1. Ethics and Social Responsibility
Chapter 3 Ethics and Social Responsibility
Ethics and Social Responsibility
Chapter 3
Lamb, Hair, McDaniel
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2. © 2015 by Cengage Learning Inc. All Rights Reserved.
Chapter 3 Ethics and Social Responsibility
Explain the determinants of a civil society
Explain the concept of ethical behavior
Describe ethical behavior in business
Discuss corporate social responsibility
Describe the arguments for and against society responsibility
Explain cause-related marketing
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3. Foundations of Ethical Behavior
Individuals and companies must behave responsibly, based on certain ethical codes of conduct (what is right or wrong)
Our moral reasoning guiding our decisions and actions can be….
Teleological-decisions are based on the consequences of the action
Utilitarianism-an action is right if produces greatest amount of good
Deontological-moral reasoning occurs per se, independently, consequence is not an issue

4. The Modes of Social Control in a Civil Society
Chapter 3 Ethics and Social Responsibility
The Modes of Social Control in a Civil Society
Ethics comprise the moral principles or values that generally govern the conduct of an individual or a group. There is no law for “cutting in line,” however, cutting in line is not considered polite and may anger some people. Order is maintained by the following factors:
Ethics
Laws
Formal and informal groups
Self-regulation
The media
An active civil society
Notes:
1. Ethics: These are the moral principles or values that generally govern the conduct of an individual or a group.
2. Laws: Often, ethical rules and guidelines are codified into law. Laws created by governments are then enforced by governmental authority.
3. Formal and Informal Groups: Businesses, professional organizations, clubs, and professional associations all have codes of conduct.
4. Self-regulation: Self-regulation involves the voluntary acceptance of standards established by nongovernmental entities.
5. The Media: In an open, democratic society, the media play a key role in informing the public about the actions of individuals and organizations—both good and bad.
6. An Active Civil Society: An informed and engaged society can help shape and mold individual and corporate behavior. 1
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5. Ethical Development Levels
Chapter 3 Ethics and Social Responsibility
Ethical Development Levels
Preconventional
Morality
Conventional
Postconventional
More
Mature
Childlike
Based on what will be punished or rewarded
Self-centered, calculating, selfish
Moves toward the expectations of society
Concerned over legality and the opinion of others
Concern about how they judge themselves
Concern if it is right in the long run
Notes:
Ethical development can be thought of as having three levels. 3
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6. Reward Punishment Model of Ethical Behavior in Business
(Un)ethical
Behavior
Economic
Reward
Quantum of
Punishment
Probability of
Punishment ~
> *
Source: Waheeduzzaman and Myers (2010), Influence of Economic Reward and
Punishment on Unethical Behavior: An Empirical Study

7. Explanation of the Model
The premise of the model is, ethical or unethical behavior depends on the relationship among three factors:
economic reward or benefit that a businessman receives from the unethical practice
the quantum (severity) of punishment the society imposes for such wrong-doing
and the probability of receiving the punishment.
Severity of punishment and its probability work as a deterrent for unethical behavior.
A businessman will risk the practice of unethical behavior as long as the economic reward is significantly greater than the product of punishment and its probability.

8. Ethical Decision Making
Chapter 3 Ethics and Social Responsibility
Ethical Decision Making
Influential Factors
Extent of Problems
Top Management Actions
Potential Consequences
Social Consensus
Probability of Harm
Time Until
Consequences
Number Affected
Notes:
There is no cut-and-dried formula for making ethical decisions, but these factors influence ethical decision making and judgments. 3
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9. Creating Ethical Guidelines
Chapter 3 Ethics and Social Responsibility
A Code of Ethics:
Helps identify acceptable business practices
Helps control behavior internally
Avoids confusion in decision making
Facilitates discussion about right and wrong
Notes:
Businesses must be careful not to make their code of ethics to vague or too detailed. 3
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10. Ethics in Other Countries
Chapter 3 Ethics and Social Responsibility
Foreign Corrupt Practices Act (FCPA)
Prohibits U.S. corporations from making illegal payments to foreign officials.
Has been criticized for putting U.S. businesses at a disadvantage.
Has encouraged some countries to implement their own anti-bribery laws.
Notes:
In order to maintain ethical practices overseas, companies must comply with the Foreign Corrupt Practices Act (FCPA).
Foreign U.S. ethical standards on to foreign cultures has been said to put U.S. corporations at a disadvantage by not allowing them to participate in foreign cultural norms (such as giving gifts).
However, the pressure to work with U.S. corporations and avoid law suits has encouraged some countries to implement anti-bribery laws. 3
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11. Corporate Social Responsibility
Chapter 3 Ethics and Social Responsibility
Corporate social responsibility is a business’s concern for society’s welfare.
Stakeholder theory says that social responsibility is paying attention to the interest of every affected stakeholder in every aspect of a firm’s operation.
Notes:
In order to maintain ethical practices overseas, companies must comply with the Foreign Corrupt Practices Act (FCPA).
Foreign U.S. ethical standards on to foreign cultures has been said to put U.S. corporations at a disadvantage by not allowing them to participate in foreign cultural norms (such as giving gifts).
However, the pressure to work with U.S. corporations and avoid law suits has encouraged some countries to implement anti-bribery laws. 4
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12. Corporate Social Responsibility
For
Against
It is the right thing to do
Businesses have the resources to devote to fixing social problems
Prevents government regulation and potential fines
It can be profitable
Takes focus away from making profits
Business executives spend shareholder money on environmental initiatives 5
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13. The Pyramid of Corporate Social Responsibility
Source: Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders,” adaptation of Figure 3, p. 42. Reprinted from Business Horizons, July/Aug Copyright © 1991 by the Foundation for the School of Business at Indiana University. Reprinted with permission. 13

14. © 2015 by Cengage Learning Inc. All Rights Reserved.
Chapter 3 Ethics and Social Responsibility
Sustainability
Socially responsible companies will outperform their peers.
It is in business’s best interest to find ways to attack society’s ills.
Notes:
Corporate social responsibility (CSR) is a business’s concern for society’s welfare. 5
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Chapter 3 Ethics and Social Responsibility
Green Marketing
The development and marketing of products designed to minimize negative effects on the environment or improve the environment.
Environmentally aware customers pay more for products
Companies must try to educate customers of environmental benefits
Discussion Questions/Team Activities:
Have students come up with examples of products using green marketing, then have them research the legitimacy of those claims. 5
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16. Cause-Related Marketing
Chapter 3 Ethics and Social Responsibility
Cause-Related Marketing
For-profit and non-profit organizations cooperate to generate funds.
Generates about $7 billion annually
Too many causes lead to customer cause fatigue
Notes:
Cause-related marketing is the cooperative efforts of a for-profit firm and a non-profit organization for mutual benefit. It creates good public relations for the firm and often stimulates brand sales.
Marketing done by a social or charitable cause is also referred to cause-related marketing.
Philanthropy or charitable donations are different from cause-related marketing. 6
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17. Ch 3 Discussion Questions
Explain the reward punishment model of ethical behavior in business.
Explain the foundations of ethical behavior.
What is Corporate Social Responsibility? Explain the Pyramid of Corporate Social Responsibility.
Explain its arguments for and against. 17

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Chapter 3 Ethics and Social Responsibility
Chapter 3 Video
Zappos
Zappos, the world’s largest online shoe retailer, discusses its commitment to social responsibility and to ethical behavior. Developing employee activities and long-term relationships with charitable organizations allows Zappos to ingrain the importance of helping the greater good into its organizational culture. Zappos culture also guides its employees to make ethical decisions.
CLICK TO PLAY VIDEO
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