Lecture 09
Ethics & Social Responsibility. Social involvement as a business concept? Pre 1900’s business purpose exclusively economic. Modern organisations more dependant than ever before on public opinion. Stakeholders. Societal awareness.
Responsibility & Responsiveness.... Social Responsiveness > the ability of a corporation to relate its operations and policies to the social environment in ways that are mutually beneficial to the company and to society. Social Responsibility > a business firm's obligation, beyond that required by law and economics, to pursue long-term goals that are good for society.
Corporate social responsibility is "seriously considering the impact of the company's actions on society”. Examples? Industries: Problems and solutions. Environmental Legal Technical Socio-political
Social Responsibility: Social obligation. Minimal fulfillment. Social Responsiveness. Going beyond the minimal. An ethical imperative.
Social norms > Act as guides for managerial decision making in accordance with prevalent customs. A socially responsive organization acts the way it does because of its desire to satisfy some popular social need. – Not necessarily because it is profitable or beneficial for the organisation.
Group Discussion: Arguments for social involvement of business Arguments against social involvement of business. Split class into two. At least five reasons. Discussions for and against. Any minds changed?
Reaction vs. Proaction? Governmental role? Law & morality? Ethics: The discipline dealing with what is good and bad as well as with moral duty and obligation.
Expectations of society, Fair competition, Advertising, Public relations, Social responsibility, – The above are all encompassed within business ethics.
Ethical Theories. Utilitarian Theory: Consequences used as basis for evaluation. Theory based on rights: Everyone has basic rights. Theory of justice: Decision makers need to be fair and equal as well as impartial. Standards for gauging the level of ethical behaviour of an organisation.
How may ethics be institutionalised? establishing an appropriate company policy or a code of ethics as a guide to behaviour. by using a formally appointed ethics committee to keep ethics in sight with decision making, and by teaching ethics in management development programs to provide the foundational basis. Whistle blowing? Ethical practice?
Managerial Ethics Four perspectives on business ethics Utilitarian View Increases efficiency and effectiveness, sometimes with a cost. Rights View Safeguarding the rights of the person. Theory of Justice View Impartial, equitable and fair enforcement of rules & regulations.
Integrative Social Contracts View Integration of what is and what should be. Notion of contracts regarding organisation and society. Equal exchange of effort and benefits.
Factors affecting. Complex interactions determine a managers behaviour. Factors determining influence Morals of manager, Organisations culture and Intensity of issue
Two Personality Variables – Ego strength A personality measure of the strength of a person’s convictions – Locus of Control A personality attribute that measures the degree to which people believe they control their own life
Locus of Control Internal locus: The belief that you control your destiny External locus: The belief that what happens to you is due to luck or chance
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?
Stages of Moral Development
Values? Independence from external values. Ego strength Strength of convictions. Loci of control Belief in control of fate.
Structural variables Rules & regulations Reward & punishment systems Organisational culture Content Strength
Factors.
Intensity of issue. Greatness of harm. (The larger the number of people harmed). Consensus of wrong. (The more agreement that the action is wrong). Probability of harm. (The greater the likelihood that the action will cause harm).
Immediacy of consequences. (The more immediately that the consequences of the action will be felt). Proximity to victim/s. (The closer the person feels to the victim/s). Concentration of effect. (The more concentrated the effect of the action on the victim/s).