MGT 101 | Ch. 4

Ethics and Social Responsibility

These are code of moral principles and values that governs the behavior or a person/group with respect to what is right or wrong.

ethics

What is ethics?

code of moral principles and values that governs the behavior or a person/group with respect to what is right or wrong

Where can business ethics come from?

• individuals

• org policies/statements

• legal statements

These are personal philosophies about what is right or wrong.

Morals

These are specific and persuasive boundaries for behavior that should not be violated.

Principles

These often become the basis for rules.

principles

What are examples of principles?

• human rights

• freedom of speech

• fundamentals of justice

These are enduring beliefs and ideals that are socially enforced.

values

What ethical values can promote success in business?

• trust

• fairness

• good reputation

• long-term success

What are the three domains of human action?

1. domain of codified law

2. domain of free choice

3. domain of ethics

T/F: Ethics applies only to individuals and not to groups.

False — It can govern the behavior of persons or groups.

The domain where values and standards are written into the legal system and are enforceable in courts.

domain of codified law

Behavior about which the law has no say, allowing an individual or organization complete freedom.

domain of free choice

The domain between codified law and free choice, where there are no specific laws but there are standards of conduct based on shared principles.

domain of ethics

Does the Domain of Ethics have specific laws governing behavior?

No. It has no specific laws, but it has standards of conduct based on shared principles.

T/F: Codified laws cannot be enforced in courts.

False — They are enforceable in courts.

T/F: Individuals and organizations have complete freedom in the Domain of Free Choice.

True

T/F: The Domain of Free Choice is governed by specific laws.

False — The law has no say in this domain.

T/F: Ethical behavior can still be guided by standards of conduct even when there is no specific law.

True

T/F: The existence of no specific law means that behavior automatically belongs to the Domain of Free Choice.

False — It may fall within the Domain of Ethics if standards of conduct based on shared principles apply.

This occurs when all available alternatives have undesirable consequences.

ethical dilemma

This often involves a conflict between the needs or interests of the part and the whole, such as individual vs. organization and organization vs. society.

ethical dilemma

What are the different approaches to ethical decision-making?

1. utilitarian

2. individualism

3. moral rights

4. justice

What is the utilitarian approach?

It states that the most moral action is the one that produces the greatest good for the greatest number.

What is the Individualism Approach?

An act is moral when it promotes the individuals' best long-term interests.

What is the Moral Rights Approach?

An ethically correct decision is one that best maintains the fundamental rights and liberties of those affected.

What are the 6 moral rights?

1. right to free consent

2. right to privacy

3. right of freedom of conscience

4. right of free speech

5. right to due process

6. right to life and safety

What is the right to free consent?

Right to agree voluntarily and with adequate information

What is the right to privacy?

right to control access to personal information and affairs

What is the right of freedom of conscience?

right to hold personal beliefs and values

What is the right of free speech?

right to express opinions and speech

What is the right to due process?

right to fair treatment and procedures

What is the right to life and safety?

right to protection from harm

What is the justice approach?

Moral decisions must be based on standards of equity, fairness, and impartiality.

What are the 3 types of justice?

1. distributive

2. procedural

3. compensatory

What is Distributive Justice?

fair and equitable distribution of resources, opportunities, and burdens among members of a society

What is Procedural Justice?

fairness of the process used to make a decision is more important to people than the final outcome itself

What is Compensatory Justice?

Compensation or restoration for those who have been wrongfully harmed.

What are the 3 levels of moral development?

1. pre-conventional

2. conventional

3. post-conventional

What characterizes Level 1: Preconventional of Moral Development?

• decisions are based mainly on personal consequences

• behavior is influenced by avoiding punishments and gaining rewards

• “What will happen to me?”

What characterizes Level 2: Conventional of Moral Development?

• decisions based on social expectations and rules

• behavior influenced by approval from others, following laws and org rules, and maintaining social orders

• “What do others expect me to do?”

What characterizes Level 3: Post-Conventional of Moral Development?

• follows self-chosen principles of justice and right

• recognizes different values

• balances individual concerns with the common good

• “What is ethically right, regardless of rules or expectations?”

What is the leadership style associated with Preconventional moral development?

autocratic/coercive leadership — a single leader holds all decision-making power and demands strict compliance from subordinates without seeking their input

What employee behavior is associated with the Preconventional level?

task accomplishment

What is the leadership style associated with Conventional moral development?

guiding/encouraging, team-oriented

What employee behavior is associated with the Conventional level?

work group collaboration

What is the leadership style associated with Postconventional moral development?

transforming or servant leadership

What employee behavior is associated with the Postconventional level?

empowered employees and full participation

What are the different factors that determine ethical or unethical behavior?

1. stage of moral development (including indiv characteristics)

2. org’s structural design

3. org’s culture

4. intensity of the ethical issue

What are the 2 personality variables that influence how an individual acts based on their beliefs about right and wrong?

• ego strength

• locus of control

What is ego strength?

The strength of a person’s conviction—how strongly they can resist impulses or pressures that conflict with their beliefs.

What does high and low ego strength indicate?

• high = The person is more likely to resist unethical behavior and follow their convictions despite pressure or temptation.

• low = The person is more likely to be influenced by external pressures or impulses, making them more susceptible to unethical behavior.

What is locus of control?

The degree to which people believe they control their own fate/destiny.

What is an internal locus of control?

The belief that they control their own destinies and that their actions influence what happens to them.

What is an external locus of control?

The belief that luck, chance, and external forces determine life events and outcomes rather than your own actions

What type of organizational structures are likely to encourage ethical behavior?

Structures with clear formal rules and regulations that reduce ambiguity and uncertainty and reinforce ethical standards.

What are the other structural variables that can influence ethical behavior?

• goals

• performance appraisal systems

• reward allocation procedures

How can organizational culture influence ethical behavior?

A strong culture with high ethical standards is more likely to influence employees to behave ethically.

Structural design vs. organizational culture: what is the key difference?

Structural design provides formal rules, systems, and procedures; culture provides shared beliefs and standards that guide behavior.

How does greater perceived ethical intensity affect behavior?

The greater the perceived intensity, the more likely an individual is to recognize the issue as important and respond to it.

What are the 6 characteristics that determine the intensity of an ethical issue?

1. greatness of harm

2. probability of harm

3. consensus of wrong

4. immediacy of consequences

5. proximity to victims

6. concentration of effect

What is greatness of harm?

The magnitude or seriousness of the harm that may result from an ethical decision.

What is probability of harm?

The likelihood that harm will actually occur as a result of an action.

What is consensus of wrong?

The degree to which people agree that a particular action is wrong or unethical.

What is immediacy of consequences?

How soon the consequences of an ethical decision are expected to occur.

What is proximity to victim/s?

How close the decision maker is to the person or people who may be affected or harmed.

What is concentration of effect?

The degree to which the consequences are concentrated on a small number of people versus spread across many people.

What are the 7 ways companies can encourage ethical behavior?

1. employee selection

2. code of ethics

3. ethical leadership

4. ethics training

5. job goals and performance appraisal

6. independent social audits

7. protective mechanisms

How can employee selection encourage ethical behavior?

The selection process provides an opportunity to learn about an individual’s moral development, personal values, ego strength, and locus of control.

What is a code of ethics?

A formal statement of an organization’s values and ethical rules that it expects employees to follow.

How does a code of ethics encourage ethical behavior?

It helps reduce ambiguity by clearly stating the organization’s values and expected ethical behavior.

What is the role of ethical leadership?

Ethical leadership creates an ethical culture within the organization.

Why should both job goals and the means of achieving them be evaluated?

It ensures that employees reach the org goals responsibly, ethically, and sustainably. If performance appraisals focus only on economic goals (ends), employees may believe that “ends will justify the means.”

What can happen when performance appraisals focus only on economic goals?

Employees may believe that ends justify the means, potentially encouraging unethical behavior to achieve results.

What is the purpose of ethics training?

To help employees understand and apply ethical principles when dealing with ethical issues and dilemmas.

How can independent social audits discourage unethical behavior?

The fear of being caught can serve as an important deterrent to unethical behavior.

What are protective mechanisms? Why are they important?

• Mechanisms that allow employees facing ethical dilemmas to do what is right without fear of reprimand.

• They protect employees who choose ethical actions from fear of punishment or reprimand.

Why should organizations engage in social responsibility?

• Stockholder interest - Socially responsible practices can protect and create long-term value for stockholders.

• Public expectations - Society increasingly expects business to act responsibly and address their social and environmental impacts

• Public image - Social responsibility can improve the organization’s reputation and public image.

• Long-run profits - Ethically and socially responsible practices can contribute to long-term profitability and sustainability.

• Ethical obligations - Organizations have an ethically responsible to do what is right and consider the effects of their actions on society.