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Managerial Ethics and Social
Responsibility
The Community of Stakeholders
Inside the Organization
• Stakeholders
 the people whose interests are affected by
an organization’s activities
 Internal, external
The Organization’s Environment
Figure 3.1
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Is Ethics important?
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Yet…
• 76% of business students have cheated
on at least one test
 19% on four more
• 56% of workers report having lied to
their boss
• Organizations short change employees
$19B a year in overtime pay
Flawed Justifications
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“It’s only a little white lie”
“When in Rome”
“I’m Desperate”
“The Devil made me do it”
“Ignorance”
“Eye for Eye”
“No one will know”
Working Definitions
• Legal Compliance
 Conforming with formal laws and
regulations
• Ethical Behavior
 Conforming with accepted social norms
and standards of right and wrong
• Social Responsibility
 actions that will benefit the interests of
society as well as of the organization
Ethical Perspectives
• Utilitarian
 guided by what will result in the greatest
good for the greatest number of people
• Moral Imperatives
 Moral rules are without exception,
conditions, or extenuating cicumstances
• Individual
 guide by what will result in the individual’s
best long term interest, which ultimately
are in everyone’s self-interest
Ethical Perspectives
• Moral-rights
 guided by respect for the fundamental
rights of human beings
• Justice
 guided by respect for impartial standards of
fairness and equity
Ethical Dilemmas
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Ethical Dilemmas
• Drug Testing
• Cultural Differences
• Technology
How Managers Can Promote Ethics
1. Support by top managers of a strong
ethical climate
2. Selection
3. Ethics codes
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Communicated internally and externally
Must be specific to the business
How Managers Can Promote Ethics
4. Ethics training programs
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5. Rewarding ethical behavior:
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Encourage and protect whistleblowers
6. Punish unethical behavior
Two Types of Social Responsibility
• Sustainability
 economic development that meets the
needs of the present without compromising
the ability of future generations to meet
their own needs
 Example: GE, Walmart, Toyota
• Philanthropy
 making charitable donations to benefit
humankind
 Examples: Google, Bill Gates, McDonalds
Social Responsibility
• Classical Economics (Milton Friedman)
 Management’s responsibility is to
maximize profits and generate shareholder
wealth
• Socioeconomics
 Management also has a responsibility to
protect and improve society
• Which perspective makes sense to
you?