial Ethics (cont d)

Utilitarian ViewGreatest good is provided for

the greatest number Encourages efficiency and

productivity and is consistentwith the goal of profitmaximization


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Managerial Ethics (cont d) Rights View

Respecting and protecting

individual liberties andprivileges Seeks to protect individual

rights of conscience, freespeech, life and safety, anddue process


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Managerial Ethics (cont d) Integrative Social Contracts Theory

Ethical decisions should be basedon existing ethical norms inindustries and communities Based on integration of the

general social contract and thespecific contract betweencommunity members


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Factors That Affect Ethical and Unethical Behavior

Ethical Dilemma

Stage of Moral Development

Organizational Culture

Structural Variables

Individual Characteristics

Issue Intensity

Moderators Ethical/Unethical Behavior


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Factors Affect Employee Ethics Stages of moral developmentIndividual characteristics

Structural variablesOrganizational cultureIssue intensity

A measure of independence from outside influencesLevels of Individual Moral Development

Pre-conventional levelConventional level

Principled level


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Stage of moral development interacts with:Individual characteristicsThe organizations structural design The organizations culture

The intensity of the ethical issue


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Stages of Moral Development

Based on L. Kohlberg, Moral Stages and Moralization: The Cognitive -DevelopmentApproach, in T. Lickona (ed.). Moral Development and Behavior: Theory, Research, and Social

Issues (New York: Holt, Rinehart & Winston, 1976), pp. 34 35.

6. Following self -chosen ethical principles even if they violate the law

5. Valuing rights of others and upholding absolutev alues and rights regardless of the majority

sopinion

4. Maintaining conv entional order by f ulf illing obligationsto which y ou hav e agreed

3. Liv ing up to what is expected by people close to y ou2. Following rules only when doing so is in your immediate interest

1. Sticking to rules to av oid phy sical punishment

Preconventional

Conv entional

Lev el Description of Stage

Principled


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Research Conclusions: People proceed through the stages of moral development sequentially There is no guarantee of continued moral development Most adults are in Stage 4 (good corporate citizen)


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Stages of moral developmentIndividual characteristics


Values Basic convictions about what is right or wrong on a broad range of issuesEgo strength A personality measure of the strength of a persons convictions

Factors Affect Employee Ethics


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Locus of ControlA 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



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Stages of moral developmentIndividual characteristicsStructural variablesOrganizational cultureIssue intensity

Organizational characteristics and mechanisms thatguide and influence individual ethics:

Performance appraisal systems Reward allocation systems Behaviors (ethical) of managers An organizations culture Intensity of the ethical issue



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Good structural design minimizes ambiguityand uncertainty and fosters ethical behavior



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Cultures high in risk tolerance, control, andconflict tolerance are most likely to encouragehigh ethical standards

Weak cultures have less ability to encourage high

ethical standards



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Determinants of Issue Intensity

Issue Intensity

Consensus of Wrong

Proximity to Victim(s)

Concentration of Effect

Greatness of Harm

Immediacy of Consequences

Probability of Harm

How many people will be harmed?

How concentrated is the effect of the

action on the victim(s)?

How likely is it that this action

will cause harm?

Will harm be felt immediately?

How much agreement is there that this action is wrong?

How close are the potential victims?


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Ethics in an International Context Ethical standards are not

universalSocial and cultural differencesdetermine acceptable Behaviors


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The Global Compact Human Rights

Principle 1: Support and respectthe protection of internationalhuman rights within their sphere of influencePrinciple 2: Make sure businesscorporations are not complicit inhuman rights abuses

Source: The Global Compact Web Site (www.unglobalcompact.org), November 7, 2004.


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The Global Compact Labor Standards

Principle 3: Freedom of association andthe effective recognition of the right to

collective bargainingPrinciple 4: Eliminate all forms of forcedand compulsory labour

Principle 5: Abolish child labour Principle 6: Eliminate discrimination inrespect of employment and occupation



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The Global Compact (cont d) Environment

Principle 7: Support a precautionaryapproach to environmental challenges

Principle 8: Undertake initiatives topromote greater environmentalresponsibilityPrinciple 9: Encourage the developmentand diffusion of environmentally friendlytechnologies



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The Global Compact (cont d) Anticorruption

Principle 10: Work against all formsof corruption, including extortionand bribery



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How To Improve Ethical Behavior in an Organization

Hire individuals with high ethicalstandards.

Establish codes of ethics anddecision rules.

Lead by example.

Delineate job goals andperformance appraisal mechanisms.


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How To Improve Ethical Behavior in an Organization

Provide ethics training.

Conduct independent socialaudits.

Provide support for individuals

facing ethical dilemmas.


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Code of Ethics

A formal statement of an organizationsprimary values and the ethical rules itexpects its employees to follow

Be a dependable organizational citizenDont do anything unlawful or improper that will harm the organization

Be good to customers

F.R. David, An Empirical Study of Codes of Business Ethics: A Strategic Perspective.Paper presented at the 48 th Annual Academy of Management Conference, Anaheim, California,August 1988.


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Effective Use of a Code of Ethics

Develop a code of ethics to guidedecision making

Communicate the code regularlyHave all levels of managementshow commitment to the code

Publicly reprimand and consistentlydiscipline those who break thecode


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Examining Ethics


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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 tocover it up

Communicating shared ethical valuesto employees through symbols, stories,and slogans


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Ethical Leadership Managers must provide a good role model by:

Rewarding employees who behave

ethically and punishing those who donot

Protecting employees ( )who bring to light unethical behaviorsor raise ethical issues


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The Value of Ethics Training Training can make a difference inethical behaviorsTraining increases employee awarenessof ethical issues in business decisionsTraining clarifies and reinforces thestandards of conduct

Employees are more confident of support when taking unpopular butethically correct stances

spe3002 entrerpeneurship - education on ethics and socia (1)

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