STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITIONTHOMAS L. WHEELEN J. DAVID HUNGERCHAPTER 3 Ethics & Social Responsibility

Ethics & Social Responsibility

Corporate GovernanceBroader responsibility --

Private corporations have responsibility to society that extend beyond making a profit

Social ResponsibilityThere is one and only one social responsibility of businessto use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.Milton Friedman

Corporate GovernanceCarrolls 4 Responsibilities

EconomicLegalEthicalDiscretionary

Carrolls 4 Responsibilities

Corporate StakeholdersAffect or are affected by the achievement of the corporations objectives

Corporate StakeholdersStakeholder Analysis

Primary stakeholderSufficient bargaining power to affect outcomes

Secondary stakeholderIndirect stake but are affected by corporations actions

Stakeholder InputDetermine whether input is necessary

Ethical Behaviorbusiness ethics

Argument that there is no such thing it is an oxymoron

Ethical Decision MakingCorporate practices --

Massive write-downs and restatements of profitMisclassification of expenses as capital expendituresPirating corporate assets for personal gain

Ethical Decision MakingRecent Survey Results --

70% distrust business executivesEnronWorldCom

Reasons for Unethical BehaviorProvocative Question --

Why are businesspeople perceived to be acting unethically?

Reasons for Unethical BehaviorPerceptions caused by --

Not aware of improprietyCultural norms and values varyGovernance systems based on rule or relationshipsDifferences in values between businesspeople and key stakeholders

Reasons for Unethical BehaviorAllport-Vernon-Lindzey Study of Values --

AestheticEconomicPoliticalReligiousSocialTheoretical

Reasons for Unethical BehaviorMost common reasons for bending rules --

Organizational performance required itAmbiguous or out of date rulesPressure from others everyone else does it

Moral RelativismMorality is relative to some personal, social, or cultural standard and there is no method for deciding whether one decision is better than another.

Kohlbergs Levels of Moral Development1. Preconventional level

Characterized by a concern for selfPersonal interestAvoidance of punishment

Kohlbergs Levels of Moral Development2. Conventional level

Characterized consideration of societys valuesExternal code of conduct

Kohlbergs Levels of Moral Development3. Principled level

Characterized by adherence to internal moral codeUniversal values or principles

Encouraging Ethical BehaviorCodes of Ethics

Specifies how an organization expects its employees to behave on the job.

Encouraging Ethical BehaviorGuidelines for Ethical Behavior

Ethics

Morality

Law

Encouraging Ethical BehaviorApproaches to Ethical Behavior

UtilitarianJudged by consequences

Individual RightsFundamental rights in all decisions

JusticeDistribution in equitable fashion

Encouraging Ethical BehaviorApproaches to Ethical Behavior

Categorical imperativegolden ruleMeans - Ends

Strategy Bits192 U.S. companies surveyed --

92% monitored employees use of e-mail/Internet

26% monitored employees electronic activities all the time

Almost none had checks in place to protect employees privacy

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