1. Ethics and Corporate Social Responsibility
Chapter 4 .
Fundamentals of Business

2. Study Question 1: What is ethical behavior?
Ethics
Code of moral principles.
Set standards of “good” and “bad” as opposed to “right” and “wrong.”
Ethical behavior
What is accepted as good and right in the context of the governing moral code.

3. Study Question 1: What is ethical behavior?
Law, values, and ethical behavior:
Legal behavior is not necessarily ethical behavior.
Many unethical behaviors lead to legislation
Unsafe working conditions such as sweatshops
OSHA (Occupational Safety and Health Administration) – enforces health and safety in the workplace
Discrimination
Consumers
Truthfulness in financial reporting

4. Study Question 1: What is ethical behavior?
Utilitarian view — greatest good to the greatest number of people.
Individualism view — primary commitment is to one’s long-term self-interests.
Moral-rights view — respects and protects the fundamental rights of all people.
Justice view — fair and impartial treatment of people according to legal rules and standards.

5. Figure 3.1 Four views of ethical behavior.

6. Study Question 1: What is ethical behavior?
How businesses can respect core or universal values:
Respect for human dignity
Create culture that values employees, customers, and suppliers.
Keep a safe workplace.
Produce safe products and services.
Respect for basic rights
Protect rights of employees, customers, and communities.
Avoid anything that threatening safety, health, education, and living standards.
Be good citizens
Support social institutions, including economic and educational systems.
Work with local government and institutions to protect environment.

7. Management Fundamentals - Chapter 3
Group Activity
Two Approaches to Promoting Ethical Behavior in the Workplace
1. Compliance Based Approach
Uses legal terms, training, rules of conduct, and penalties for non-compliance
Focuses on what not to do
2. Values Based Approach
Relies of self-policing and motivation, rather than coercion
Encouraging good behavior rather than punishing bad behavior
Management Fundamentals - Chapter 3

8. Management Fundamentals - Chapter 3
Group Activity
Two groups will be formed
Each group will examine one of the different approaches to promoting ethical behavior in the workplace
Compliance vs Values Based
1. Determine the advantages of your approach
2. After hearing the response from the other group, determine a major disadvantage of the other approach.
Management Fundamentals - Chapter 3

9. Study Question 2: How do ethical dilemmas complicate the workplace?
An ethical dilemma occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical.
Ethical dilemmas include:
Discrimination
Sexual harassment
Conflicts of interest
Customer confidence
Organizational resources

10. Study Question 2: How do ethical dilemmas complicate the workplace?
Ethical behavior can be rationalized by convincing yourself that:
Behavior is not really illegal.
Behavior is really in everyone’s best interests.
Nobody will ever find out.
The organization will “protect” you.

11. Study Question 2: How do ethical dilemmas complicate the workplace?
Factors influencing ethical behavior include:
The person
Family influences, religious values, personal standards, and personal needs.
The organization
Supervisory behavior, peer group norms and behavior, and policy statements and written rules.
The environment
Government laws and regulations, societal norms and values, and competitive climate in an industry.

12. Figure 3.3 Factors influencing ethical managerial behavior—the person, organization, and environment.

13. Class Activity Break into the groups determined by your card
Address the following ethical dilemma as a group:
A lifeboat is overflowing with survivors. There isn’t room for everyone. If someone is not thrown overboard, the lifeboat will sink. What will you do? Support your answer.

14. Study Question 3: How can high ethical standards be maintained?
Checklist for dealing with ethical dilemmas
Step 1: Identify the ethical dilemma
Step 2: Get the facts and identify your options
Step 3: Determine who will be affected
Step 4: List the effects of the alternatives
Step 5: Choose the best option
Double-check decision by asking the “spotlight” questions: “How would I feel if my family found out about my decision?” “How would I feel about this if my decision were printed in the local newspaper?”

15. Management Fundamentals - Chapter 3
Ethical Scenarios
With a partner, address the ethical dilemmas handed out to you.
Write your responses using the 5 steps learned today
Management Fundamentals - Chapter 3

16. Study Question 3: How can high ethical standards be maintained?
Ethics training:
Structured programs that help participants to understand ethical aspects of decision making.
Helps people incorporate high ethical standards into daily life.
Helps people deal with ethical issues under pressure.

17. Study Question 3: How can high ethical standards be maintained?
Whistleblowers
Expose misdeeds of others to:
Preserve ethical standards
Protect against wasteful, harmful, or illegal acts
Laws protecting whistleblowers vary

18. Study Question 3: How can high ethical standards be maintained?
Barriers to whistleblowing include:
Strict chain of command
Strong work group identities
Ambiguous priorities
Organizational methods for overcoming whistleblowing barriers:
Ethics staff units who serve as ethics advocates
Moral quality circles

19. Study Question 3: How can high ethical standards be maintained?
Ethical role models:
Top managers serve as ethical role models.
All managers can influence the ethical behavior of people who work for and with them.
Excessive pressure can foster unethical behavior.
Managers should be realistic in setting performance goals for others.

20. Study Question 3: How can high ethical standards be maintained?
Codes of ethics:
Formal statement of an organization’s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas.
Areas often covered by codes of ethics:
Bribes and kickbacks
Political contributions
Honesty of books or records
Customer/supplier relationships
Confidentiality of corporate information

21. Study Question 4: What is corporate social responsibility?
Looks at ethical issues on the organization level.
Obligates organizations to act in ways that serve both its own interests and the interests of society at large.

22. Study Question 4: What is corporate social responsibility?
Organizational stakeholders
Those persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance.
Typical organizational stakeholders
Employees
Customers
Suppliers
Owners
Competitors
Regulators
Interest groups

23. Figure 3.4 Multiple stakeholders in the environment of an organization.

24. Study Question 4: What is corporate social responsibility?
Beliefs that guide socially responsible business practices:
People do their best with a balance of work and family life.
Organizations perform best in healthy communities.
Organizations gain by respecting the natural environment.
Organizations must be managed and led for long-term success.
Organizations must protect their reputations.

25. Study Question 4: What is corporate social responsibility?
Perspectives on corporate social responsibility:
Classical view
Management’s only responsibility is to maximize profits.
Socioeconomic view
Management must be concerned for the broader social welfare, not just profits.

26. Study Question 4: What is corporate social responsibility?
Arguments against social responsibility:
Reduced business profits
Higher business costs
Dilution of business purpose
Too much social power for business
Lack of public accountability
Arguments in favor of social responsibility:
Adds long-run profits
Improved public image
Avoids more government regulation
Businesses have resources and ethical obligation

27. Study Question 4: What is corporate social responsibility?
Criteria for evaluating corporate social performance:
Is the organization’s …
Economic responsibility met?
Legal responsibility met?
Ethical responsibility met?
Discretionary responsibility met?

28. Figure 3.5 Criteria for evaluating corporate social performance.

29. Study Question 4: What is corporate social responsibility?
Strategies for pursuing social responsibility:
Obstructionist — meets economic responsibilities.
Defensive — meets economic and legal responsibilities.
Accommodative — meets economic, legal, and ethical responsibilities.
Proactive — meets economic, legal, ethical, and discretionary responsibilities.

30. Figure 3.6 Four strategies of corporate social responsibility—from obstructionist to proactive behavior.

31. Companies “Doing it Right”
Tom’s Founder on Ellen
Management Fundamentals - Chapter 3

32. Study Question 5: How do organizations and governments work together in society?
How government influences organizations:
Common areas of government regulation of business affairs:
Occupational safety and health
Fair labor practices
Consumer protection
Environmental protection

33. Study Question 5: How do organizations and governments work together in society?
How organizations influence governments:
Personal contacts and networks
Public relations campaigns
Lobbying
Political action committees
Sometimes by illegal acts, such as bribery or illegal financial contributions to political campaigns

34. Figure 3.7 Centrality of ethics and social responsibility in leadership and the managerial role.

35. Study Question 5: How do organizations and governments work together in society?
Corporate governance:
The oversight of the top management of an organization by a board of directors.
Corporate governance involves:
Hiring, firing, and compensating the CEO.
Assessing strategy.
Verifying financial records.

36. Culture and Diversity in Business
Chapter 16 .
Fundamentals of Business