SOCIAL RESPONSIBILITY AND
BUSINESS
4TH EDITION
FERRELL • THORNE • FERRELL
CHAPTER 6
Strategic Approaches to
Improving Ethical Behavior
The Need for
Organizational Ethics Programs
• Organizations are held accountable for the conduct of
their employees.
– Without such programs, employees may not understand
acceptable behavior.
• Organizations can create unethical corporate cultures.
– Pressure to succeed
– Rewarding the wrong behavior
• Stakeholders demand greater ethical and
social responsibility.
Codes of Conduct
• Formal statements that describe what an
organization expects of its employees
– Reflect the board of directors and senior
management’s desire for organizational
compliance
– Assess key risks for the organization
Ethics Officers
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Assess organizational needs and risks
Develop and distribute the code of ethics
Conduct ethics training programs
Establish and maintain a confidential system to respond to
ethics questions
Make certain the company is in compliance with government
regulation
Monitor and audit ethics conduct
Take action when there is a code violation
Review and update the code
Ethics Training and Communication
• Educates employees about the firm’s policies,
expectations, relevant laws and regulations,
and general social standards
• Makes employees aware of available
resources, support systems, and personnel
who can assist with ethics and legal advice
• Can empower employees
Establishing Systems to Monitor
and Enforce Ethical Standards
• Help or assistance lines
– Report and request assistance with ethical concerns
• Observation and feedback
– Determine level of adequacy in handling ethical issues
• Whistle-blowing
– Exposing an employer’s wrongdoing to
outsiders, such as the media or government agencies
– Protection for accurate exposures
Leaders influence Corporate Culture
• Organizational leaders use their power and
influence to shape corporate culture. Power
refers to the influence that leaders have over
the behavior and decisions of subordinates.
• Transformational vs. transactional leaders
• Exerting power is one way to influence the
ethical decision-making framework.
Five Power Bases
• There are five power bases from which one
person may influence another:
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Reward power
Coercive power
Legitimate power
Expert power
Referent power
SOCIAL RESPONSIBILITY AND
BUSINESS
4TH EDITION
FERRELL • THORNE • FERRELL
CHAPTER 7
Employee Relations
Psychological Contract
• The beliefs, perceptions, expectations, and
obligations that make up the agreement
between individuals and the organizations that
employ them
– Largely unwritten
– Details of the contract develop through
interactions with managers and coworkers and
through perceptions of the corporate culture
Changes in Employees’
Psychological Contract with Employers
Legal Responsibilities to Employees
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Employment at will
Wages and benefits
Labor unions
Health and safety
Equal Opportunity Employment
Sexual Harassment
– Unwelcome sexual advances, requests for sexual
favors, and other verbal or physical conduct of a
sexual nature
Ethical Responsibilities
to Employees
• Training and development
• Diversity
• Allow for work/life balance
– Assist employees in balancing work
responsibilities with personal and family
responsibilities
– Provide flexibility
• Flextime, Job sharing, Child care, Elder care, Health
clubs
Philanthropic Activities
• Corporate giving affects employee attitudes toward the
organization.
• Employees benefit from participating in volunteerism
programs and other philanthropic projects.
– Builds teamwork skills
– Educates employees
– Example: More than 30,000 volunteers support the Ronald
McDonald House Charities, donating one million hours of
service per year (Source: www.rmhc.com, 11/30/09).
SOCIAL RESPONSIBILITY AND
BUSINESS
4TH EDITION
FERRELL • THORNE • FERRELL
CHAPTER 8
Consumer Relations
Consumer Economic Issues
• Consumers are primary stakeholders because their awareness,
purchase, use and repurchase of products is vital to a
company’s existence.
• Consumers and business are connected by an economic
relationship.
• Consumers exchange money for goods or services.
• Consumers expect the products they purchase to perform as
guaranteed by the sellers.
– In the early 1900s “let the buyer beware” typified the power
that business- not consumers- wielded in exchange relationships. This
is still true in less developed parts of the world.
Motivations for
Illegitimate Consumer Complaints
Additional Legal Issues and Relevant
Laws
• Health and safety
– Pure Food and Drug Act
• Credit and ownership
– Home Ownership and Equity Protection Act
• Marketing, advertising, and packaging
– Federal Trade Commission Act
– Telemarketing and Consumer Fraud
and Abuse Prevention Act
Additional Legal Issues and Relevant
Laws (cont.)
• Sales and warranties
• Product liability- a business’s legal
responsibility for the performance of its
products
– Toy Safety Act
• International issues
• Consumerism protect consumers from an
imbalance of power
Ethical Issues
• Consumer Bill of Rights
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Right to choose
Right to safety
Right to be informed
Right to be heard
Right to seek redress
Right to privacy
Philanthropic Issues
• Consumers are increasingly concerned with
organizations’ social responsibility.
• Organizations are increasingly linking
philanthropic efforts with consumer interests
in order to strengthen ties to consumers.
– Avon—breast cancer fundraising
– Home Depot—Habitat for Humanity
– Eastman Kodak—World Wildlife Fund
SOCIAL RESPONSIBILITY AND
BUSINESS
4TH EDITION
FERRELL • THORNE • FERRELL
CHAPTER 9
Community Relations and
Strategic Philanthropy
Community Stakeholders
• Issues of concern include:
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Pollution of the environment
Land use
Economic advantages to the region
Discrimination
Exploitation of workers and consumers
• Neighbor of choice
– An organization that builds and
sustains trust within the community
Responsibilities to the Community
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Economic issues
Legal issues
Ethical issues
Philanthropic issues
24
Economic Issues
• Business is vital to the community.
• Buyer-seller interaction stimulates the economy.
• Companies hire, train, and buy supplies, raw
materials, utilities, advertising services, and other
local goods and services.
• A company’s departure or retrenchment from
a community can be devastating to
the local economy.
• Downsizing
• Plant closings
25
Legal Issues
• A company must operate within legal and regulatory
parameters.
• Companies are granted a license to operate.
– Business license
– Sales tax number
• Many mega-retailers have faced rejection because
people believe they threaten small “mom & pop”
businesses.
Ethical Issues
• Companies may evaluate the role and impact of
their decisions on communities from an ethical
perspective.
• Business leaders are taking greater responsibility for
determining how they can assist in improving
communities.
– Improving public schools and education
– Assisting in the development of mass transit
– Supporting environmental initiatives
27
Philanthropic Issues
• Historically this has meant providing
support for worthy causes.
– Gifts
– Grants
– Other resources
• Volunteer programs
– Employees donate time in support of social causes
(volunteerism).
– Communities benefit from the application of new skills
and initiative toward problems; and companies develop
better community relations.
Strategic Philanthropy
• The synergistic use of an organization’s core
competencies and resources to address key
stakeholders’ interests and to achieve both
organizational and social benefits
– Goes beyond traditional benevolent philanthropy
– Involves both financial and non-financial
contributions to stakeholders
– Involves employees, organizational
resources, and expertise
Cause-Related Marketing
• An organization’s products are tied directly to a social concern.
• Percentage of sales are usually donated to a cause appealing to a
relevant target market.
• Overall goal is to increase product sales for a defined period
of time.
• Charity partners often assist in promoting the alliance
(e.g., Habitat for Humanity partnered with Home Depot).
• American Express pioneered this process in 1983 by donating a
percentage of credit card sales to the Statue of Liberty and Ellis
Island Restoration Fund.
SOCIAL RESPONSIBILITY AND
BUSINESS
4TH EDITION
FERRELL • THORNE • FERRELL
CHAPTER 11
Sustainability Issues
Sustainability
• Sustainability is the potential for long-term wellbeing of the natural environment, including all
biological entities, as well as the interaction among
nature and individuals, organizations, and business
strategies.
• Sustainability includes the assessment and
improvement of business strategies, economic
sectors, work practices, technologies, and lifestyles
while maintaining the natural environment.
Global Environmental Issues
• Natural environment
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Air, Water, Land Pollution
Global Warming
Acid Rain
Deforestation
Urban Sprawl
Waste Management
Genetically Modified Food
Ways to Curb Environmental Issues
• DOE – Jabatan Alam Sekitar
• Environmental Legislation
• Alternative energy – wind, solar, hydro, biofuel,
electric etc.
• Recycling
• Green Marketing
• Emissions reduction
• Socially Responsible Buying
• Environmental Management – ISO 14000
SOCIAL RESPONSIBILITY AND
BUSINESS
4TH EDITION
FERRELL • THORNE • FERRELL
CHAPTER 12
Social Responsibility in a
Global Environment
The Global Marketplace
The expanding global marketplace
requires that executives and
managers develop the ability to
conduct business effectively and
socially responsibly in
different regions of the world.
Employee Issues in Global
Environment
• Wages and benefits relative to home country standards
• Attitudes toward employees from different genders and
ethnicities, especially in executive positions
• Existence of collective bargaining efforts
• Laws and regulations for employee rights, health, and safety
• Norms of employee volunteering
• Availability and comfort with open-door policies and other
management practices
Consumer Issues in Global
Environment
• Laws and regulations on product safety and
liability
• Presence and power of consumer rights groups
• Respect for the product needs of subcultures
and minority groups
• Attitudes and accommodations for customers
with disabilities
Shareholder Issues in Global
Environment
• Laws and regulations regarding ownership and
corporate governance
• Stability and governance of stock exchanges
• Willingness and ability to participate in
shareholder meetings
Supplier Issues in Global
Environment
• Ethical and social considerations in the supply
chain
• Prices offered to suppliers in developed
countries and developing countries in
comparison to other suppliers
• Availability and attitudes toward minority
suppliers
Community Issues in Global
Environment
• Norms of community relations and dialogue
• Expectations of community service and/or
philanthropy
• Rights of indigenous people
• Availability and quality of infrastructure
(roads, utilities, schools, etc.)
Environmental Issues in Global
Environment
• Environmental law and regulations
• Availability of “green” electricity, recycled
materials, and other environmentally friendly
inputs
• Environmental expectations relative to those in
home country
• Use of natural resources to achieve business
goals