Lecture 09emad@iqraisb.edu.pk

Ethics & Social Responsibility.Social involvement as a business concept?Pre 1900’s business purpose exclusively

economic.Modern organisations more dependant than

ever before on public opinion.Stakeholders.Societal awareness.

Responsibility & Responsiveness....Social Responsiveness > the ability of a

corporation to relate its operations and policies to the social environment in ways that are mutually beneficial to the company and to society.

Social Responsibility > a business firm's obligation, beyond that required by law and economics, to pursue long-term goals that are good for society.

Corporate social responsibility is "seriously considering the impact of the company's actions on society”.

Examples?Industries: Problems and solutions.

EnvironmentalLegalTechnicalSocio-political

Social Responsibility:Social obligation.

Minimal fulfillment.Social Responsiveness.

Going beyond the minimal. An ethical imperative.

Social norms > Act as guides for managerial decision making in accordance with prevalent customs.

A socially responsive organization acts the way it does because of its desire to satisfy some popular social need.– Not necessarily because it is profitable or

beneficial for the organisation.

Group Discussion:Arguments for social involvement of businessArguments against social involvement of

business.Split class into two.At least five reasons.Discussions for and against. Any minds changed?

Reaction vs. Proaction?Governmental role?Law & morality?Ethics:

The discipline dealing with what is good and bad as well as with moral duty and obligation.

Expectations of society, Fair competition, Advertising, Public relations, Social responsibility,

– The above are all encompassed within business ethics.

Ethical Theories.Utilitarian Theory:

Consequences used as basis for evaluation.Theory based on rights:

Everyone has basic rights.Theory of justice:

Decision makers need to be fair and equal as well as impartial.

Standards for gauging the level of ethical behaviour of an organisation.

How may ethics be institutionalised?establishing an appropriate company policy or

a code of ethics as a guide to behaviour.by using a formally appointed ethics committee

to keep ethics in sight with decision making,

andby teaching ethics in management

development programs to provide the foundational basis.

Whistle blowing? Ethical practice?

Managerial EthicsFour perspectives on business ethics

Utilitarian ViewIncreases efficiency and effectiveness,

sometimes with a cost. Rights View

Safeguarding the rights of the person.Theory of Justice View

Impartial, equitable and fair enforcement of rules & regulations.

Integrative Social Contracts ViewIntegration of what is and what should be.Notion of contracts regarding organisation and

society.Equal exchange of effort and benefits.

Factors affecting.Complex interactions determine a managers

behaviour.Factors determining influence

Morals of manager,Organisations culture andIntensity of issue

Two Personality Variables

–Ego strength• A personality measure of the

strength of a person’s convictions

– Locus of Control• A personality attribute that

measures the degree to which people believe they control their own life

Locus of Control

Internal locus: The belief that you control your destiny

External locus: The belief that what happens to you is due to luck or chance

Determinants of Issue Intensity

Issue Intensity

Consensusof Wrong

Proximity toVictim(s)

Concentrationof Effect

Greatnessof Harm

Immediacy ofConsequences

Probabilityof Harm

How many peoplewill be harmed?

How concentratedis the effect of the

action on the victim(s)?

How likely is itthat this action

will cause harm?

Will harm be feltimmediately?

How much agreementis there that thisaction is wrong?

How close are thepotential victims?

Stages of Moral Development

Values?Independence from external values.Ego strength

Strength of convictions.Loci of control

Belief in control of fate.

Structural variablesRules & regulationsReward & punishment systems

Organisational cultureContentStrength

Factors.

Intensity of issue.Greatness of harm. (The larger the

number of people harmed).Consensus of wrong. (The more

agreement that the action is wrong).Probability of harm. (The greater the

likelihood that the action will cause harm).

Immediacy of consequences. (The more immediately that the consequences of the action will be felt).

Proximity to victim/s. (The closer the person feels to the victim/s).

Concentration of effect. (The more concentrated the effect of the action on the victim/s).