Business Ethics Chapter 5

Social Responsibility

• There are two opposing views of social responsibility: the classical view and the socioeconomic view.
  • The classical view, advocated by Milton Friedman, states that management's only social responsibility is to maximize profits.
  • The socioeconomic view holds that businesses have a responsibility to society that goes beyond making profits, and includes protecting and improving societal welfare.

Levels of Social Involvement

• There are three levels of social involvement: social obligation, social responsibility, and social responsiveness.
  • Social obligation refers to a business's obligation to meet its economic and legal responsibilities.
  • Social responsibility refers to a business's obligation to pursue long-term goals that help society, going beyond legal and economic requirements.
  • Social responsiveness refers to a firm's capacity to adapt to changing societal conditions.

Social Responsibility versus Social Responsiveness

• The key differences between social responsibility and social responsiveness are:
  • Focus: social responsibility focuses on ends, while social responsiveness focuses on means.
  • Emphasis: social responsibility emphasizes obligation, while social responsiveness emphasizes responses.
  • Decision framework: social responsibility uses a long-term framework, while social responsiveness uses a medium-term and short-term framework.

Social Responsibility and Economic Performance

• Most research suggests a positive relationship between social responsibility and economic performance.
  • Socially responsible actions do not hurt a company's long-term economic performance.

Values-Based Management

• Values-based management is an approach to managing in which managers establish, promote, and practice an organization's shared values.
  • The purposes of shared values are to:
    • act as guideposts for managerial decisions and actions
    • shape employee behavior
    • influence marketing efforts
    • build team spirit

The "Greening" of Management

• The "greening" of management refers to the recognition of the close link between an organization's decisions and activities and its impact on the natural environment.
  • Organizations can go green by adopting approaches such as the legal, market, stakeholder, and activist approaches.
  • The four approaches to being green vary in their level of environmental sensitivity.

Managerial Ethics

• Ethics are the rules and principles that define right and wrong conduct.
  • There are four views of ethics: utilitarian, rights, theory of justice, and integrative social contracts theory.
  • Factors that affect managerial ethics include:
    • individual characteristics (values, ego strength, locus of control)
    • structural variables (organizational design, rules and regulations, behavior of superiors)
    • organizational culture
    • issue intensity
  • To improve ethical behavior, organizations can use comprehensive ethics programs, employee selection, codes of ethics, top management's leadership, job goals, performance appraisal, ethics training, and formal protective mechanisms.