Ethics & Social Responsibility

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Broader responsibility --

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

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Social Responsibility

There is one and only one social responsibility of business—to 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

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Carroll’s 4 Responsibilities

–Economic–Legal–Ethical–Discretionary

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Carroll’s 4 Responsibilities

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Corporate Stakeholders

Affect or are affected by the achievement of the corporation’s objectives

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Corporate Stakeholders

Stakeholder Analysis –

–Primary stakeholder•Sufficient bargaining power to affect outcomes

–Secondary stakeholder•Indirect stake but are affected by corporation’s actions

–Estimate the effect on each stakeholder

–Stakeholder Input•Determine whether input is necessary

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Ethical Behavior

“business ethics”

–Argument that there is no such thing … it is an oxymoron

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Ethical Decision Making

Corporate practices --

–Massive write-downs and restatements of profit–Misclassification of expenses as capital expenditures–Pirating corporate assets for personal gain

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Ethical Decision Making

Recent Survey Results --

–70% distrust business executives–Enron–WorldCom

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Reasons for Unethical Behavior

Provocative Question --

–Why are businesspeople perceived to be acting unethically?

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Reasons for Unethical Behavior

Perceptions caused by --

–Not aware of impropriety–Cultural norms and values vary–Governance systems based on rule or relationships–Differences in values between businesspeople and key stakeholders

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Reasons for Unethical Behavior

Most common reasons for bending rules --

–Organizational performance required it–Ambiguous or out of date rules–Pressure from others – everyone else does it

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Moral Relativism

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

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Kohlberg’s Levels of Moral Development

1. Preconventional level

–Characterized by a concern for self•Personal interest•Avoidance of punishment

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Kohlberg’s Levels of Moral Development

2. Conventional level

–Characterized consideration of society’s values•External code of conduct

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Kohlberg’s Levels of Moral Development

3. Principled level

–Characterized by adherence to internal moral code

•Universal values or principles

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Encouraging Ethical Behavior

Codes of Ethics

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

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Encouraging Ethical Behavior

Guidelines for Ethical Behavior

–Ethics- -Consensually accepted standards of behavior

–Morality- - Percepts of personal behavior based on religious or philosophical grounds

–Law- -formal codes that permit or forbid