Mata kuliah : A0012 – Manajemen Umum
Tahun
: 2010
Session 5
ETHICS AND CORPORATE
RESPONSIBILITY
Learning Objectives
• After studying this, you will know:
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–
–
–
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how different ethical perspectives guide decision making
how companies influence the ethics environment
the options you have when confronting ethical issues
the important issues surrounding corporate social responsibility
how the political and social environment affects your firm’s competitive position and
legitimacy
– the strategies corporations use to manage the political and social environment
– the role of managers in our natural environment
5-2
Outline Materi
• Ethics
•
Corporate Social Responsibility
•
The Political Environment
•
The Natural Environment
Bina Nusantara
Ethics
• Ethics
– the system of rules governing the ordering of values
• affects people’s behavior and the ‘goods’ that are worth seeking
• values - principles of conduct
– ethics becomes more complicated when a situation dictates that one value overrules another
– business ethics - the moral principles and standards that guide behavior in the world of
business
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Ethics (cont.)
• Ethical systems
– moral philosophy - the principles, rules, and values people use in deciding what is right and
wrong
– universalism - individuals should uphold certain values, regardless of the immediate result
• important values are those that society needs to function
– teleology - an act is morally right if it produces a desired result
• egoism - acceptable behavior maximizes consequences for the individual
• utilitarianism - seeks the greatest good for the greatest number of
people, thereby maximizing total utility
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Ethics (cont.)
• Ethical systems (cont.)
– deontology - focuses on the rights of individuals
• ensures that equal respect is given to all persons
• concentrates on means
– relativism - ethical behavior defined by the opinions and behavior of relevant other people
• acknowledges the existence of different theoretical viewpoints
• group consensus is sought
– positive consensus signifies that an action is right, ethical, and acceptable
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Ethics (cont.)
• Ethical systems (cont.)
– virtue ethics - morality defined by what a mature person with ‘good’ moral character would
deem right
• society’s rules provide a moral minimum
• individual’s can transcend rules by applying personal standards
– Kohlberg’s model of cognitive moral development
• preconventional stage - decisions based on concrete rewards,
punishments, and immediate self-interest
• conventional stage - actions conform to societal expectations
• principled stage - follow self-chosen ethical principle
– see beyond authority, laws, and norms
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Ethics (cont.)
• The ethics environment
– Ethical climate - processes by which decisions are evaluated and made on the basis of right
and wrong
• unethical corporate behavior may be the responsibility of an unethical
individual
– often reveals a company culture that is ethically lax
– Corporate ethical standards- organizations must be explicit regarding their ethical standards
and expectations
• there are many different corporate ethical standards
– golden rule
– accepted business practice
– intuitive approach
5-8
Ethics (cont.)
• The ethics environment (cont.)
– Ethics codes - most visible sign of corporate commitment to ethical behavior
• must be tailored to individual company’s philosophies
• address subjects such as employee conduct, community and
environment, shareholders, customers, political activity
– Ethics programs
• compliance-based - designed by corporate counsel to prevent, detect,
and punish legal violations
– increases surveillance and controls
• integrity-based - guiding principles that instill personal responsibility for
ethical behavior
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Ethical Decision Making
Define the
issue clearly
Identify the
relevant values
in the
situation
Ethical
Decision
Making
Implement the
decision
Weigh conflicting
values and choose
option that
balances them
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Corporate Social Responsibility
• Corporate social responsibility
– the obligation toward society assumed by business
• maximizes it positive effects on society and minimizes it negative effects
– economic responsibilities - produce goods and services that society wants at a price that
perpetuates the business
– legal responsibilities - obey local, state, federal and relevant international laws
– ethical responsibilities - meeting other societal expectations, not written as law
– voluntary responsibilities - additional behaviors that society finds desirable and that the values
of the business support
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Pyramid Of Corporate Social Responsibility
Voluntary
Responsibilities
Be a good corporate
citizen
Ethical
Responsibilities
Be ethical
Legal
Responsibilities
Obey the law
Economic
Responsibilities
Be profitable
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The Political Environment
• Competitive advantage
– progressive organizations realize that government may be the source of competitive
advantages for an individual company or an entire industry
– numerous examples of public policy that assists business
• Corporate legitimacy
– motive for business involvement in the public policy process
– organizations are legitimate to the extent that their goals and methods are consistent with
those of society
– domain defense - activities intended to counter challenges to the organization’s legitimacy
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The Political Environment (cont.)
• Strategies for influencing the political environment
– public affairs department - monitors key events and trends, analyzes their effects on the
organization, recommends organizational responses, and implements political strategies
– Lobbying - traditional form of influence
• involves political professionals or company executives who establish
communication channels with regulatory bodies
– Political action committees (PACs) - make donations to candidates for political office
• companies may ask employees or shareholders for contributions to political
candidates, subject to certain limitations
• “protection money” - donated money intended to ensure that company is
not disadvantaged in the legislative process
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The Political Environment (cont.)
• Strategies for influencing the political environment (cont.)
– Corporate constituency programs - organizational effort to identify, educate, and motivate
individuals to take political action that could benefit the organization
• encourage interested stakeholders to take grassroots action
• probably requires the greatest commitment of organizational resources
– Coalition building - finding other organizations or voter groups that share political interests
on a particular legislative issue
• combine efforts and power to influence the environment
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The Political Environment (cont.)
• Strategies for influencing the political environment (cont.)
– Stonewalling - use of public relations, legal action, and administrative processes to prevent or
delay the introduction of legislation and regulation that may have an adverse impact on the
organization
• rarely changes the conditions that led to the adverse regulation
• consumes considerable time and money, and may boomerang
– Strategic retreat - response to adverse regulatory change
• efforts to adapt products and processes to changes in the political and
social environments while minimizing the negative effects of those
changes
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The Natural Environment
• Environmental issues
– range of issues is broad, and the impact huge
• must consider a mix of technical, ethical, social, and competitive issues
– e.g., many technological developments used by business are contributing to the destruction of ecological
ecosystems
• A risk society
– sources of risk include:
• excessive production of hazards
• ecologically unsustainable consumption of natural resources
– risk has proliferated due to population explosion, industrial pollution, and environmental
degradation
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The Natural Environment (cont.)
• Ecocentric management
– has as its goal the creation of sustainable economic development and improvement of quality
of life worldwide for all organizational stakeholders
– seeks to minimize negative environmental impact
– design for environment (DFE) - tool for creating products that are easy to recover, reuse, or
recycle
• all environmental effects of a product are examined during the design
phase
– assessments of inputs
– analysis of how consumers will use and dispose of the product
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The Natural Environment (cont.)
• Environmental agenda for the future
– corporations are the only organizations with the resources, technology, and global power to
help create a sustainable world
• webs of companies with a common ecological vision can combine their
efforts into high-leverage, impactful action
– companies beginning to acquire the motivation to solve environmental problems
• may represent the biggest opportunity in the history of commerce
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