Chapter 13 - Ethics Flashcards
What is social responsibility according to the classical view?
Management’s only social responsibility is to maximize profits (create a financial return) by operating the business in the best interests of the stockholders (owners of the corporation).
Expending the firm’s resources on doing “social good” unjustifiably increases costs that lower profits to the owners and raises prices to consumers.
What is social responsibility according to the socio-economic view?
- Management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare.
- Corporations are not independent entities responsible only to stockholders.
- Firms have a moral responsibility to larger society to become involved in social, legal, and political issues.
Name some of the arguments for social responsibility
- Public expectation
- Long-run profits
- Ethical obligation
- Public image
- Better environment
- Discouragement of further governmental regulation
- Balance of responsibility and power
- Stockholder interests
- Possession of resources
- Superiority of prevention over cure
Name some of the arguments against social responsibility
- Violation of profit maximisation
- Dilution of purpose
- Cost
- Too much power
- Lack of skills
- Lack of accountability
Discuss economic social responsibility
Required by society
- Be profitable. Make sound strategic decisions. Provide adequate and attractive returns on investment.
Discuss legal social responsibility
Required by society
- Obey all laws and regulations. Fulfill all contractual obligations. Honor warranties and guarantees.
Discuss ethical social responsibility
Expected by society
- Respond to spirit as well as letter of law
- Avoid questionable practices
- Assume law is floor of behaviour and operate above minimum required.
- Do what is right, fair, and just.
Discuss philanthropic social responsibility
Desired and expected by society
- Be a good corporate citizen
- Give back
- Improve overall quality of life
What is social obligation?
The obligation of a business to meet its economic and legal responsibilities and nothing more.
What is social responsiveness?
When a firm engages in social actions in response to some popular social need.
Shortly define social responsibility
A business’s intention, beyond its legal and economic obligations, to do the right things and act in ways that are good for society.
It has been shown that social actions do not affect the long-term performance of a firm. Discuss.
Difficulties in defining and measuring “social responsibility” and “economic performance” raise issues of validity and causation in the studies.
Mutual funds using social screening in investment decisions slightly outperformed other mutual funds.
What is values-based management?
An approach to managing in which managers establish and uphold an organization’s shared values.
What are bottom line shared corporate values?
An organization’s values are reflected in the decisions and actions of its employees.
What are the purposes of shared values?
- Guiding managerial decisions
- Shaping employee behaviour
- Influencing the direction of marketing efforts
- Building team spirit
Give two different definitions of ethics
The established customs, morals, and fundamental human relationships that exist throughout the world.
Principles, values, and beliefs that define what is right and wrong behaviour.
What is ethical behaviour?
Behavior that is morally accepted as good or right.
Give some common examples of unethical behaviour
- Corruption
- Inadequate labour conditions
- Environmental responsibility not taken into account (Why is this here?)
What is an ethical dilemma?
A situation in which a person must decide whether or not to do something that, although beneficial to oneself or the organization, may be considered unethical and perhaps illegal.
What is moral development?
A measure of independence from outside influences
Discuss the three levels of moral development
Preconventional:
- Sticking to rules to avoid physical punishment
- Following rules if it is in immediate interest to do so
Conventional:
- Living up to what is expected by people close to you
- Fulfilling obligations to which you have agreed
Principled:
- Valuing rights of others and upholding values regardless of the majority opinion
- Following self-chosen ethics even if it violates the law
With what parts of an organisation does moral development interact?
- Individual characteristics
- The organization’s structural design
- The organization’s structural design s culture
- The intensity of the ethical issue
What are values?
Basic convictions about what is right or wrong on a broad range of issues
What is ego strength?
A personality measure of the strength of a person’s convictions
Discuss internal vs external locus of control
Internal locus:
the belief that you control your destiny.
External locus:
the belief that what happens to you is due to luck or chance.
What is the locus of control
The degree to which a person believes that they have control over their own life.
What are structural variables?
Organizational characteristics and mechanisms that guide and influence individual ethics
Name some structural variables
- Performance appraisal systems
- Reward allocation systems
- Ethical behaviours of managers
How can managers be ethical role models?
- Be ethical and honest at all times
- Do not hide or manipulate information
- Communicating shared ethical values to employees (for example through slogans)
- Rewarding ethical behaviour
- Protecting whistleblowers
How can ethical behaviour be improved in an organisation?
- Hire individuals with high ethical standards
- Establish code of ethics and decision rules
- Lead by example.
- Set realistic job goals and include ethics in
performance appraisals. - Provide ethics training
- Conduct independent social audits.
- Provide support for individuals facing ethical
dilemmas.
What is the ethical decision making procedure?
- Harm test
Do the benefits outweigh the harms, short term and long term? - Reversibility test
Would I think this choice was good if I traded places? - Colleague test
What would professional colleagues say? - Legality test
Would this choice violate a law or a policy of my employer? - Publicity test
How would this choice look on the front page of a newspaper? - Common practice test
What if everyone behaved in this way? - Wise relative test
What would my wise old aunt or uncle do?
