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Social

Responsibilityand Ethics inStrategic

Management

Chapter 3

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Learning Objectives

Cond#ct a sta+eholder analysis

E"plain why people may act

#nethically,escribe di-erent views o ethics

according to the #tilitarian.

individ#al rights and j#sticeapproaches

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Social Responsibilities o Strategic

,ecision Ma+ers

Social Responsibility proposes that a private corporation has

responsibilities to society that e"tendbeyond ma+ing a pro/t


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Friedmans 1raditional 2iew o

#siness Responsibility

4rg#es against the concept o socialresponsibility

%rimary goal o b#siness is pro/tma"imi5ation not spendingshareholder money or the general

social interest

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Carrolls Fo#r Responsibilitieso #siness

1.Economic responsibilities prod#ce goods and services o val#e to

society so that the /rm may repay itscreditors and increase the wealth o itsshareholders

2.Legal responsibilities de/ned by governments in laws that

management is e"pected to obey


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Carrolls Fo#r Responsibilitieso #siness

3.Ethical responsibilities ollow the generally held belies abo#t

behavior in a society

4.Discretionary responsibilities p#rely vol#ntary obligations a

corporation ass#mes


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Responsibilities o #siness

Fig#re 3*(


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Responsibilities o a #siness Firm

Social capital the goodwill o +ey sta+eholders. that

can be #sed or competitive advantage

opens doors in local comm#nities

enhances rep#tation with cons#mers


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ene/ts o eing

Socially Responsible

May enable /rm to charge premi#mprices and gain brand loyalty

May help generate end#ringrelationships with s#ppliers anddistrib#tors

Can attract o#tstanding employees

Can #tili5e the goodwill o p#blico:cials or s#pport in di:c#lt times

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Characteristics oS#stainability

Environmental

EconomicSocial

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Corporate Sta+eholders

Stakeholders have an interest in the b#siness and

a-ect or are a-ected by theachievement o the /rms objectives

Enterprise strategy

an overarching strategy that e"plicitlyartic#lates the /rms ethical relationshipwith its sta+eholders

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Sta+eholder 4nalysis

Stakeholder analysis the identi/cation and eval#ation o

corporate sta+eholders

#s#ally done in a three*step process

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1he frst step in sta+eholder analysisis to identiy primary sta+eholders;

rimary stakeholders have a direct connection with the

corporation and who have s#:cientbargaining power to directly a-ect

corporate activities incl#de c#stomers. employees. s#ppliers.

shareholders and creditors


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1he second step in sta+eholderanalysis is to identiy the secondarysta+eholders;

Secondary stakeholders have an indirect sta+e in the corporation

b#t are also a-ected by corporate activities

incl#de

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1he third step in sta+eholderanalysis is to estimate the e-ect on

each sta+eholder gro#p rom anypartic#lar strategic decision;


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Sta+eholder >np#t

Once sta+eholder impacts have beenidenti/ed. managers sho#ld decidewhether sta+eholder inp#t sho#ld be

invited into the disc#ssion o thestrategic alternatives;

4 gro#p is more li+ely to accept or even

help implement a decision i it has someinp#t into which alternative is chosenand how it is to be implemented;


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Reasons or !nethicalehavior

!nawarethat behavior is?#estionable

Lac+ o standards o cond#ct,i-erent c#lt#ral norms and val#es

ehavior*based or relationship*

based governance systems,i-erent val#es between b#siness

people and sta+eholders


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Moral Relativism

!oral relativism claims that morality is relative to some

personal. social or c#lt#ral standard andthat there is no method or decidingwhether one decision is better thananother


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Moral Relativism

"a#ve relativism based on the belie that all moral

decisions are deeply personal and thatindivid#als have the right to r#n theirown lives

Role relativism

based on the belie that social rolescarry with them certain obligations tothat role

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Moral Relativism

Social gro$p relativism based on a belie that morality is simply

a matter o ollowing the norms o anindivid#als peer gro#p

%$lt$ral relativism based on the belie that morality is

relative to a partic#lar c#lt#re. societyor comm#nity

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@ohlbergs Levels o Moral

,evelopment

reconventional level concern or ones sel

%onventional level considerations or societys laws andnorms

rincipled level g#ided by an internal code o ethics

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Enco#raging Ethicalehavior

%ode o& Ethics speci/es how an organi5ation e"pects

its employees to behave while on thejob

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4 code o& ethicsA

(;clari/es company e"pectations o

employee cond#ct in vario#ssit#ations

&;ma+es clear that the company

e"pects its people to recogni5e theethical dimensions in decisions andaction


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'histleblo(ers employees who report illegal or

#nethical behavior on the part o others

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=#idelines or Ethicalehavior

Ethics the consens#ally accepted standards o

behavior or an occ#pation. trade or proession

!orality ones r#les o personal behavior based on

religio#s or philosophical gro#nds

La( the ormal codes that permit or orbid certain

behaviors and may or may not enorce ethicsor morality


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)tilitarian approach proposes that actions and plans sho#ld

be j#dged by their conse?#ences

*ndivid$al rights approach proposes that h#man beings have

certain #ndamental rights that sho#ld

be respected in all decisions


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+$stice approach decisions m#st be e?#itable. air and

impartial in the distrib#tion o costs andbene/ts to individ#als or gro#ps


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Cavanaghs ?#estions to solve ethicalproblemsA

1.)tility,,oes it optimi5e thesatisactions o the sta+eholdersB

2.Rights,,oes it respect the rights o

the individ#als involved3.+$stice,>s it consistent with the

canons o j#sticeB


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-ants categorical imperatives

(;4ctions are ethical only i the person

is willing or the same action to beta+en by everyone who is in asimilar sit#ation;

&;

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