Source:

Principles of
Management by Krietner,
11th Edition

Prepared by:
Prof. Emilia. S. Bio

Managements Social and Ethical

Responsibilities

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

As the social, political, economic, and

technological environments of
management have changed, the practice
of management itself has changed. This is
especially true for managers in the private
business sector.

The Changing Workplace

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

Today, it is far less acceptable for someone in

business to stand before the public and declare
that his or her sole job is to make as much profit
as possible.
The public is wary of the abuse of power and the
betrayal of trust, and business managers
indeed, managers of all types of organizations
are expected to make a wide variety of
economic and social contributions.

The Changing Workplace

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

-Stuart Graham, CEO of Skanska

The future is that there will be no letup in the demands of

shareholders for financial performance. There will also be
no letup in the demands of society that businesses behave
responsibly. Management just has to better.

Demands on business that would have been

considered patently unreasonable 30 or 40
years ago have become the norm today.

The Changing Workplace

Social Responsibility:
Definition and Perspectives

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

It is the notion that corporations have an

obligation to constituent groups in society other
than stockholders and beyond that prescribed by
law or union contract.
In other terms, it is the idea that business has
social obligations above and beyond making a
profit.

Corporate Social Responsibility

Be profitable

Obey the law

Be a good global citizen

Be ethical

Do what is required by
global capitalism

Do what is required by
global stockholders

Do what is expected by
global stockholders

Do what is desired by
global stockholders

Carrolls Global Corporate Social

Responsibility Pyramid

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

From the previous figure, global and

transnational companies have four main areas
of responsibility: economic, legal, ethical, and
philanthropic.

Corporate Social Responsibility

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

Make a profit consistent with expectations for

international businesses

Obey the law of host countries as well as international
law

Be ethical in its practices, taking host-country and
global standards into consideration

Be a good corporate citizen, especially as defined by
the host countrys expectations

Working from bottom to top, this means that the

global corporation should:

Corporate Social Responsibility

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

All businesses should commit to the triple bottom linea

measure of corporate success that takes int oaccount not
just profit and loss but also social and environmental
impact.
-Paul Dolan, True to Our Roots: Fermenting
a Business Revolution

An implicit feature of the above definition and

perspective is that an action must be voluntary
to qualify as socially responsible.

CSR Requires Voluntary Action

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

Much of the disagreement over what social

responsibility involves can be traced to a
fundamental debate about the exact purpose of
a business.
Is business an economic entity responsible only
for making a profit for its stockholders? Or is it a
socioeconomic entity obligated to make both
economic and social contributions to society?

What is the Role of Business in

Society?

(for)
Wal-Mart
Financial
Community
(bankers,
brokers, and
investors)

Domestic and
Foreign suppliers
and distributors

Customers

Public-at-large

Stockholders

Competitors

Political Parties

Public-at-large

Stockholders

Political Parties

WAL-MART

Customers
Neighbors of stores
and facilities
(homeowners
association)
All levels of
domestic and
foreign
government

The Stockholder Auditthe identification of all

parties that might be affected by the
organization.

4.

3.

1.
2.

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

Business is unavoidably involved in social issues.

Business has the resources to tackle todays
complex societal problems.
A better society means a better environment for
doing business.
Corporate social action will prevent government
intervention.

Arguments For Social

Responsibility

3.
4.

2.

1.

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

Profit maximization ensures the efficient use of

societys resources.
As an economic institiution, business lacks the
ability to pursue social goals.
Business already has enough power.
Because managers are not elected, they are not
directly accountable to the people.

Arguments Against Social

Responsibility

Toward Greater Social

Responsibility

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

Is it inevitable that management will assume

greater social responsibility? Some scholars
believe so. It has been said that business Is bound
by an iron law of responsibility, which states
that in the long run, those who do not use power
in a way that society considers responsible will
tend to lose it.

The Iron Law of Responsibility

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

Is it accurate to say of social responsibility what

used be said about home medicine, It has to taste
bad to be good? In other words, does social
responsibility have to be a hardship for the
organization? Those who answer yes believe that
it should be motivated by altruism, an unselfish
devotion to the interests of others.
This implies that businesses that are not socially
responsible are motivated strictly by self-interest.

Who Benefits from Corporate

Social Responsibility?

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

A study of 243 companies for two years found a positive

correlation between industry leadership in environmental
protection/pollution control and profitability. The
researchers concluded, It pays to be green.
A second study found agood reputation for corporate
social responsibility to be a competitive advantage in
recruiting talented people.

On the basis of evidence alone, one would hard

pressed to say that social responsibility pays. But
research paints a brighter picture:

Who Benefits from Corporate

Social Responsibility?

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

Enlightened self-interest, the realization that

business ultimately helps itself by helping to solve
societal problems, involves balancing short-run
costs and long-run benefits. Advocates of
enlightened self-interest contend that social
responsbility expenditures are motivated by profit.
Research into corporate philanthropy, the
charitable donation of company resources ($12.7
billion in US in 2006), supports this contention.

Who Benefits from Corporate

Social Responsibility?

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

Tax-free incentives to employees.

Retention of talented employees by satisfying their altruistic
motives.
Help in recruiting talented and socially conscious personnel.
Swaying public opinion against government intervention.
Improved community living standards for employees.
Attracting socially conscious investors.
A nontaxable benefit for employees in which company funds
are donated to their favorite causes.

In addition to the advertising effect, other possible

long-run benefits include:

An Array of Benefits for the

Organization

The Ethical Dimension of

Management

Moral
Immoral
Amoral Managers managers who are neither moral nor
immoral, but ethically lazy.

Business ethics, sometimes referred to as

management ethics or organizational ethics, narrows
the frame of reference to productive organizations.





I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

Ethics is the study of moral obligation involving the

distinction between right and wrong.

The Ethical Dimension of

Management

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

In a survey of 1,324 US employees from all levels across

several industries, 48 percent admitted to having
performed at least one illegal or unethical act from a list
of 25 questionable practices.
The list included everything from calling in sick when
feeling well through cheating on expense accounts,
forging signatures, and giving or accepting kickbacks, to
ignoring violations of environmental laws.

Ethical Hot Spots.

Practical Lessons from

Business Ethics Research


Balancing work and family
Poor internal communications
Poor leadership
Work hours, workload
Lack of management support
Need to meet sales, budget, or profit goals
Little or no recognition of achievements
Company politics
Personal financial worries
Insufficient resources

I find a universal belief in fairness, kindness, dignity, charity,

integrity, honesty, quality, and patience.
-Stephen R. Covey

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

The top ten workplace hot spots responsible for

triggering unethical conduct are:

Practical Lessons from

Business Ethics Research