Managerial Ethics &
Corporate Social
Responsibility
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Ethics
• The code of moral principles and
values that govern the behaviors
of a person or group with respect
to what is right or wrong.
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American Forest & Paper Association
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Three Domains of Human Action
Domain of Certified Law
Domain of Ethics
Domain of Free Choice
(Legal Standard)
(Social Standard)
(Personal Standard)
Amount of
High
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Explicit Control
Low
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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.
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Criteria for
Ethical Decision Making
• Most ethical dilemmas involve
 A conflict between needs of the part & whole.
 The individual versus the organization.
 The organization versus society as a whole.
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Four Considerations in
Ethical Decision Making
Utilitarian Approach
Individualism Approach
Moral-Rights Approach
Justice Approach
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Utilitarian Approach
Moral behavior produces the greatest good for the
greatest number.
Computations can be very complex, simplifying
them is considered appropriate.
Critics fear a “Big Brother” approach and ask if
the common good is squeezing the life out of the
individual.
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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.
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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 others.
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“Moral Rights” Considerations
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
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Justice Approach
• Moral Decisions must be based on standards
of equity, fairness, and impartiality.
• Treatment of individuals should not be based
on arbitrary characteristics.
• Closet thinking to codified law.
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Levels of Moral Development
SOURCES: Based on L. Kahlberg, “Moral Stages and Moralization: The Cognitive-Developmental Approach, in Moral Development and Behavior: Theory, Research, and
Social Issues, ed. T. Lickona (New York: Holt, Rinehart, and Winston, 1976), 31-53; and Jill W. Graham, “Leadership, Moral Development and Citizenship Behavior,”
Business Ethics Quarterly 5, no. 1 (January 1995), 43-54.
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Cultural Impact Questions
 Identify the organizations heroes.
 What are some important organizational rituals?
 What are the ethical messages sent to new entrants into the
organization, must they obey authority at all costs?
 Does analysis of organizational stories and myths reveal
individuals who stand up for what is right, or is conformity
the valued characteristic?
 Does language exist for discussing ethical concerns?
 What informal socialization process exist?
SOURCE: Linda Klebe Trevino, “A Cultural Perspective on Changing and Developing Organizational Ethics,” in Research in Organizational Change and Development, ed. R.
Woodman and W. Pasmore (Greenwich, Conn: JAI Press, 1990), 4.
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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 wrong.
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Shades of Corporate Green
Activist
Approach
Actively conserve
the environment
Stakeholder Approach
Address multiple stakeholder concerns
Market Approach
Respond to customers
Legal Approach
Satisfy legal requirements regarding environmental
conservation
SOURCE: Based on R.E. Freeman, J. Pierce, and R. Dodd, Shades of Green: Ethics and the Environment (New York: Oxford University Press, 1995).
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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.
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Corporate Responses to
Social Demands
High
Proactive
Take social initiatives.
Accommodation
Degree of
Social
Responsibility
Accept ethical responsibility.
Defense
Do only what is legally required.
Obstruction
Low
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Fight all the way.
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Three Pillars of an Ethical
Organization
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.
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Enlightened Companies
• Realize the importance of:
– integrity
– trust
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