Very IMPORTANT topics today!!!
Part II
Defining the Manager’s Terrain
Ch.3 Organizational Culture
Ch.4 Global Environment
Ch.5 Social Responsibility and
Managerial Ethics
© Emily & Jian, MGTO120 Summer 2006,
HKUST
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Today’s Agenda
Short review – org. culture (Ch.3)
& global environment (Ch. 4)
 Ch.5 – social responsibility and
managerial ethics
 Tutorial – video, group
discussion (start your group
work as early as possible!)

Class ends on 4:00pm today!
© Emily & Jian, MGTO120 Summer 2006,
HKUST
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Ch.5 Social Responsibility
and Managerial Ethics
Learning objectives:
1.
2.
3.
4.
5.
Understand the classical and
socioeconomic views of social responsibility.
Understand social obligation, social
responsiveness, and social responsibility
Contrast the four views of managerial ethics
Discuss the factors that affect managerial
ethics
Discuss various ways organizations can
improve ethical behavior
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Where We Are Today
Management (Robbins & Coulter)
Part 1
Basic
Concepts
(Ch1)
Part 1
Part 2
Retrospect
(ch2)
Context
(ch3-5)
Part 3
Part 4
Planning Organizing
(ch6-9) (Ch10-13)
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Part 5
Part 6
Leading
Controlling
(Ch 14-17) (Ch 18,19)
4
Business Ethics – IMPORTANT
to managers and everyone!
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What are ethical problems?
" Many energy companies have
invested in closed or repressive
countries – arguing that their investment
would help develop the local economy
and thereby improve the human rights
situation.”
“The manager of a Mexican firm bribes
several high-ranking government officials in
Mexico City to secure a profitable
government contract....is a standard
business practice in Mexico.” (textbook)
环境污染致人死——癌症村与夺命GDP
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What Is Social Responsibility?
• Classical view - maximize
profits
Milton Friedman
– managers’
only job is to serve
stockholders
• doing “social good” adds
costs
• costs have to be passed on
to consumers
Nobel Prize
winner ! ?
• Socioeconomic view serve society
– Management’s social
responsibility goes beyond
making profits to include
protecting and improving
society’s welfare.
– Corporations are not
independent entities
responsible only to
stockholders.
– Firms have a moral
responsibility to larger society
to become involved in social,
legal, and political issues.
– “To do the right thing”
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To Whom is Management
Responsible?
Different views at different stages
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Organizational Stakeholders
Exhibit 3.11
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Social Obligation, Responsiveness,
and Responsibility
• Social Obligation
The obligation of a business to meet its
economic and legal responsibilities and
nothing more.
• Social Responsiveness
The capacity of a firm to adapt to changing
societal conditions through the practical
decisions of its managers in responding to
important social needs.
• Social Responsibility
A firm’s obligations as a moral agent extends
beyond its legal and economic obligations,
to the pursuit of long-term goals that are
good for society.
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From Obligation to
Responsiveness to Responsibility
Levels of social involvement:
e.g. Johnsons &
Johnsons – Tylenol
e.g. Café de Coral –
non-smoking areas
Social
Responsibility
Social
Responsiveness
Social Obligation
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e.g. Tobacco
manufacturers –
health warning on the
11
packing
Social Responsibility versus Social
Responsiveness
Social Responsibility
Social Responsiveness
Major consideration
Ethical
Pragmatic
Focus
Ends
Means
Emphasis
Obligation
Responses
Decision framework
Long term
Medium and short term
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corporate social responsibility
 economic performance
Does Social Responsibility Pay?
• Studies appear to show a positive
relationship between social involvement
and the economic performance of firms.
• A general conclusion is that a firm’s social
actions do not harm its long-term
performance.
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Values-Based Management
An approach to managing in which
managers establish and uphold
an organization’s shared values.


Values reflect what the
organization stands for and what
it believes in
The Purposes of Shared Values
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Purposes of Shared Values
– Serving as guideposts for managerial decisions
– Shaping employee behavior by communicating what the
organization expects of its members
– Influencing the direction of marketing efforts
– Building team spirit
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Xian Janssen
(video if time allows)
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CEO exchange –
What does “social responsibility”
mean to Jack Welch? And what
do you think?
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Managerial Ethics

Utilitarian View

Ethical decisions are made solely on the basis
of their outcomes or consequences such that the
greatest good is provided for the greatest
number.


Encourages efficiency and productivity and is
consistent with the goal of profit maximization.
Rights View

Concerned with respecting and protecting
individual liberties and privacy.

Seeks to protect individual rights of conscience,
free speech, life and safety, and due process.
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Managerial Ethics (cont’d)

The Theory of Justice

Organizational rules are enforced fairly and
impartially and follow all legal rules and
regulations.


Protects the interests of underrepresented
stakeholders and the rights of employee.
Integrative Social Contracts Theory

Ethical decisions should be based on existing
ethical norms in industries and communities in
order to determine what constitutes right and
wrong.

Based on integration of the general social
contract and the specific contract between
community members.
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Why employee would behave
ethically or unethically?



Individual characteristics
Organizational characteristics
Issue Intensity
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Factors That Affect Ethical and
Unethical Behavior
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Individual Characteristics
Affecting Ethical Behaviors

Stage of Moral Development


Values


A measure of an individual’s
independence from outside influences
Basic convictions about what is right or
wrong on a broad range of issues
Personality Variables


Ego strength
Locus of Control
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Stages of Moral Development
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Organizational Characteristics
Affecting Ethical Behaviors




Performance appraisal systems
Reward allocation systems
Behaviors (ethical) of managers
Organizational culture
Good structural design minimizes ambiguity and
uncertainty and fosters ethical behavior.
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Intensity of the ethical issue
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How Managers Can Improve Ethical
Behavior in An Organization
1.
Hire individuals with high ethical standards.
2.
Establish codes of ethics and decision
rules.
3.
Lead by example.
4.
Delineate job goals and performance
appraisal mechanisms.
5.
Provide ethics training.
6.
Conduct independent social audits.
7.
Provide support for individuals facing
ethical dilemmas.
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Many organizations are now having
their “Codes of conduct”
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JUSTICE
(practical, by John, not in text)
a model of Ethical Decision criteria
2.
Justice: all follow same rule
Utilitarianism: greatest good
3.
Spiritual values: do unto others as you
1.
would want them to do to you
4.
TV rule: defend openly on TV
5.
Influence: any influence of your action?
Core: important to you, your core values
Emergency: urgency of situation
6.
7.
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“Parable of the Sadhu”
• What is the ethical issue? What are the
dilemmas?
• What do you think Buzz McCoy did?
• What would YOU do? Why? (apply the
JUSTICE model?)
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Parable of the Sadhu
• true story: Parable on ethics.
During a climbing expedition in
Nepal, a man encounters a
dying pilgrim - a sadhu, an
Indian holy man. Members of
several groups do what they
can - food, warm clothes, etc. but none made sure that he
would be safe. Should someone
have stopped to help the sadhu
to safety? Would it have done
any good? Was the group
responsible?
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• characters:
Wall Street New York Banker Buzz McCoy,
good-hearted mountain climber Steven,
the “Sherpa” (local guide)
and the Sadhu (a Monk, a Holy man)
• Some strange English:
“Mate”: Australian/ New Zealander for friend
“Good Samaritan” (from Samaria) helped victim (Bible
story)
altitude sickness
Nepal (country at top of Himalayas)
32 degrees is freezing in Fahrenheit scale
• put yourself in other person’s shoes – the dilemma, what
did they do, what should they do, and what would you do?
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Why did it happen?
• Stress
• Goal Obsession
• Failures of leadership
– value conflicts
– buck passing: no one takes final responsibility
– decision by technicians
• bad examples
• alien cultural environments
• blaming the victim
• failure of individual moral responsibility
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Cases
• Enron
“The downfall of Enron Corporation is one of the most
infamous and shocking events in financial world in the
whole history of the mankind, and its reverberations were
felt on global scale.”
• Anderson
(Textbook page 125)
• Search information about the cases of Worldcom, Tyco
International, Imclone...what were the ethical issues
involved?
• HK cases??
• http://www.businessethics.ca/enron/
• http://articles.pointshop.com/ethics/
Read more articles in google, searching with key works like “Business Ethics”,
“managerial ethics”, and “Enron”, “Anderson”, etc. Tons of articles!
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Homework (remember, this course is
to HELP you to think critically, but it is
YOU who THINK):



Think about social responsibility
and ethics issues in your life –
(un)ethical things that you
observed/encountered/did? Why
and in what sense it is (un)ethical?
How HKUST can improve campus
ethical behavior?
Plan ahead ! – mid-term exam,
group movie project
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HKUST
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Starting next class...
We will talk about POLC in
greater detail.
Part III Planning
Read Ch.6 & 7
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HKUST
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