Management’s Social and Ethical Responsibilities

Summary


Chapter 3: Management’s Social and Ethical Responsibilities

1. Corporate social responsibility is the idea that management has broader responsibilities than just making a profit. A strict interpretation holds that an action must be voluntary to qualify as socially responsible. Accordingly, reluctantly submitting to court orders or government coercion is not social responsibility. The arguments for corporate responsibility say businesses are members of society with the resources and motivation to improve society and avoid government regulation. Those arguing against call for profit maximization because businesses are primarily economic institutions run by unelected officials who have enough power already.
2. Management scholars who advocate greater corporate social responsibility cite the iron law of responsibility. This law states that if business does not use its socioeconomic power responsibly, society will take away that power. A continuum of social responsibility includes four strategies: reaction, defense, accommodation, and proaction. The reaction strategy involves denying social responsibility, whereas the defense strategy involves actively fighting additional responsibility with political and public relations tactics. Accommodation occurs when a company must be pressured into assuming additional social responsibilities. Proaction occurs when a business takes the initiative and becomes a positive model for its industry.
3. In the short run, proactive social responsibility usually costs the firm money. But, according to the notion of enlightened self-interest, both society and the company will gain in the long run. Research indicates that corporate philanthropy actually is a profit-motivated form of advertising.
4. Business ethics research has taught these three practical lessons: (1) 48 percent of surveyed workers reported engaging in illegal or unethical practices; (2) perceived pressure from above can erode ethics; and (3) employees desire clear ethical standards in ambiguous situations. The call for better business ethics is clearly a personal challenge.
5. The ten general ethical principles that consciously and unconsciously guide behavior when ethical questions arise are self-interests, personal virtues, religious injunctions, government requirements, utilitarian benefits, universal rules, individual rights, economic efficiency, distributive justice, and contributive liberty.
6. The typical manager is said to be amoral—neither moral or immoral—just ethically lazy or indifferent. Management can encourage ethical behavior in the following four ways: conduct ethics training; use ethical advocates in high-level decision making; formulate, disseminate, and consistently enforce specific codes of ethics; and create an open climate for dissent in which whistle-blowing becomes unnecessary.