ethics and social responibilities
TRANSCRIPT
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ETHICS AND SOCIAL RESPONSIBILITIES IN
MANAGEMENT
By :- Anup Chauhan & Bhumika kapoor
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Social Responsibility
Definition:- Is an ethical or ideological theory, that an entity whether a govt.corporation or private organization has a big responsibility to society at large.
MNCs wants to lower the cost by locating in countries where human rights arenot a high priority. They justify by saying that they are bringing in jobs and
strengthening the local economy.
Are tobacco and alcoholic beverages companies socially responsible ?
What factors influence the decision of managers in these situations ?
Two Views of Social responsibilities:-
Social Responsibility
The Classical View Socio-Economic View
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Views of Social Responsibilities
The Classical View:-
Believes that managements only social responsibility is to maximizeprofits.
Milton Friedman, the economist and Nobel prize winner strongly
advocates this approach.
According to this view doing Social good adds to the cost of doing
business. This additional cost is compensated by:-
Increasing the price of the product.
Stockholders reduce their profit margins.
Those who believe in this view are also socially responsible but their
definition of social responsibility is different i.e. their extent of
responsibility is to maximize profits for Stock holders.
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Comparison of the views
The difference between the two perspectives is easy to understand as the
Classical view is based on maximizing profits whereas the socio
economic view goes beyond making profits to include protecting and
improving societys welfare.
Lesser Greater Social Responsibility
Stage 1
Owners and
Management
Stage 2
Employees
Stage 3
Constituents in the
specific environment
(Customer)
Stage 4
Broader Society
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Corporate Social Responsibility
Pyramid
Carrolls four part definition:-
Philanthropic
Responsibilities
Ethical
Responsibilities
Legal
Responsibilities
Economic
Responsibilities
Be a good
Corporate citizen
Be ethical
Obey the law
Be Profitable
Contribute resources to
communities; improve quality
of life.
Obligation to do what is right,
just and fair. Avoid harm.
Law is societys codification
of right and wrong. Play by
the rules of the game.
The foundation on which all
other rest.
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Obligations, Responsiveness,
Responsibility
Social Obligations.
Engages in social actions because of its obligations to meet economic andlegal responsibilities.
Social Responsiveness. Engages in social actions in response to some popular social need.
Social Responsibility.
Goes beyond social obligations and responsiveness and believes in getting
involved in actions which can improve the society as its the right thing todo.
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Example
Infosys:-
Indian IT giant with over 1,00,000 employees and presence in 22 countries.
Infosys as a socially responsible company aims at:-
Conservation of Resources.
Prevention of pollution. Adherence to all applicable legislations.
Organizing and contributing in welfare programs, especially for under
privileged children.
The primary purpose of corporate leadership is to create wealth legally and
ethically. This translates to bringing a high level of satisfaction to fiveconstituencies - customers, employees, investors, vendors and the society-at-large.
- N.R Narayana Murthy (Chairman of board and Chief mentor)
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Arguments For and Against Social
Responsibility
For:-
Public Expectations.
Long Term Profits.
Ethical Obligation.
Public Image.
Better Environment.
Less Govt. Regulations
Stakeholders Interest.
Against:-
Violation if profit
maximization.
Costs. Lack of necessary skills to
address social issues.
No direct lines of
accountability for social
actions.
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NATURE OF ETHICS
Ethics The inner-guiding moral principles,
values, and beliefs that people use to analyze or
interpret a situation and then decide what is the
right or appropriate way to behave.
Ethical Dilemma
quandary people find themselves in when
they have to decide if they should act in away that might help another person even
though doing so might go against their own
self-interest.
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Reasons to Behave Ethically
From Internal Customer point of view:-
Improves the atmosphere at work and helps motivating theemployees.
Ethic behavior of management sets a good example to the
employees.
Evokes a sense of pride for the company and improves its image in
the eyes of employees.
From External Customer point of view:- Improves the public image of the company adds to the overall
development of ethical behaviour in the society
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FACTORS THAT AFFECT ETHICS
The factors that affect ethics are as follows: Stage of moral development Individual characteristics
Structural variablesOrganizations culture
Issue intensity
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STAGE OF MORAL DEVELOPMENT
There are three levels of moral development PRECONVENTIONAL: Sticking to rules to avoid physical
punishment and following rules only when doing so is inyour immediate interest.
CONVENTIONAL: Living upto what is expected bypeople close to you and maintaining conventional order byfulfilling obligations to which you have agreed.
PRINCIPLED: Valuing rights of others and upholding
absolute values and rights regardless of the majoritysopinion and following self-chosen ethical principles even ifthey violate the law.
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INDIVIDUAL CHARACTERISTICS
Two personality variables influence an individuals actions. They are :
EGO STRENGTH: It is a personality measure of the strength of a personsconvictions . People who score high on ego strength are likely to resist impulses toact unethically and instead follow their convictions. That is, individuals high on egostrength are more likely to do what they think is right.
LOCUS OF CONTROL: It is a personality attribute that measures the degree towhich people believe they control their own fate. People with an internal locus ofcontrol believe that they control their own destinies ; those with an external locus
believe that what happens to them is due to luck or chance. Externals are less likelyto take personal responsibility for the consequences of their behavior and are morelikely to rely on external forces. Internals on the other hand are more likely to takeresponsibility for consequences and rely on their internal standards of right andwrong to guide their behavior. Employees with an internal locus of control are likelyto be more consistent in their moral judgments and actions than external ones.
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STRUCTURAL VARIABLES
An organizations structural design influences whether
employees behave ethically. Some structures provide strong
guidance , whereas others create ambiguity and uncertainty.
Structural designs that minimize ambiguity and uncertainty
through formal rules and regulations and those that
continuously remind employees of what is ethical are more
likely to encourage ethical behaviour. Other organizational
mechanisms that influence ethics include the use of goals ,
performance appraisal systems , and reward allocationprocedures.
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ORGANIZATIONS CULTURE
An organizational culture most likely to encourage
high ethical standards is one thats high in risk
tolerance, control and conflict tolerance. The
employees in such a culture are encouraged to beaggressive and innovative. If the culture is strong
and supports high ethical standards, it has a very
powerful and positive influence on their decision to
act ethically or unethically.
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ISSUE INTENSITY
The determinants of issue intensity are : Greatness of harm Consensus of wrong Probability of harm Immediacy of consequences Proximity to victims Concentration of effect The larger the number of people harmed ,the more agreement that the
action is wrong , the greater the likelihood that the action will cause harm, the more immediately that the consequences of the action will be felt,
the closer the person feels to the victim, and the more concentrated theeffect of the action on the victims , the greater the issue intensity. Themore intense an ethical issue is, the more the employees would behaveethically.
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