The Ethical and Social Environment

Week of 1-21

Determinants of Individual Ethics

Family

IndividualEvents

Individual Ethics

Peers

Values and Morals

Individual Ethics

Ethical Behavior Ethical behavior is in the eye of the beholder However, it also refers to behavior that

conforms to generally accepted social norms

Best guide for individual ethics is to ask yourself “Would it be okay if Mom knew I was doing this?”

Individual Ethics

Are these behaviors unethical? Using office supplies for personal use “Surfing the Net” on business time Selling a product you know to be defective Selling company stock before the general

public knows about something that will decrease the value of that stock.

? Discussion Questions ?

Have you ever been faced with an ethical dilemma at work?

What happened, and how did you resolve the issue?

Individual Ethics

Problem is that ambiguous situations can be interpreted in different ways

Ethics in Organizations

Managing Ethical Behavior Must begin with top management Training Code of Ethics

A formal, written statement of the values and ethical standards that guides a firm’s actions

Individual behavior

Arguments for Social Responsibility

Business creates problems and should therefore help to solve them

Corporations are citizens in our society Business often has the resources necessary to

solve problems Business is a partner in

our society, along with the government and general population.

Arguments Against Social Responsibility

Business lacks the expertise to manage social programs

Involvement in social programs gives business too much power

There is potential for conflict of interest The purpose of business in U.S. society is to

generate profit for owners.

Corporate Social Responsibility Hierarchy

Economic

Discretionary

Ethical

Legal

Economic Responsibilities -Be Profitable

Basic economic unit of society Produce the goods and services that society

wants and maximize profits for its owners The only social responsibility = profit-

maximizing.

Legal Responsibilities - Obey the Law Local governments State legislators Federal regulatory agencies.

Ethical Responsibilities -Do What is Right

Not necessarily codified into law May not serve the firm's direct economic

interests To be ethical organization decision makers

should: Act with equity, fairness, and impartiality Respect the rights of individuals Treat individuals differently only when

relevant to the organization's goals.

Discretionary Responsibilities -Contribute to Quality of Life

Purely voluntary and guided by a company's desire to make social contributions not mandated by economics, law, or ethics

Philanthropic contributions Goes beyond what society expects

a firm to contribute to the community's welfare.

Corporate Reactions to Ethical Crises

Obstructive - Fight All the Way

Deny all responsibility Claim that evidence of wrongdoing is

misleading or distorted Place obstacles to delay

investigation Tends to occur in firms

whose actions are based on economic considerations.

Defensive - Do Only What is Legally Required

Company admits to some errors of omission or commission

Defends itself but is not obstructive

Tend to work within the letter of the law.

Accommodative - Accept Ethical Responsibility

Accepts social responsibility for actions Try to meet economic,

legal, and ethical responsibilities

Curtail ethically questionable activities.

Proactive -Take Social Initiatives

Take the lead in social issues

Learn what is in the public interest and respond without pressure from stakeholders

Use discretionary responsibilities to enhance community welfare.