Management
Organizational
Behavior
An Integrated Perspective
CHAPTER 3
Social
Responsibility
and Ethics
Jon L. Pierce &
Donald G. Gardner
with Randall B. Dunham
Copyright © 2002 by South-Western
PowerPoint Presentation
by Charlie Cook
3–1
Learning Objectives
1. Define social responsibility and trace its historical
development.
2. Name and discuss three levels of commitment to
social responsibility.
3. Compare and contrast two divergent views on
corporate social responsibility.
4. Define and distinguish ethics from social
responsibility.
5. Discuss individuals’ and organizations’ responsibility
for ethical behavior and list sources of unethical
behavior.
6. Identify the three ethical standards and discuss how
they affect decision making.
Copyright © 2002 by South-Western
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Learning Objectives
7.
8.
9.
Discuss steps managers can take to encourage
ethical behavior in organizations.
Discuss the ethical challenge associated with efforts
to “manage” employee work-related attitudes,
motivation, and behavior.
Discuss the ethical issues associated with workplace
diversity.
Copyright © 2002 by South-Western
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The Nature of Social Responsibility
• Social responsibility
 An organization’s obligation to engage in activities that
protect and contribute to the welfare of society.
• The law and social responsibility
Social Responsibility
illegal and
irresponsible
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legal and
irresponsible
illegal and
responsible
legal and
responsible
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An Historical Perspective
• Principle of charity
 Suggests that those who have plenty should give to
those who do not.
• Principle of stewardship
 Suggests that organizations have an obligation to see
that the public’s interests are served by corporate
action and the ways in
which profits are spent.
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Historical Phases of Social Responsibility
1900’s
Social Responsibility
1930’s
1960’s
Phase One:
Profit-Maximizing
Management
Phase Two:
Trusteeship
Management
Phase Three:
Quality-of-Life
Management
Business’s primary
responsibility to society
is to underwrite the
country’s economic
growth and to oversee
the accumulation of
wealth.
Corporate managers
need to maintain an
equitable balance
among the competing
interests of all groups
with a stake in the
organization.
Managers have to do
more than achieve
economic goals, but
they should manage the
quality-of-life by helping
develop solutions for
society’s ills.
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An Historical Perspective on Social
Responsibility
100%
Phase Three: Quality of Life
75%
Proportion of
Firms Adopting
Each Perspective
Phase Two:
Trusteeship
50%
Phase One:
Profit Maximization
25%
1800
1900
2000
FIGURE 3–1
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Organizational
Stakeholders
Employees
Society
at Large
Suppliers of:
Capital
Raw Materials
Human Resources
Information
Customers
Allies
Organization
Competitors
Regulatory Agencies and
Influence Groups:
Governments
Unions
Professional Associations
Interest Groups
FIGURE 3–2
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The Social
Audit
The Needs
of Society
An Organization’s
Social Goals
(e.g. Improving
Environment,
Increasing
Employment)
A detailed
examination and
evaluation of an
organization’s
social performance
Measurement
of Social
Performance
Gap Analysis
Goal Successes
Goal Failures
Changes Needed
Organizational
Resources
Report to
Management
Organizational Goals
Goal Successes
Goal Failures
Social Exposures
Changes Needed
Report to Internal
Stakeholders
Organizational Goals
Goal Successes
Goal Failures
Changes Needed
Report to External
Stakeholders
Organizational Goals
Goal Successes
Goal Failures
Future Goals
FIGURE 3–3
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Levels and Types of Social Commitment
Social
Obligation
Social
Responsibility
Low
Social
Responsiveness
High
Reactive
Prescriptive
Proactive
Proscriptive*
Does more than
required by law
Anticipates and
prevents problems
Adheres to legal
requirements
Does more than
required by economic
considerations
Searches for socially
responsible acts
Adheres to economic
considerations
Avoids public stands
on issues
Takes public stands on
issues
*Proscriptive means the firm reacts when its action is called (or threatened to be called) to the public’s attention.
TABLE 3–3
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Minnesota
Power’s
Environmental
Ethic
Recognizing that all human activities affect the natural
environment, the people of Minnesota Power are sensitive
to the environmental effects of our conduct as individuals
and collectively as a company.
We will be leaders in environmental stewardship. And,
consistent with public policy, we will:
• Meet or surpass all environmental compliance criteria.
• Seek and adopt safeguards to prevent injury to the
environment, and be prepared to respond quickly should
an accident occur.
• Promote land, air, water and energy conservation by
encouraging customers and employees to use our
products and services efficiently.
• Solicit public and regulatory agency views about
environmental concerns and company activities.
In addition, we seek ways to:
• Reduce adverse environmental impacts of our activities.
• Prevent waste by stressing efficiency, recycling and
reduced consumption.
• Enhance the environment as we carry out our
responsibilities.
Source: Minnesota Power—
Environmental Ethic, 1998.
• Demonstrate conservation of land, air, water and energy.
FIGURE 3–4
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Diverging Views on Social Responsibility
• Arguments for social responsibility
 The assumption of social responsibility balances
corporate power with corporate responsibilities.
 The voluntary assumption of social responsibility
discourages the creation and imposition of of
government regulations.
 Acts of social responsibility by organizations help
correct the social problems that organizations create.
 Organizations, as members of society, have a moral
obligation to help society deal with its problems and to
contribute to its welfare.
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Diverging Views… (cont’d)
• Arguments against social responsibility
 Socially responsible behavior lowers operating
efficiency and weakens the ability to offer goods and
services at the lowest possible competitive cost.
 Socially responsible behavior costs reduce dividends,
lower wages, and increase consumer prices.
 Social responsibility may conflict with organizational
goals for profit making.
 Assuming social responsibilities makes organizations
too powerful.
 Business persons are not trained to deal with social
problems.
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The Growth of Attention to Social Issues
Amount of Attention
Much
Little
1950
1960
Phase I
Gestation and Innovation
1970
1980
1990
Phase II
Phase III
Development
and Expansion
Maturity and
Institutionalization
Source: L. E. Preston. 1986. Social issues in management: A evolutionary perspective. In D. A. Wren and J. A. Pearce (eds.), Papers
dedicated to the development of modern management. Chicago: Academy of Management, 52. Copyright 1986 by Academy of
Management. Reproduced with permission of Academy of Management in the format Textbook via Copyright Clearance Center.
Copyright © 2002 by South-Western
FIGURE 3–5
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The Nature of Managerial Ethics
• Ethics
 The set of standards and code of conduct that defines
what is right, wrong, and just in human actions.
• Sources of ethics
 Socialization—the process through which people
develop beliefs (social values, norms, and mores) about
what is right, wrong, and just.
 Organizations
teaching ethics: religious, educational,
cultural, and family.
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Moral Development Models
• Ethic of care
 An act is judged as ethical depending on whether the
act derives from feelings, emotions, and empathy for
others.
• Ethic of justice
 Abstract rules (personal
moral principles) are used
to define which actions are
fair and which actions are
not.
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Managerial Ethics
• Managerial ethics and responsibilities
 The application of personal ethics within the context of
the management of organizations.
 Ethical responsibilities:
 Personal
decisions and actions
 Actions taken at the direction of superior
 Actions taken by subordinates following orders
 Inaction that allows unethical behavior to occur
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An Organization’s Ethical Responsibility
• Top management’s responsibilities
 Infuse ethical behavior into the organizational culture.
 Provide role models for ethical behavior.
 Punish unethical behavior when it occurs.
 Make explicit statements of what ethical conduct is.
 Establish a ethical code of conduct.
 Encourage the reporting of unethical conduct
(whistleblowing) and protect those who report it.
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Managerial Response to Behavior
The Impact of Reward and Punishment on
Unethical Behavior
Unethical
behavior
punished
Unethical behavior
rewarded and
punished
Unethical behavior
neither rewarded
nor punished
Unethical
behavior
rewarded
Mostly
ethical
Behavior
Source: W. H. Hegarty and H. P. Sims, Jr. 1979. Organizational philosophy, policies, and objectives related
to unethical decision behavior: a laboratory experiment. Journal of Applied Psychology 64:331–338.
Copyright © 2002 by South-Western
Mostly
unethical
FIGURE 3–6
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Theories Affecting Ethical Standards
• Utilitarian theory
 An action is considered morally right if its
consequences for everyone affected by the action are
greater than those which would be realized by a
different action.
• Rights theory
 Decision makers’ paramount concern is respecting the
moral and/or legal rights to which people are entitled.
 Procedural
justice is applied to ensure that, while all
individual outcomes may not be equal, the process of
outcome allocation is perceived as fair and impartial.
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Ethical Dilemmas
• Ethical dilemmas
 Situations that arise when managers attempt to balance
the utilitarian (future-oriented) ethic and the formalistic
(perpetuating rights and the status quo) ethic.
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Encouraging Ethical Behavior
• Encourage ethical behavior in short-term by:
 Hiring persons who are not prone to unethical behavior.
 Making public statements (e.g., a code of ethics) about
the importance of ethical behavior.
 Developing policies that specify ethical objectives.
 Rewarding ethical behavior; punishing unethical
behavior.
 Avoiding competitive situations where there is a
potential for unethical behavior.
 Using groups to make decisions requiring moral
judgment.
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Individual Belief Systems
Locus of Control
Ethical
Dilemma
The Interactionist
Model of Ethical
Decision Making
in Organizations
Cognitions
Stage of
Cognitive Moral
Development
Ethical/
Unethical
Behavior
SITUATIONAL FORCES
Immediate Job Context
Reinforcement
Job Pressures
Organizational Culture
Responsibility for
Consequences
Characteristics of the Work
Role Taking
Resolution of Moral Conflict
Source: Modified from L. K. Trevino. 1986. Ethical
Decision Making in Organizations: A Person-Situation
Interactionist Model. Academy of Management
Review 11:603.
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FIGURE 3–7
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Diversity—A Contemporary Issue of Ethics
and Social Responsibility
• Organizational diversity
 The goal of having a heterogeneous work group where
no one group occupies a majority position, and all
members are expected to work effectively with people
different from themselves.
• Why value diversity?
 Diversity is ethical.
 Diversity is socially responsible.
 Diversity is good business (competitive advantage).
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