Ethics and Social Responsibility
Chapter 5
• ____________ are the inner-guiding moral principles,
values, and beliefs that people use to analyze or interpret a
situation and then decide what is the right or appropriate
way to behave
• A(n) ___________ a quandary people find themselves in
when they have to decide if they should act in a way that
might help another person even though doing so might go
against their own self-interest
• There are no absolute or indisputable rules or principles that
can be developed to decide if an action is ethical or
unethical
How are Ethics and Laws Different?
• Ethics come from _________.
• The Law comes from ______.
• Neither are _____ principles.
• There are punishments for violating both.
______________ the people and groups that supply
a company with its productive resources and so have
a claim on and stake in the company.
• Stockholders: equity owners; want to ensure that
managers are behaving ethically and not risking
investors’ capital by engaging in actions that could
hurt the company’s reputation
Types of Company Stakeholders
Some Principles from the Gap’s Code
of Vendor Conduct
Four Ethical Rules
Click here to Read Article
What did Dan Price, CEO of Gravity Payments, do to get
world wide attention? ___________
What ethical rule was he following? ____________
Rights Rule
“We hold these truths to be selfevident, that all men are created
equal, that they are endowed by
their Creator with certain
unalienable Rights, that among
these are Life, Liberty and the
pursuit of Happiness.--That to
secure these rights, Governments
are instituted among Men, deriving
their just powers from the consent
of the governed…”
The United States Declaration of
Independence
“Two things awe me
most, the starry sky
above me and the moral
law within me.”
Immanuel Kant
Practical Decision Model – 3 Questions
1. Does my decision fall within the acceptable
standards that apply in business today?
2. Am I willing to see the decision communicated
to all people and groups affected by it?
3. Would the people with whom I have a
significant personal relationship approve of
the decision?
Would you want your mother to know?
Some Effects of
Ethical/Unethical Behavior
• _________willingness of
one person or group to have
faith or confidence in the
goodwill of another person
• __________esteem or high
repute that individuals or
organizations gain when
they behave ethically
Examples of
Unethical Business
Executives
1. Bernie Madoff,
Chairman of NASDAQ
2. Bernie Ebbers, CEO of
Worldcom
3. Ken Lay, CEO of Enron
13
Companies should know their Values!
Values drive behavior
• Values are a compass. Employees need direction to tell them where
to go.
• There are espoused values and actual values. Values shouldn’t just be
a marketing campaign.
• Companies should think about values when they hire employees. You
can always train/develop skills. You can’t train values easily.
Companies are looking for
the type of person
described in Slide 19.
http://www.fastcompany.com/3056187/t
he-future-of-work/the-woman-whocreated-netflixs-enviable-companyculture/1
Sources of Ethics
Ethics Guidelines
• _________ Ethics: standards that govern how members of a society
should deal with one another in matters involving issues such as
fairness, justice, poverty, and the rights of the individual
• _________ Ethics: standards that govern how members of a
profession, trade, or craft should conduct themselves when
performing work-related activities
• _________ Ethics: personal standards and values that determine how
people view their responsibilities to other people and groups
• _________ Ethics: guiding practices and beliefs through which a
particular company and its managers view their responsibility toward
their stakeholders
Some Failures in Professional Ethics
____________ The way a company’s managers and
employees view their duty or obligation to make decisions
that protect, enhance, and promote the welfare and wellbeing of stakeholders and society as a whole
The Four Approaches
1.
2.
3.
4
Approaches to Social Responsibility
Forms of Socially
Responsible Behavior
Examples of Companies with Ethical Missions
• Ben and Jerry’s Three Foci
 Economic
 Activism
 Product
http://www.benjerry.com/activism/
Starbucks Coffee
• Building Greener Stores
• Protecting Clean Water
• The Path to Sustainable Coffee
http://www.starbucks.com/responsibility
5–21
Arguments For and Against Social Responsibility
• For
•
•
•
•
•
•
•
•
•
•
• Against
Public expectations
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 cures
• Violation of profit
maximization
• Dilution of purpose
• Costs
• Too much power
• Lack of skills
• Lack of accountability
Does Social Responsibility Pay?
• Studies appear to show a positive relationship between social
involvement and the economic performance of firms.
• 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.
• A general conclusion is that a firm’s social actions do not harm its
long-term performance.
5–23
The Point of Business is ____________ (The
fourth “G”)
Whole Foods
Does Green necessary make Green $$$?
The search at the offices and
plant of Solyndra, a Californiabased manufacturer of solar
panels, came as Republicans
on Capitol Hill demanded
answers to questions about
the company’s selection for
the $535 million Energy
Department loan guarantee.
Some Democrats questioned
whether the company misled
federal officials about its
deteriorating financial
condition.
Washington Post, By Carol D.
Leonnig and Joe Stephens,
Published: September 8
5–26
How socially responsible is clean energy?