1. Making Ethical Decisions and Managing a Socially Responsible Business
Chapter 3 1 1

2. Chapter 3 Learning Goals
What philosophies and concepts shape personal ethical standards, and what are the stages of ethical development?
How can managers influence organizational ethics?
What are the techniques for creating employee ethical awareness?
What is social responsibility?

3. Chapter 3 Learning Goals (cont’d.)
How do businesses meet their social responsibilities to various stakeholders?
What are the global and domestic trends in ethics and social responsibility?

4. Ethics:
a set of moral standards for judging whether something is right or wrong

5. Learning Goal 1
What philosophies and concepts shape personal ethical standards, and what are the stages of ethical development?
Utilitarianism approach
Justice approach
Three stages of ethical development
Preconditional ethics
Conventional ethics
Postconventional ethics

6. Individual Business Ethics
1. Utilitarianism
the consequences of an act determine whether it is right or wrong
2. Individual Rights
human rights, legal rights
3. Justice
what is fair according to societal standards
4. Stages of Ethical Development
preconventional, conventional, postconventional 2 2

7. Types of Justice 2 ways that people judge fairness: Procedural justice
Is the process fair?
Distributive justice
Is the result fair? 2 2

8. Learning Goal 2 How can managers influence organizational ethics?
Recognize the categories of unethical business actions
When faced with ethical dilemmas, teach employees to use
The three-question test
Front page of the newspaper test
Management should lead by example

9. How Organizations Influence Ethical Conduct
1. Recognizing Unethical Business Actions
2. Resolving Ethical Problems in Business
3. Ethics Training
4. Establishing a Formal Code of Ethics 2 2

10. Types of Unethical Business Actions
1. Recognizing Unethical Business Actions
Types of Unethical Business Actions
1. Taking things that don’t belong to you
2. Saying things you know aren’t true
3. Giving or allowing false impressions
4. Buying influence or engaging in a conflict of interest
5. Hiding or divulging information
6. Taking unfair advantage
7. Committing improper personal behavior 2 2

11. Types of Unethical Business Actions
1. Recognizing Unethical Business Actions
Types of Unethical Business Actions
8. Abusing another person
9. Permitting organizational abuse
10. Violating the rules
11. Condoning unethical actions 2 2

12. “Cyberslacking” on the Job
Personal use of the Internet at work is a concern for many employers
Of the time employees spend online at work, 1/3 of it is spent ‘recreationally’
How employees slack on the Internet:
Shopping
Sports
Entertainment
Travel
Pornography
Other
General news
Investment
Source: Surfwatch Checknet/Newsweek, Nov. 29, 1999, p. 63 2 2

13. Ways of Resolving Ethical Problems
2. Resolving Ethical Problems in Business
Ways of Resolving Ethical Problems
1. Three-Questions Test
Is it legal?
Is is balanced?
How does it make me feel?
2. Front Page of the Newspaper Test
3. Leading by Example
4. Ethics Training 2 2

14. Learning Goal 3
What are the techniques for creating employee ethical awareness?
Ethics training
Analyzing ethical dilemmas
Discussing ethical dilemmas
Companies can heighten ethical awareness by
Creating codes of ethics
Distributing codes of ethics

15. Learning Goal 4 What is social responsibility?
Concern of businesses for the welfare of society as a whole
Obligations go beyond
Making a profit
What is required by law or union contract
Companies engage in
Illegal and irresponsible behavior,
Irresponsible but legal behavior, or
Legal and responsible behavior (vast majority)

16. Social Responsibility:
the concern of businesses for the welfare of society as a whole; includes concerns beyond legal and contractual obligations

17. Pyramid of Business Responsibility
Be a good corporate citizen
Philanthropic Responsibility
Ethical Responsibility
Do what is fair
Obey law
Legal Responsibility
Pursue profit
Economic Responsibility 2 2

18. Two Dimensions of Social Responsibility:
1. Legality
Does the action break a law?
2. Responsibility
Is the action responsible?
Does the action benefit society? 2 2

19. Discussion: Think of an example of each combination
Responsible
Irresponsible
Follows laws and benefits society
Follows laws, but harms society
Legal
Benefits society, but breaks laws
Harms society and breaks laws
Illegal 2 2

20. Examples Responsible Irresponsible Legal Illegal
Follows laws and benefits society
charitable donation of profits
Follows laws, but harms society
cigarette advertisements targeted at teens
Legal
Benefits society, but breaks laws
tax evasion by a charitable organization
Harms society and breaks laws
illegal disposal of waste material
Illegal 2 2

21. Learning Goal 5
How do businesses meet their social responsibilities to various stakeholders?
Employees
Provide a clean, safe working environment
Build employees’ self-worth through empowerment programs
Customers
Provide good, safe products and services
General public
Be good corporate citizens
Protect the environment
Provide a good place to work

22. Learning Goal 5 (cont’d.)
How do businesses meet their social responsibilities to various stakeholders?
Corporate philanthropy
Contributing cash
Donating goods and services
Supporting volunteer efforts of employees
Investors
Companies should try to earn a reasonable profit for the owners

23. Responsibilities to Stakeholders
1. Responsibility to Employees
2. Responsibility to Customers
3. Responsibility to the General Public
environmental protection
corporate philanthropy
4. Responsibilities to Investors 2 2

24. Discussion: What do You Expect from Companies?
When I am a(n):
Employee
Customer
Member of Society
Investor
I expect: 2 2

25. Examples: When I am a(n): I expect: Employee Customer
Member of Society
Investor
I expect:
job security, benefits, flexibility, compensation
safe products, response to complaints, honest advertising
charitable contribution, minimal environmental harm
profits, disclosure, ethical practices 2 2

26. Stopping Sweatshops
The US Department of Labor has formed an organization, No Sweat, to put an end to sweatshops
3 things consumers can do:
Ask retailers where and how garments are made
Ask retailers if they purposefully don’t buy from sweatshops
Ask retailers if they support “No Sweat” clothing
Source: No Sweat, 2 2

27. Learning Goal 6
What are the global and domestic trends in ethics and social responsibility?
Corporate philanthropy
focusing on strategic giving
New social contract between employer and employee
Each assumes part of the responsibility for maintaining jobs
Employees find ways to add value to the business
Multinational corporations must assume a global set of ethics and responsibility
Understand local customs
Involve local stakeholders in decision making
Be sure suppliers are not involved in human rights violations

28. Trends in Business Ethics:
1. Strategic Giving
ties philanthropy to corporate mission
2. Social Contracts with Employees
3. Carrying Ethical Conduct Overseas 2 2

29. Strategic Giving Example
In 1999, Bill Gates, CEO of Microsoft, donated a total of $3.35 billion to
The Gates Learning Foundation, which provides computers & software to libraries in low-income areas
The William H. Gates Foundation, which grants money to aid world health & human services and to local Seattle causes
Source: Fortune, Mar. 1, 1999, p. 35