Ethics,
Corporate
Responsibility,
and
Sustainability
Chapter Five
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Learning Objectives
LO1 Describe how different ethical perspectives guide
decision making
LO2 Explain how companies influence their ethics
environment
LO3 Outline a process for making ethical decisions
LO4 Summarize the important issues surrounding corporate
social responsibility
LO5 Discuss reasons for businesses’ growing interest in the
natural environment
LO6 Identify actions managers can take to manage with the
environment in mind
5-2
Ethics
Ethics
The system of rules
that governs the
ordering of values
5-3
Telling the Truth and Lying:
Possible Outcomes
Table 5.1
5-4
It’s a Personal Issue
Most of us think we are good decision
makers, ethical, and unbiased.
But most people have unconscious biases
that favor themselves and their own group.
5-5
It’s a Personal Issue
Managers often:
Hire people who are like them
Think they are immune to conflicts of interest
Take more credit than they deserve
Blame others when they deserve some blame
themselves
5-6
It’s a Personal Issue
If the employer pays
for the computer and
the time you spend
sitting in front of it, is
it ethical for you to
use the computer to
do tasks unrelated to
your work?
5-7
Ethics
Ethical issue
Situation, problem, or opportunity in which an
individual must choose among several actions
that must be evaluated as morally right or wrong
Business ethics
The moral principles and standards that guide
behavior in the world of business.
5-8
Ethical Systems
Moral philosophy
Principles, rules, and values people use in
deciding what is right or wrong
Universalism
The ethical system stating that all people should
uphold certain values that society needs to
function.
5-9
Caux Principles
Caux Principles
Ethical principles established by international
executives based in Caux, Switzerland, in
collaboration with business leaders from Japan,
Europe, and the United States.
5-10
Caux Principles
Kyosei
living and working
together for the
common good,
allowing cooperation
and mutual
prosperity to coexist
with healthy and fair
competition
Human dignity
concerns the value of
each person as an
end, not a means to
the fulfillment of
others’ purposes
5-11
Question
Which ethical system bases ethical behavior
on the opinions and behaviors of relevant
other people?
A. Egoism
B. Utilitarianism
C. Relativism
D. Virtue ethics
5-12
Ethical Systems
Egoism
An ethical system defining acceptable behavior
as that which maximizes consequences for the
individual
5-13
Ethical Systems
Utilitarianism
An ethical system stating that the greatest good
for the greatest number should be the overriding
concern of decision makers.
5-14
Ethical Systems
Relativism
Philosophy that bases ethical behavior on the
opinions and behaviors of relevant other people
Virtue ethics
Classification of people based on their level of
moral judgment.
5-15
Ethical Systems
Kohlberg’s model of cognitive moral
development
Perspective that what is moral comes from what
a mature person with “good” moral character
would deem right.
5-16
Current Ethical Issues in Business
Table 5.2
5-17
Question
What act passed into law by Congress in 2002
established strict accounting and reporting
rules?
A. Wagner Act
B. Sarbanes-Oxley Act
C. Chapin Act
D. GAAP Act
5-18
The Ethics Environment
Sarbanes-Oxley Act
An act passed into law by Congress in 2002 to
establish strict accounting and reporting rules in
order to make senior managers more
accountable and to improve and maintain
investor confidence
5-19
Business Ethics
Ethical climate
In an organization,
the processes by
which decisions are
evaluated and made
on the basis of right
and wrong
5-20
Danger Signs
1.
2.
3.
4.
Excessive emphasis on short-term revenues over
longer-term considerations.
Failure to establish a written code of ethics.
A desire for simple, “quick fix” solutions to
ethical problems.
An unwillingness to take an ethical stand that
may impose financial costs.
5-21
Danger Signs (cont.)
5. Consideration of ethics solely as a legal
6.
7.
issue or a public relations tool
Lack of clear procedures for handling ethical
problems.
Responding to the demands of shareholders
at the expense of other constituencies
5-22
Danger Signs
Ethical leader
One who is both a moral person and a moral
manager influencing others to behave ethically.
5-23
Ethics Programs
Compliance-based ethics programs
Company mechanisms typically designed by
corporate counsel to prevent, detect, and punish
legal violations.
5-24
Ethics Programs
Integrity-based
ethics programs
Company
mechanisms
designed to instill in
people a personal
responsibility for
ethical behavior
5-25
A Process for Ethical Decision Making
Figure 5.1
5-26
Ethical Decision Making
Making ethical decisions takes:
Moral awareness
realizing the issue has ethical implications
Moral judgment
knowing what actions are morally defensible
Moral character
the strength and persistence to act in accordance
with your ethics despite the challenges
5-27
Courage
Behaving ethically requires not just moral
awareness and moral judgment but also
moral character, including the courage to take
actions consistent with your ethical decisions
5-28
Corporate Social Responsibility
Corporate social
responsibility (CSR)
Obligation toward
society assumed by
business.
Triple bottom line
5-29
Corporate Social Responsibility
Economic responsibilities
To produce goods and services that society wants
at a price that perpetuates the business and
satisfies its obligations to investors.
Legal responsibilities
To obey local, state, federal, and relevant
international laws
5-30
Corporate Social Responsibility
Ethical responsibilities
Meeting other social expectations, not written as
law.
5-31
Corporate Social Responsibility
Philanthropic
responsibilities
Additional behaviors
and activities that
society finds
desirable and that
the values of the
business support.
5-32
Pyramid of Global Corporate Social
Responsibility and Performance
Figure 5.2
5-33
Corporate Social Responsibility
Transcendent education
An education with five higher goals that balance
self-interest with responsibility to others
Empathy, generativity, mutuality, civil aspiration,
intolerance of ineffective humanity
5-34
Contrasting Views
First - holds that managers act as agents for
shareholders and, as such, are obligated to
maximize the present value of the firm
Second - managers should be motivated by
principled moral reasoning
5-35
Reconciliation
Profit maximization and corporate social
responsibility used to be regarded as
antagonistic, leading to opposing policies. But
the two views can converge
Recent attention has also been centered on
the possible competitive advantage of socially
responsible actions
5-36
Ecocentric Management
Ecocentric management
Goal is the creation of sustainable economic
development and improvement of quality of life
worldwide for all organizational stakeholders.
5-37
Ecocentric Management
Sustainable growth
Economic growth and development that meet
present needs without harming the needs of
future generations
5-38
Ecocentric Management
Life-cycle analysis (LCA)
A process of analyzing all inputs and outputs,
though the entire “cradle-to-grave” life of a
product, to determine total environmental
impact
5-39
Video: Cell Phones for Soldiers
Why is it important
for Rob and Brittany
Bergquist to be
socially responsible?
5-40
