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4. Chapter. Demonstrating Ethical Behavior and Social Responsibility. 4- 1. Ethics. We define ethics as the standards of moral behavior that is accepted by society as right versus wrong. Ethics.

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  1. 4 Chapter Demonstrating Ethical Behavior and Social Responsibility 4-1

  2. Ethics We define ethics as the standards of moral behavior that is accepted by society as right versus wrong.

  3. Ethics Many Americans have few moral absolutes. Meaning, they seem to think that right or wrong depends on what works best for the individual. Further, each person needs to work it out for himself or herself. Ten Commandments? Thinking like this leads to scandals!

  4. SEC Investigations (2002) • Software • Computer Associates • Network Associates • Telecom • Global Crossing • Lucent Technologies • Qwest Communications • WorldCom • Wall Street • Credit Suisse First Boston • Hedge Funds • Capital Markets • Merrill Lynch • Accounting • Arthur Andersen • Deloitte & Touche • Ernst & Young • KPMG • PriceWaterhouse Coopers • Energy • CMS Energy • Dynergy • Enron • Halliburton • Reliant Resources Source: Business Week, June 10, 2002

  5. Corporate Scandal Fines Source: Business Week, Nov. 4, 2002

  6. All Corporations Fair Amount 41% Only A Little 35% Not At All 13% A Great Deal 10% No Opinion 1% Your Employer A Lot 50% Only Somewhat 39% Not At All 8% No Opinion 3% How Much DoAmericans Trust Corporations? Source: USA Today/CNN/Gallup Poll, Jan. 25-27, 2002

  7. Ethics of MBA Students Percent of MBA Students Who Would: • Buy Stock on Inside Information 52% • Reveal Corp. Secrets to Spouse/Family 50% • Let a Gift Sway Purchasing Decision 26% • Pay Someone Off to Close a Business Deal 13% Source: USA Today

  8. Why People Volunteer Percent of Respondents Total is more than 100%- respondents could give more than one reason.

  9. Ethics • More Than Legality • Standards are Fundamental • Stem From Individual Page 104, San Diego State University students partially blamed the instructor for giving the same test to different classes….

  10. Ethical Decision Resolved Through: • Religious Teachings: Judeo-Christian beliefs • Individual Rights: Founding Fathers: liberty & freedom • Legislation: Laws and court decisions

  11. Ethics Check Questions: • Is It Legal? Ask yourself if you are violating any law or company policy. Whether you are thinking about having a drink and then driving home, gathering marketing information, getting rid of company waste, or using a questionable nickname for an employee. • Is It Balanced? Ask yourself if you are acting fairly? Would you want to be treated this way? Is it a when-lose situation: somebody will gain at the expense of another which usually results in a lose-lose • How Will It Make Me Feel About Myself? Will I feel good if my family learned of my decision? My boss and/or my friends? Will the decision bother me?

  12. Factors InfluencingManagerial Ethics Organizational Environmental Individual • Values • Competition • Economic Conditions • Social/Cultural Institutions • Top Level Mgmt. Philosophy • The Firm’s Reward System • Job Dimensions • Work Background • Family Status • Personality

  13. Six Steps to Improve Business Ethics • Top Management must adopt and lead by example. • Employees must understand that ethical behavior is expected by all associated with the company. • Managers and employees must be trained. • An ethics office must be set up with an anonymous method to assist whistle blowers. • Outsiders (stakeholders) must be included in the company ethics program. • The Code of Ethics must be written and enforced.

  14. Levels of Corporate Social Responsibility Societal Responsibility Stakeholder Responsibility Ecological Environment Customers Profit Responsibility General Public Owners/Stockholders Employees Suppliers/Distributors Public Interest Groups Source: Marketing, 5/E by Berkowitz, Kerin, Hartley, and Rudelius.

  15. Codes of EthicsCorporate Codes of Ethics can be classified into two major categories……………………. • Compliance-Based: emphasizes increase control and penalizing wrong doers. • Integrity-Based: emphasizes supporting environment and shared accountability among employees – values are not necessarily legally mandatory.

  16. Corporate Social Responsibility and Social Performance 1. CORPORATE SOCIAL RESPONSIBILITY is a business’s concern for welfare of society. Ranges from making safe products to minimizing pollution and harm to the environment. Nestle. 2. SOCIAL PERFORMANCE of a company has several dimensions: a. CORPORATE PHILANTHROPY is the dimension of social responsibility that includes charitable donations to nonprofit organizations. b. CORPORATE RESPONSIBILITY is the dimension of social responsibility that includes everything from hiring minority workers to making safe products. c. CORPORATE POLICY refers to the position a firm takes on social and political issues.

  17. Contributions to Charity(In Billions of Dollars)

  18. New Philanthropy Source: Business Week, Dec. 2, 2002

  19. Most AdmiredCompanies by Industry Industry Company • Apparel Levi-Strauss • Airlines Southwest • Food Services McDonald’s • Food Products Campbell’s • Beverages Coca-Cola • Electronics Intel Source: Fortune Magazine

  20. Merck Johnson & Johnson Pfizer Eli Lilly IBM Microsoft Intel Bank of America $221.0* 176.2 123.9 121.4 116.1 104.7 101.0 91.5 Corporate Annual Giving Source: The Taft Group * In Millions

  21. Where CharitableContributions Go (2001) In Billion $ Source: BusinessWeek. Dec. 2, 2002

  22. Strategic Giving Strategic philanthropy involves companies making long-term commitments to one cause, such as McDonald’s founding and support of Ronald McDonald Houses, which house families whose critically ill children require treatment away from home.

  23. Social AuditingCompanies can and do perform social audits on themselves. • A SOCIAL AUDIT is a systematic evaluation of an organization’s progress toward implementing programs that are socially responsible and responsive. • Some suggest that positive actions be added up and NEGATIVE EFFECTS SUBTRACTED to get a NET SOCIAL CONTRIBUTION.

  24. Social Audit In addition to social audits being conducted by the companies themselves, there are four types of watchdog groups: • Socially-Conscious Investors • Environmentalists • Union Officials • Customers

  25. International Ethics& Responsibility • Ethics Not Unique To U.S.- Leaders Accountable • Demand for Socially Responsible Behavior • Not all countries share are values on ethics, however?!

  26. Most Admired Global Companies (Outside of U.S.) • Nokia Finland • Toyota Motor Japan • Sony Japan • Nestle’ Switzerland • Honda Motor Japan • BP Britain • Singapore Airlines Singapore • L’Oreal France • Royal Dutch/Shell Britain & Netherlands • Canon Japan Source: Fortune, March 4, 2002

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