Transcript ethical responsibilities

5-1
Chapter
5
McGraw-Hill
Ethics And
Corporate
Responsibility
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
5-2
Learning Objectives

After studying Chapter 5, you will know:







how different ethical perspectives guide decision making
how companies influence the ethics environment
the options you have when confronting ethical issues
the important issues surrounding corporate social
responsibility
how the political and social environment affects your firm’s
competitive position and legitimacy
the strategies corporations use to manage the political and
social environment
the role of managers in our natural environment
McGraw-Hill
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
5-3
Ethics

Ethics

the system of rules that governs the ordering of values


affects people’s behavior and the ‘goods’ that are worth seeking
values - principles of conduct



ethics becomes more complicated when a situation dictates that one
value overrules another
ethical issue - a situation, problem, or opportunity in which an
individual must choose among several actions that must be
evaluated as right or wrong
business ethics - the moral principles and standards that guide
behavior in the world of business
McGraw-Hill
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Ethics (cont.)

5-4
Ethical systems





moral philosophy - the principles, rules, and values people
use in deciding what is right and wrong
universalism - individuals should uphold certain values,
regardless of the immediate result
teleology - an act is morally right if it produces a desired
result – focuses on ends
egoism - acceptable behavior maximizes consequences for the
individual – “virtue of selfishness”
utilitarianism - seeks the greatest good for the greatest
number of people, thereby maximizing total utility
McGraw-Hill
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
5-5
Ethics (cont.)

Ethical systems (cont.)

deontology - focuses on the rights of individuals




ensures that equal respect is given to all persons
concentrates on means to particular ends
right to privacy, free speech, freedom of conscience, safety, nondiscrimination
relativism - ethical behavior defined by the opinions and
behavior of relevant other people


acknowledges the existence of different ethical viewpoints
group consensus is sought

McGraw-Hill
positive consensus signifies that an action is right, ethical, and
acceptable
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
5-6
Ethics (cont.)

Ethical systems (cont.)

virtue ethics - morality defined by what a mature person with
‘good’ moral character would deem right

society’s rules provide a moral minimum


Kohlberg’s model of cognitive moral development


preconventional stage - decisions based on concrete rewards,
punishments, and immediate self-interest
conventional stage - actions conform to societal expectations


ethical behavior deemed appropriate by groups or institutions
principled stage - follow self-chosen ethical principle

McGraw-Hill
moral individuals can transcend rules by applying personal standards
see beyond authority, laws, and norms
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
5-7
Ethics (cont.)

The ethics environment

Ethical climate - processes by which decisions are evaluated
and made on the basis of right and wrong


McGraw-Hill
unethical corporate behavior may be the responsibility of an
unethical individual
often the company’s culture that is ethically lax
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
5-8
Climate Factors Conducive To
Unethical Behavior
Emphasis on shortterm revenues
Shareholders concerns
take precedence over
other constituencies
Lack clear procedures
for dealing with ethical
problems
Ethics considered
from legal or public
relations viewpoint
McGraw-Hill
No written code
of ethics
Danger
Signs
Desire for “quick
fix” solutions
Financial concerns
take precedence over
ethical considerations
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
5-9
Ethics (cont.)

The ethics environment (cont.)

Ethics codes - most visible sign of corporate commitment to
ethical behavior



must be tailored to individual company’s philosophies
address subjects such as employee conduct, community and
environment, shareholders, customers, political activity
Ethics programs

compliance-based - designed by corporate counsel to prevent,
detect, and punish legal violations


McGraw-Hill
increases surveillance and controls
integrity-based - guiding principles that instill personal
responsibility for ethical behavior
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
5 - 10
Ethical Decision Making
Identify the
relevant values
in the
situation
Define the
issue clearly
Ethical
Decision
Making
Implement
the
decision
McGraw-Hill
Weigh conflicting
values and choose
option that
balances them
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Social Responsibility

5 - 11
Corporate social responsibility

the obligation toward society assumed by business





McGraw-Hill
maximizes it positive effects on society and minimizes it
negative effects
economic responsibilities - produce goods and services that
society wants at a price that perpetuates the business
legal responsibilities - obey local, state, federal and relevant
international laws
ethical responsibilities - meeting other societal expectations,
not written as law
voluntary responsibilities - additional behaviors that society
finds desirable and that the values of the business support
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Pyramid Of Corporate Social
Responsibility
5 - 12
Philanthropic
Responsibilities
Be a good corporate
citizen
Ethical
Responsibilities
Be ethical
Legal
Responsibilities
Obey the law
Economic
Responsibilities
Be profitable
McGraw-Hill
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Social Responsibility (cont.)

5 - 13
Contrasting views

profit maximization view

managers act as agents for shareholders



obligated to maximize the present value of the firm
economic performance is an organization’s primary social
responsibility
principled moral reasoning view


ethical actions are not optional, but mandatory
organizations have a wider range of responsibilities that extend
beyond the production of goods and services for a profit

McGraw-Hill
organizations should actively and responsibly participate in the
community and the larger environment
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Social Responsibility (cont.)

5 - 14
Reconciliation


based on the idea that ethical behavior is both right and more
profitable
there are competitive advantages of socially responsible
actions, especially over the long-term



McGraw-Hill
avoid unnecessary and costly regulation
pay dividends to the reputation of the company
profits can be made from attempts to solve society’s problems
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Approaches To Corporate Social
Responsiveness
Approach
Posture or Strategy
5 - 15
Performance
1. Reactive
Deny responsibility
Do less than required
2. Defensive
Admit responsibility
but fight it
Do the least that is required
3. Accommodative
Accept responsibility
Do all that is required
4. Proactive
Anticipate responsibility
Do more than is required
McGraw-Hill
© 2003 The McGraw-Hill Companies, Inc. All rights reserved.