Chapter 5: Managerial Ethics & Corporate Social Responsibility*
Domain of
Codified Law
(Legal Standard)
Domain of
Ethics
The code of moral principles and values that govern the behaviors of a person or group with respect to what is right or wrong.
Codified Law
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Free Choice
Behavior about which law has no say and for which an individual or organization enjoys complete freedom
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Ethics
Obedience is to norms and standards levied by self and/or others. These are unenforceable in a legal sense, but are often powerful.
Ethical Dilemma
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Honesty in advertising and in communications with superiors, clients, and government.
Problems relating to special gifts, entertainment, and kickbacks.
Overlooking wrong doings of others
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Utilitarian
Individualism
Moral-Rights
Justice
Practical
Moral behaviors produce the greatest good for the greatest number.
Individualism Approach
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Moral-Rights Approach
Human beings have fundamental rights (e.g., free consent, privacy, due process)
Justice Approach
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Practical Approach
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Learned Ethics
The Organization
Preconventional Level = concerned with external rewards and punishments
Conventional Level = conform to the expectations of peers and society (consistent with practical approach to ethical decision making)
Postconventional (Principled) Level = individuals develop a personal, internal set of standards and values. (About 20% of adults)
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Is it legal?
Is it right?
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Guidelines for Dealing with Ethical Dilemmas (cont.)
Would you be willing to allow everyone to do what you are considering?
Would you like your family to know?
Would you like your decision printed in the newspaper?
Have you consulted others who are objective and knowledgeable?
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Being a good corporate citizen.
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Stakeholder Model
The belief that a business should be operated for the benefit of all who are concerned with it (all “stakeholders” not just the owners).
The foundation of Social Responsibility.
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1- Economic Responsibilities:
2- Legal Responsibilities:
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3- Ethical Responsibilities
To be ethical, an organization should seek a higher standard than merely obeying the law:
e.g., Act with equity, fairness, and impartiality
e.g., Respect the rights of individuals
e.g., Act for the common good
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Goes beyond what society expects
This is true Social Responsibility
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Discretionary-------------------Proaction
Ethical-------------------Accommodation
Why Social Responsibility?
Self-defense - If business is not proactive, the public or government will press for more regulation
Obligation - Business exists due to being sanctioned by society - owes debt to society
Self-interest - S.R. good for business in long run
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Business lacks the ability to pursue social goals.
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Code of Ethics
A formal statement of the company's values concerning ethics and social issues.
Principle-based:
Designed to:
Enable the employee to make ethical decisions based on appropriate values
e.g., “treat people fairly” or “don’t be dishonest”
Policy-based:
Outline how to act in specific ethical situations (reducing the need for thinking or shared values):
Conflicts of interest
Ethics committee = group appointed to monitor company ethics
Hot lines- employees can report questionable behavior, possible fraud, waste, or abuse( i.e., Blow the Whistle”)
Ethics training programs
Whistle-Blowing
Definition:
The disclosure by an employee of illegal, immoral, or illegitimate practices by the organization.
Guidelines:
Try to resolve the situation in-house first
Consult an attorney before contacting the media, etc.
Realize you could be fired
Don’t expect to profit financially
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