Scribd
Upload
14 views36 pages

BusinessEthics1-1

Uploaded by

mandocdocmica55
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
14 views36 pages

BusinessEthics1-1

Uploaded by

mandocdocmica55
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 36

SOCIAL RESPONSIBILITY AND

BUSINESS 4TH EDITION

FERRELL • THORNE • FERRELL

BUSINESS ETHICS

Social Responsibility
Framework
Social Responsibility Defined

• Social responsibility
– The adoption by a business of a strategic focus
for fulfilling the economic, legal, ethical and
philanthropic responsibilities expected of it by
its stakeholders
• Businesses should look beyond their self-
interests and recognize that they belong to
a larger group that expects responsible
participation.
What do you believe organizations
should be responsible for
accomplishing?
Social Responsibility Defined (cont.)

• Applies to all types of businesses


– Small businesses
– Large businesses
– Sole proprietorships
– Multinational corporations
Social Responsibility Defined (cont.)

• Fulfills societal expectations


– Provides a return on investment for owners
– Obeys the law and regulatory agencies
– Acts in a just, fair, and correct manner
– Promotes human welfare and good will
Pyramid of Social Responsibility
Social Responsibility Defined (cont.)

• Economic
– Maintain profitability
• Legal
– Abide by legal and regulatory influence
• Ethical
– Ensure just and fair behavior in the workplace
• Philanthropic
– Promote human welfare and goodwill
SOCIAL RESPONSIBILITY AND
BUSINESS 4TH EDITION

FERRELL • THORNE • FERRELL

BUSINESS ETHICS

Strategic Management of
Stakeholder Relationships
Stakeholders

• Those constituents who have a stake in, or


claim on, some aspect of a company’s
products, operations, markets, industry, and
outcomes
• Companies that operate with a stakeholder
orientation recognize that business and society
are interpenetrating systems, in that each
affects and is affected by the other.
Primary Stakeholders

• Groups fundamental to a company’s operation and survival


– Customers
– Employees
– Shareholders
– Investors
– Suppliers
– Government
– Community
• Balancing the needs and perspectives
of primary stakeholders is a strategic imperative.
Secondary Stakeholders

• Groups that may influence and/or be affected by the


company, but are not engaged in economic exchanges with
the firm:
– Media
– Special interest groups
– General public
• These groups are not fundamental to an organization’s daily
survival.
• They can place significant pressure on a business
and therefore, cannot be ignored.
Development of
Stakeholder Relationships
• Relationships are founded on principles of:
– Trust
– Commitment
– Communication
• They are also associated with a degree of:
– Time
– Interaction
– Shared expectations
• Companies are searching for ways to develop long-term and
collaborative relationships with their customers and business
partners.
Social Capital

• An asset, which resides in relationships,


that is characterized by mutual goals and
trust
• Facilitates smooth internal and external
transactions and processes
The Reactive-Defensive-
Accommodative-Proactive
Scale
SOCIAL RESPONSIBILITY AND
BUSINESS 4TH EDITION

FERRELL • THORNE • FERRELL

BUSINESS ETHICS

Corporate Governance
Corporate Governance

• Corporate governance is the formal system


of oversight, accountability, and control for
organizational decisions and resources.
• Major issues:
– Shareholder rights
– Executive compensation
– Organizational ethics programs
– Board composition and structure
– Auditing, control and risk management
– CEO selection and executive succession plans
Models of Corporate Governance

• Shareholder model
– Maximizes wealth for investors and owners
– Develops and improves the formal system of
performance accountability between
management and the firm’s shareholders
– Makes decisions based on what is ultimately
best for investors
– Focuses on aligning investor and
management interests
Models of Corporate Governance
(cont.)

• Stakeholder model
– Considers the interests of employees,
suppliers, government agencies, communities, and
other groups with which the firm interacts
– Assumes a collaborative and
relational approach to business
– Focuses on continuous improvement,
accountability, and engagement with internal
and external constituents
Issues in Corporate Governance
Systems
• Boards of directors
– Independence
– Quality and experience
– Performance
• Shareholders and investors
– Shareholder activism
– Social investing
– Investor confidence
Issues in Corporate Governance
Systems (cont.)
• Internal control and risk management
– Internal and external audits
– Control systems
– Risk management
• Financial misconduct
• Executive compensation
SOCIAL RESPONSIBILITY AND
BUSINESS 4TH EDITION

FERRELL • THORNE • FERRELL

BUSINESS ETHICS

Legal, Regulatory, and


Political Issues
Government’s Influence on Business

• Laws are enforced through the judicial system.


– Settles disputes and punishes criminals
• Corporations have the same legal status
as a person.
– Can sue
– Can be sued
– Can be held liable for debt
The Rationale for Regulation

• Preventing trusts and monopolies from using


their market dominance to negatively manipulate
output, pricing, and quality
• Eliminating unfair competition and anti-
competitive practices
• Supporting environmental initiatives, equality in
the workplace, and product safety
• Protecting consumers and business in e-
commerce activities
Global Regulation
• Import barriers
– Tariffs and quotas
– Minimum price levels
– Port-of-entry taxes
• Product quality, safety, distribution, sales, and advertising
regulation
• North American Free Trade Agreement (NAFTA)
– Eliminates virtually all tariffs on goods produced and
traded between the U.S., Canada, and Mexico
• European Union (EU)
– Promotes free trade between member nations
Benefits of Regulation

• Greater equality in the workplace


• Safer workplaces
• Resources for disadvantaged societal members
• Safer products
• More information about products
• Greater product variety
• Cleaner air and water
• Preservation of wildlife
Deregulation

• Removal of all regulatory authority


• Belief that less government intervention
allows business markets to work more
effectively
• Many industries have been deregulated.
– Trucking
– Airlines
– Telecommunications
– Electric utilities
• Critics of deregulation cite higher
prices and poorer service/quality.
Corporate Approaches
to Influencing Government
• Lobbying
– Process of persuading public and/or government
officials to favor a particular position in decision making
– Takes place directly or through trade organizations
• Political Action Committees
– Organizations that solicit donations from individuals
and then contribute to candidates running for political
office
• Campaign Contributions
– Corporate donations
Seven Steps to Effective Compliance
and Ethics Program
• Establish a code of ethics.
• Appoint a high-level compliance manager, usually
an ethics officer.
• Take care in delegation of authority.
• Institute a training program and
communication system.
• Monitor and audit for misconduct.
• Enforce and discipline.
• Revise program as needed.
SOCIAL RESPONSIBILITY AND
BUSINESS 4TH EDITION

FERRELL • THORNE • FERRELL

BUSINESS ETHICS

Business Ethics and


Ethical Decision Making
Ethical Issues in Business

• An ethical issue is a problem, situation, or


opportunity requiring an individual, group, or
organization to choose among several actions that
must be evaluated as right or wrong, ethical or
unethical.
• Ethical issues:
• Honesty and fairness
• Conflict of interest
• Fraud
• Discrimination
• Information technology
Moral Philosophies

• Consequentialism
– A decision is right or acceptable if it helps
achieve the desired results
• Egoism
– Maximizing one’s own self-interest
• Utilitarianism
– Greatest good for the greatest number of people
• Ethical formalism
– Focuses on the rights of the individual
• Justice theory
– Evaluations of fairness
Kohlberg’s Model

• People progress through the previous six stages.


• Cognitive moral development should be viewed
as a continuum.
• People’s moral beliefs and behavior change as
they gain education and experience.
• There are universal values by which
people in the highest level of moral
development abide.
Social Needs that Motivate
Ethical/Unethical Behavior
• Need for achievement
– Preference for goals that are well defined
and moderately challenging
• Need for affiliation
– Inclination to work with others in the
organization rather than alone
• Need for power
– Desire to influence and control others
Creating an Ethical Climate

• Top managers, employees, and stakeholders


must support the philosophy that all
organizations have responsibilities that extend
beyond legal and economic obligations.
• Members of the organization must be willing
to share their values about workplace ethics.
Creating an Ethical Climate (cont.)

• Ethical concerns should be incorporated into


strategic planning.
• Management must develop a mechanism for
assessing its progress in making ethical
decisions that contribute to social
responsibility.

You might also like