M A N A G E M E N T M A N A G E M E N T 1 st E D I T I O N 1 st E D I T I O N Gulati | Mayo | Nohria Gulati | Mayo | Nohria Chapter 3 Chapter 3 ETHICS AND ETHICS AND CORPORATE SOCIAL RESPONSIBILITY ©South-Western, a part of Cengage Learning PowerPoint Presentation by Charlie Cook SETTING THE CONTEXT FOR MANAGEMENT

Learning Objectives Differentiate between various ethical frameworks and describe how they influence the way managers navigate complex ethical decisionsDifferentiate between various ethical frameworks and describe how they influence the way managers navigate complex ethical decisions Describe the different types of moral dilemmas that managers face both inside and outside their organizationsDescribe the different types of moral dilemmas that managers face both inside and outside their organizations Explain the ethical, legal, and financial obligations of a business and how these influence a firm’s approach to corporate social responsibilityExplain the ethical, legal, and financial obligations of a business and how these influence a firm’s approach to corporate social responsibility Outline the link between corporate social responsibility and the overall performance of a firmOutline the link between corporate social responsibility and the overall performance of a firm © South-Western, a part of Cengage Learning3–2

IntroductionIntroduction 3–3 The standards that people use to judge what is right or wrong, good or evil Morality The study of moral standards and their effect on behavior and conduct Ethics

Ethical Frameworks © South-Western, a part of Cengage Learning3–4 The ethical philosophy claiming that behaviors are considered moral if they produce the greatest good, or utility, for the greatest number of people Utilitarianism An ethical philosophy claiming that motives and universal rules are important aspects in judging what is right or wrong Kantianism A person who is entrusted with property, information, or power to act on behalf of a beneficiary Fiduciary An ethical philosophy claiming that morality’s primary function is to develop virtuous character Virtue ethics

Virtues and Character © South-Western, a part of Cengage Learning3–5 How well a person can teach others to exhibit character How well a person makes moral judgments Measures of a virtuous character A person’s ability to recognize the moral elements of a situation How consistent a person’s actions are with those judgments

© South-Western, a part of Cengage Learning3–6 Table Moral Development

JusticeJustice © South-Western, a part of Cengage Learning3–7 An ethical philosophy that provides the framework for society to judge what is morally right or wrong, fair or unfair, and establishes ways to evaluate or punish those who behave in morally wrong ways A subset of justice that deals with the distribution of wealth and prosperity among members of a society A subset of justice that deals with the distribution of wealth and prosperity among members of a society Distributive justice A subset of justice claiming that rules should be clearly stated, consistently obeyed, and impartially enforced Procedural justice

Moral Dilemmas Faced by Organizations © South-Western, a part of Cengage Learning3–8 Environmental Increasing pollution and depletion of natural resources Managers face the question of how much they should conserve Privacy A person’s right to determine the type and extent of information that is disclosed about him or her Requires managers to strike balance between respecting privacy and learning about their subordinates

Ethical Dilemmas Faced by Individuals © South-Western, a part of Cengage Learning3–9 Conflicts that occur when employees or managers engage in activities on behalf of the company and have a personal interest in the outcome of those activities Conflicts that occur when employees or managers engage in activities on behalf of the company and have a personal interest in the outcome of those activities Conflicts of interest Any type of information used in conducting business that is not commonly known by others. It often provides a strategic advantage for a company over its competitors Trade secrets The release of information by a member of an organization that is evidence of illegal or immoral conduct to executives in a company or regulating agencies outside a company Whistle-blowing Offering something valuable to a party to act on his or her behalf, often to an unfair advantage Offering something valuable to a party to act on his or her behalf, often to an unfair advantage Bribery

Corporate Social Responsibility (CSR) © South-Western, a part of Cengage Learning3–10 A business’s obligation to pursue policies, decisions, and actions that align with the objectives and values of society A business’s duty to make a profit and increase shareholder value Economic responsibilities A business’s duty to pursue its economic responsibilities within the boundaries of the law Legal responsibilities A business’s duty to meet the expectations of society beyond its economic and legal responsibilities Ethical responsibilities

© South-Western, a part of Cengage Learning3–11 Figure Core Responsibilities of Business in Society

© South-Western, a part of Cengage Learning3–12 Figure Duties of Corporate Social Responsibility

Corporate Social Responsiveness © South-Western, a part of Cengage Learning3–13 Design plans and policies to respond to changing conditions Monitor and assess environmental conditions on a constant basis Seek to identify the needs of their stakeholders Behaviors of responsive firms The practice of businesses responding to pressure from society to engage in socially responsible ways

CSR and Strategy: Using CSR for a Competitive Advantage © South-Western, a part of Cengage Learning3–14 Supervised carefully to create value for the community and the firm Must be planned specifically to support core business activities Evaluated regularly to ensure that CSR activities benefit society while also benefitting the business Corporate social responsibility activities that are directly related to their business activities so that they can combine social welfare with financial welfare Strategic CSR

© South-Western, a part of Cengage Learning3–15 Figure Four-Step Process to Implementing CSR

KEY TERMS © South-Western, a part of Cengage Learning3–16 Conflicts of interest Corporate social responsibility Corporate social responsiveness Distributive justice Economic responsibilities Ethical responsibilities EthicsFiduciaryJusticeKantianism Legal responsibilities MoralityPrivacy Procedural justice Strategic CSR Trade secret Utilitarianism Virtue ethics Whistle-blowing