Chapter 4 Ethics and Social Responsibility

MGMT 321 – Chapter 4 Ethics The inner-guiding moral principles, values, and beliefs that people use to decide what is the “right” or appropriate way to behave Ethical Dilemma – deciding whether to do the “right” thing though doing so might go against your own self-interest

MGMT 321 – Chapter 4 Ethics and the Law Ethical beliefs lead to the development of laws and regulations to prevent certain behaviors or encourage others Laws can change or disappear as ethical beliefs change Neither laws nor ethics are fixed

MGMT 321 – Chapter 4 Ethics and Stakeholders Stakeholders –People and groups affected by the way a company and its managers behave –Supply a company with its productive resources and have a claim on its resources When the law does not specify how companies should behave, managers must decide how to behave toward the people and groups affected by their actions

MGMT 321 – Chapter 4 Stakeholders

MGMT 321 – Chapter 4 Ethical Decision Making

MGMT 321 – Chapter 4 Practical Decision Model 1. Does my decision fall within the acceptable standards that apply in business today? 2. Am I willing to see the decision communicated to all people and groups affected by it? 3. Would the people with whom I have a significant personal relationship approve of the decision?

MGMT 321 – Chapter 4 Managers Behaving Ethically The relentless pursuit of self-interest can lead to a collective disaster When one or more people start to profit from being unethical other people may be encouraged to act in the same way

MGMT 321 – Chapter 4 Effects of Ethical/Unethical Behavior

MGMT 321 – Chapter 4 Trust and Reputation Trust – willingness of a person or group to have faith or confidence in the goodwill of another person Reputation – esteem or high repute that individuals or organizations gain when they behave ethically

MGMT 321 – Chapter 4 Sources of Ethics

MGMT 321 – Chapter 4 Social Responsibility Way a company views its duty or obligation to make decisions that protect, enhance, and promote the welfare and well-being of stakeholders and society as a whole

MGMT 321 – Chapter 4 Why Be Socially Responsible? 1. Demonstrating its social responsibility helps a company build a good reputation 2. If all companies in a society act socially responsible, the quality of life as a whole increases

MGMT 321 – Chapter 4 Role of Organizational Culture Ethical values and norms help organizational members: –Resist self-interested action –Realize they are part of something bigger than themselves