Chapter 05 Managerial Ethics and Corporate Social - Hale

Ethics & Corporate
Social Responsibility
A Case for Companies to
be Socially Responsible
 A company is a corporate citizen—it
should act as a responsible citizen
 Improves a company’s reputation
 Companies should solve the problems
they cause
 Example—pollution
 Keeps the government out of business
 Increased market share
A Case Against Companies
being Socially Responsible
 Increases costs
 A company’s job is to make a good or
service, not improve society
 Stealing shareholders’ money
 A company’s social obligations are
discharged when it pays taxes
 Gives company’s too much power
 Businesses may exert too much
influence over charitable causes
 The code of moral principles
and values that govern the
behaviors of a person or group
with respect to what is right or
Ethical Dilemma
 A situation that arises when all
alternative choices or behaviors have
been deemed undesirable.
 Potentially negative ethical
consequences, making it difficult to
distinguish right from wrong.
Criteria for
Ethical Decision Making
 Most ethical dilemmas involve
A conflict between needs of the part &
The individual versus the
The organization versus society as a
Four Considerations in
Ethical Decision Making
Utilitarian Approach
Individualism Approach
Moral-Rights Approach
Justice Approach
Utilitarian Approach
Moral behavior produces the greatest
good for the greatest number.
Computations can be very complex,
simplifying them is considered
Critics fear a “Big Brother” approach
and ask if the common good is
squeezing the life out of the individual.
Individualism Approach
Acts are moral when they promote the
individual's best long-term interests.
Individual self-direction paramount.
Individualism is believed to lead to
honesty & integrity since that works best
in the long run.
Moral-Rights Approach
 Asserts human beings have
fundamental rights and liberties.
 Moral decisions are those that best
maintain the rights of those people
affected by them.
 An ethical decision is one that avoids
interfering with the fundamental rights of
“Moral Rights”
The right of free consent
The right to privacy
The right of freedom of conscience
The right of free speech
The right to due process
The right to life & safety
Justice Approach
 Moral Decisions must be based on
standards of equity, fairness, and
 Treatment of individuals should not be
based on arbitrary characteristics.
 Closet thinking to codified law.
Social Responsibility
 Organization’s obligation to make
choices and take actions that will
contribute to the welfare and interests of
society and organization.
 Distinguishing right from wrong.
 Being a good corporate citizen.
Many social responsibilities issues are
ambiguous with respect to right and
Shades of Corporate Green
Actively conserve
the environment
Stakeholder Approach
Address multiple stakeholder concerns
Market Approach
Respond to customers
Legal Approach
Satisfy legal requirements regarding environmental
SOURCE: Based on R.E. Freeman, J. Pierce, and R. Dodd, Shades of Green: Ethics and the Environment (New York: Oxford University Press, 1995).
Total Corporate
Social Responsibility
SOURCES: Based on Archie B. Carroll, “A Three-Dimensional Conceptual Model of Corporate Performance,” Academy of Management Review 4(1979), 499; and “The Pyramid of Corporate
Social Responsibility: Toward the Moral Management of Corporate Stakeholders,” Business Horizons 34 (July-August 1991), 42.
Corporate Responses to
Social Demands
Take social initiatives.
Degree of
Accept ethical responsibility.
Do only what is legally required.
Fight all the way.
Three Pillars of an Ethical
SOURCE: Adapted from Linda
Klebe Trevino, Laura Pincus
Hartman, and Michael Brown,
“Moral Person and Moral
Manager,” California
Management Review 42, No. 4
(Summer 2000), 128-142.