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1840000006c77747074000001f000000014626b707400000204000000147258595a00000218000000146758595a000 0022c000000146258595a0000024000000014646d6e640000025400000070646d6464000002c400000088767565640 000034c0000008676696577000003d4000000246c756d69000003f8000000146d6561730000040c000000247465636 8000004300000000c725452430000043c0000080c675452430000043c0000080c625452430000043c0000080c74657 87400000000436f70797269676874202863292031393938204865776c6574742d5061636b61726420436f6d70616e7 90000646573630000000000000012735247422049454336313936362d322e310000000000000000000000127352474 22049454336313936362d322e31000000000000000000000000000000000000000000000000000000

BUSS116
CHARLESAYOMASCHOOLOFBUSINESS

ffd8ffe000104a46494600010101005700560000ffee000e41646f626500640000000001 ffdb0043000c08090b09080c0b0a0b0e0d0c0e121e1412111112251b1c161e2c272e2e2b 272b2a3137463b313442342a2b3d533e42484a4e4f4e2f3b565c554c5b464d4e4bffdb00 43010d0e0e121012241414244b322b324b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b 4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4b4bffc000110 800c100c503012200021101031101ffc4001f0000010501010101010100000000000000 000102030405060708090a0bffc400b5100002010303020403050504040000017d01020 300041105122131410613516107227114328191a1082342b1c11552d1f0243362728209 0a161718191a25262728292a3435363738393a434445464748494a535455565758595a6 36465666768696a737475767778797a838485868788898a92939495969798999aa2a3a4 a5a6a7a8a9aab2b3b4b5b6b7b8b9bac2c3c4c5c6c7c8c9cad2d3d4d5d6d7d8d9dae1e2e3e 4e5e6e7e8e9eaf1f2f3f4f5f6f7f8f9faffc4001f0100030101010101010101010000000000 000102030405060708090a0bffc400b5110002010204040304070504040001027700010 2031104052131061241510761711322328108144291a1b1c109233352f0156272d10a16 2434e125f11718191a26

DISTANCELEARNINGMATERIAL

PUBLISHEDBYKENYAMETHODISTUNIVERSITY P.O. BOX26760200,MERU Email:odlm.meru@kemu.ac.ke TEL:25406430301,31146/0736752262

INTRODUCTIONWelcometotheunitBusinessValuesandSocialResponsibilityBUS116.Undertakinganopenanddistancelearningprogramcanbeexciting,challenging,oritmaybelonely.Theprocessbyw hichwelearniscomplex,andduringthiscoursewewillbeencouragingyoutoreflectonyourownlearningprocess. Tobegin,thinkaboutyourpreviousexperiencesofeducation.Youhaveprobablyexperiencedmanytypesofteaching,formala ndinformal.Youhavealmostcertainlyexperienceschool.Thisprobablyincludesformalclasses,lectures,setexercises,solitar ystudyperiods,groupactivities,researchprojects.Youwillalsohaveexperiencesofbeingtaughtasanadult:Adulteducationcl asses,demonstrations,correspondencecoursesetc. Youwillhavemanyexperiencesoflearning.Somewillhavearisenfromteachingyoureceived,butlearningandbeingtaughtare alwaysconcurrent.Sometimeswefeelwehavebeentoclassandlearnednothing.Thisisprobablynotactuallytrue,butwemayn othavelearntwhatwasintended. Thepurposeofthisintroductionistodescribe Therequirementforthisunit Howtostudyforthisunit Generalassessmentrequirements Theexaminationprocess Requirementsforthisunit: SpecificrequirementforthisunitarespecifiedindetailintheUnitOutlineforthisparticularunit.Pleaseensureyoureadthisoutli ne. Wewillbespending12weekstogetherlearningaboutEthicsandCorporateSocialResponsibilityand,onsuccessfulcompletio noftheunit,youwillbeableto:(Asappearsoncourseoutline) Sohowwillweachievethis? WewillachievethisusingacombinationofLectureNotes,OnlineActivities,SelfAssessmentTests,andQuestionstoreflecton

aswellaslecturerstudentfacetofacetutorialsatleasttwiceasemester. RequirementsforthisUnit Assessmentconsistsofthefollowing: Assignment(30%) FinalExamination(70%) HowtoStudyforthisUnit Eachlecturehas4components: 1Selfassessmenttests 2Questionstoreflectonwhathasbeenlearnt. 3Lecturenotesandonlineinformation 4Lecturerandstudentfacetofacetutorialstwiceasemester. LearningSuccess Theroadtosuccessinlearningcanbesmoothorrough.Thesmoothestpathyoucantakeistostudythelecturenotes,readingsando nlinelinks.Wewanttohelpyoutosuccessfullygaintheknowledgeandskillsinvolvedinthisunit.Todosoweusetheinnovativeco mbinationoflecturenotesandonlinelinksandtutorialstwiceasemester.Theuniversitywillroleoutschedulesforthistutorialsa ndyouwillbeintimatedonline. UnitStudy Readthroughyourlecturenotescarefullyastheymaybeprovidingextrainformationthatwillnotbeintextbooksbutyouwillbee xpectedtoknow.Pleaseensurethatyougathertheinformationyourequiretoprepareyouranswerstothetests.Thisinformation maycomefromyourtextbookreadings;lecturenotesorothersources. Thelecturenotesareprovidedtohelpandsupportyouindoingtheselfassessmenttests.Thisinformationwilli ncludesomeofthefollowing: Additionquestionsfromyourtextbook.(Rememberthemoreyoudothemoreyouwilllearn) Lecturenotestoassistintheparticulartopiconaweeklybasis Anyextrareadingsrequiredandinstructionsforaccessingthemfromaparticularonlinedatabaseornewspaper Linkstoothersiteswhichareacomponentfortheunit. Pleasenotethatthiscoursehastwocomponents,BusinessEthicsandCorporateSocialResponsibility.Eachisonpages6and72r espectively.Thatdoesnotmakeeachcomponentmutuallyexclusive.Indeedtheyareinterrelated. COURSEOUTLINE Coursepurpose Thepurposeofthiscourseistostrengthenstudents`abilitytoanticipate,criticallyanalyzeandappropriatelyrespondtothecruci alethicalandsocialchallengesfacingmangersinthemodernglobaleconomy.Thisstrengthisanecessaryconditionforeffectiv

eleadership.Instructionwillbebasedprimarilyonthecasemethod,supplementedbybothtopicalandphilosophicalarticlesan dessays.First,thecourseintroducesstudentstotheprincipalproblemsandtheoriesofethicsandhowmightapplytoreallifesitua tionswithspecialfocusonthebusiness.Amongtheproblemsexaminedarethenaturesofmorality,howethicaljudgmentsarem ade,questionsconcerningthemeaningofethicaltermsandthedistinctionbetweenthemoralandthenonmoral.ThecourseconcludeswiththeanalysisoftheemergingconceptsofCorporateSocialResponsibilityandSustainability( CSR&S)andhowcompanieshavebeenrespondingtodemandsformoreethicalbehaviour,andsocialandenvironmentalrespo nsibilities. CourseObjectives Identifyingandevaluatingtheimportanceofresourcesprovidedbypublicstakeholders. 1Evaluatingtheroleofthemoralmanagerinmakingpublicandprivatesectordecisionsincludingresolvingtradeoffsamong stakeholders. 2Evaluatingthesocialcontractbetweenthefirmandpublicstakeholdersandevaluatinghowthissocialcontractshouldguidede cisionmaking. 3Applyingaformalethicalframeworkthatincorporatespersonalvaluesandbroaderutilitarian,rights/duties,andjusticeconsi derationsintomakingdecisions. CourseContent

1. BusinessEthics
DefiningofBusinessethicsandsocialResponsibility. WhystudybusinessEthics? AframeworkforunderstandingEthicalDecisionMakinginBusiness. RelationshipinValues,AttitudeandBehaviours ClassificationofethicalIssues ConflictofInterest HonestyandFairness Communications Technology EthicalIssuesrelatedtoparticipantsandFunctionalareasofBusiness:Owners,Finance,Employees,Management,Consumers,MarketingandAccounting. OrganizationalStructureandBusinessethics:centralizedanddecentralizedorganizations. Groupdimensions:Formal,informal,GroupNorms. 1. ImplementationandManagementofEthics. 2. InternalEthicsaudit,ethicscommittee,CodesofEthics,SocialAudits,andEthicalOmbudsman. ImprovingEthicsDecisionMakinginBusiness/ReducingUnethicalbehaviourinBusinessOrganization. Driversofdecisionsthatbusinesspeoplemake. CreatinganEthicalFrameworkforBusiness

2. CorporateSocialResponsibility
SocialResponsibility:Legal,environmental,ethical,economicPhilanthropicdimensions ThePracticeorCSR ThedebateoverCSR CSRbestpractices:Stakeholders&standardsetting/auditing EconomictheoryandCSRasamodelforopportunityrecognition TheriseofthesustainabilityandCSRSmovements

ReflectionsonCSR MotivationsforCSR&S BeyondCSR DimensionofCorporateSocialPerformance

Reference: 1PincusHartman,PerspectivesinBusinessEthics(Mc.GrawHillSeries)1998. 2Bateman,Zeithane,(1993),Management:Functionsandstrategy,RichardD.IrwinInc.USA. th 3Longeneclker,JustinG.etal,(2000),smallBusinessManagement:AnEntrepreneurEmphasis,11 Edition. nd 4Robins,StephenP,(2000)ManagingToday,2 Edition,PrenticeHall,Inc,USA 5Zikmund,WilliamG,etal(1995),Business:ChallengesforGlobalCompetitiveness. th 6KeithDavisandWilliamC.Fredrick,Businessandsociety,(Management,PublicPolicyandEthics,5 Edition,1976. th 7StephenP.RobbinsandMaryCoulter,Management,6 Edition,1999. 8P.K.Gosh(SultanChandandSons),BusinessP)olicy,strategicPlanningandManagement,Delhi1996. rd 9JohnA.PearceII&RichardB.RobinsJr.,StrategicManagement,(StrategyFormulationandImplementation),3 Edition,1988. 10C.RonaldChritensen,KennethR.AndrewsandJosephBower,BusinessPolicy,1978.RickyGriffinsandRonaldJ.Elbert,B usiness,1989.

TABLEOFCONTENTS
INTRODUCTION.............................................................................................................2COURSEOUTLINE............. ............................................................................................5Week1.................................................................................. ............................................10Topic1..........................................................................................................................10 BusinessValuesandEthics........................................................................................10ReasonswhywestudyBusinessEthi cs.....................................................................12CharacteristicsofHighlyEthicalOrganization......................................... ..............14Week2..............................................................................................................................19Topic2................. .........................................................................................................19GuidelinesforManagingEthicsintheWorkplace..... .............................................19DevelopingCodesofEthics........................................................................................20Su mmaryofthelecture...........................................................................................22Week3................................................... ...........................................................................25Topic3................................................................................................. .........................24Reducingunethicalbehaviourinanorganization...................................................24Topic4................... .......................................................................................................26AFrameworkforUnderstandingEthicalDecisionMa kingInBusiness...............26Week4..............................................................................................................................33T opic5..........................................................................................................................33ClassificationofEthicalIssuesand ProblemsinBusiness......................................33Topic6...................................................................................................... ....................38EthicalIssuesRelatedtoParticipantsandFunctionalareasofBusiness............38Week5................................ ..............................................................................................43Topic7:ApplicationofMoralPhilosophies/TheoriestoBus inessEthics..............43Topic8..........................................................................................................................51Organiz ationalStructureandBusinessEthics.........................................................51Topic9............................................................ ..............................................................55TheRoleofCorporatecultureinEthicaldecisionmaking.....................................

55Week6..............................................................................................................................66 Topic10........................................................................................................................66EthicalDilemmas...................... ...................................................................................66MethodstoResolveEthicalDilemmas:.......................................... ...........................66EthicsTools:ResolvingEthicalDilemmas(withRealtoLifeExamples).............66Week7..............................................................................................................................75To pic11........................................................................................................................75EthicsintheBusinessDisciplines.... ..........................................................................75Topic12................................................................................................ ........................79ApplicationofEthicsinHiringandPromotion.......................................................79Week8..................... .........................................................................................................81Topic13................................................................. .......................................................81CorporateSocialResponsibilityinBusiness............................................................. 81CorporateSocialResponsibilityinBusinessEthics.................................................84Week9........................................... ...................................................................................90Topic14....................................................................................... .................................90CorporateSocialResponsibility&Profitability......................................................90Topic15........ ................................................................................................................94SatisfyingCorporateSocialResponsibility...... .........................................................94Topic16................................................................................................................. .......98EvolutionofCorporateSocialResponsibility...........................................................98Topic17................................ ......................................................................................100ModelsonCorporateSocialResponsibility.............................. ..............................100Topic18......................................................................................................................105Corporat ePowersandIssues...................................................................................105Week10........................................................ ..................................................................109Topic19...................................................................................................... ................109RelationshipoftheFirmtoStakeholders...............................................................109Week11....................... ...................................................................................................123Topic20..................................................................... .................................................123SocialResponsibility&ManagementFunctions....................................................123 FactorsthatinfluenceBusinessEthicalBehaviour....................................................128

Week 1 Topic 1 1.0 BusinessValuesandEthics

Lectureobjectives UnderstandingBusinessValuesandEthics Toexploretheconceptualizationofbusinessethics AppreciatingthestudyofBusinessValuesandEthics OutliningcorevaluesinBusinessEthics Explainingtheinterrelationshipbetweenvalues,attitudesandbehaviourinbusiness 1.1 Introduction BusinessEthicsisoneofthemostimportantyetperhapsmostmisunderstood,concernsintheworldofbusinesstoday.Thefieldo

fbusinessethicsdealswiththequestionsaboutwhetherspecificbusinesspracticesareacceptable.Forexample,shouldasalesp ersonomitfactsaboutaproductspoorsafetyrecordinasalespresentationtoclient? Shouldanaccountantreportinaccuraciesdiscoveredinanauditofaclient,knowingthatthecompanywillprobablybefiredbyth eclientfordoingso? Shouldanautomobiletiremanufacturerintentionallyconcealsafetyconcernstoavoidamassive,andcostly,tirerecall? Shouldpharmaceuticalcompanieswidelyadvertiseimprovedlifestylewonderdrugsthatshouldonlybeprescribedtoasmal lpercentageofthepopulation?Additionallyatwhatcostdotheselifestyleimprovementscome? Regardlessoftheirlegality,theactionstakeninsuchsituationswillsurelybejudgedbyothersasrightorwrong,ethicalorunethic al.Byitsverynature,thefieldofbusinessethicsiscontroversialandthereisnouniversallyacceptedapproachforsolvingethicali ssues.Ontheotherhand,governmentisencouragingorganizationalaccountabilityforethicalandlegalconduct.Organization sarebeingaskedtopreventandcontrolmisconductbyimplementingethicsprogram.Manybusinessesarecommunicatingcor evaluestotheiremployeestodevelopanethicalclimateintheorganization. Beforewegetstarted,itisimportanttostatewhatthisreadingmaterialisandwhatitisnot.Firstitdoesnotmoralizebytellingyouw hatisrightorwronginaspecificsituation.Second,althoughitprovidesanoverviewofgroupandindividualdecisionmakingprocess,itdoesnotprescribeanyonephilosophyprocessasbestormostethical.Third,thismaterialwillnotmakeyoum oreethical,norwillittellyouhowtojudgetheethicalbehaviourofothers.Ratheritsgoalistohelpyouunderstandanduseyourcur rentvaluesandconvictionsinmakingbusinessdecisions,tothinkabouttheeffectsofyourdecisionsonbusinessandsociety,and tobetterunderstandhoworganizationsmanageverydiverseemployees.Tothisendweaimtohelpyoulearntorecognizeandres olveethicalissueswithinbusinessorganizations.Theframeworkdevelopedinthismaterialthereforefocusesonhoworganizat ionalethicaldecisionsaremadeandonwaystheorganizationcanimproveethicalconduct. 1.1.1 Definitionofbusinessethics Ethicshasbeendefinedasinquiryintothenatureandgroundsofmoralitywherethetermmoralityistakentomeanmoraljudgm ent,standardsandrulesofconduct.Ithasalsobeencalledthestudyandphilosophyofhumanconductwithanemphasisonthedet erminationofrightandwrong. TheAmericanHeritagedictionaryoffersthisdefinitionofethicsasthestudyofthegeneralmoralchoices,moralphilosophyan dtherulesorstandardsgoverningtheconductofmembersofaprofession. Mostpeoplewouldagreethathighethicalstandardsrequirebothbusinessandindividualstoconformtosoundmoralprinciples. However,somespecialaspectsmustbeconsideredwhenapplyingethicstobusiness.First,tosurvive,businessmustmakeprofi ts.Ifprofitsarerealizedbymisconduct,thismeansthatthelifeoftheorganizationwillbeshort.Secondly,businessmustbalancet heirdesireforprofitsagainsttheneedsanddesiresofthesociety.Maintainingthisbalancealwaysrequirescompromisesandtra deoffs.Toaddressthisuniqueaspectofthebusinessworld,societyhasdevelopedruleswhicharebothlegalandimplicit(hidden rules)toguidebusinessintheireffortstoearnprofitsinwaysthatdonotharmindividualsandsocietyasawhole.

Inanutshell,businessethicscomprisesofprinciplesandstandardsthatguidebehaviourintheworldofbusiness.Whetheraspeci ficrequiredbehaviourisrightorwrong,ethicalorunethicalisoftendeterminedbystakeholderssuchasinvestors,interestgroup s,employees,thelegalsystemandthecommunity.Althoughthesegroupsarenotnecessarilyright,theirjudgmentsinfluenceits activities. 1.1.2 Definitionofbusinessvalues Thesearefundamentalbeliefsystemsthatformthebasisforthedevelopmentoradoptionofethicalpatternsofbehaviour.Value sandsystemsarethebedrockuponwhichanethicalpersonalityisbuilt.Theyserveasamoraljustificationofalltheactionsthatan enterprisedecidedtotakeornottotakeinthecourseofitsoperations.Theenterprisevaluesystemandthoseofthesocietyinwhich itoperatesserveasyardsticksagainstwhichtheenterpriseisjudgedaseitheroperatingethicallyorunethically. 1.1.3 WhyStudybusinessethics Ethicalwrongdoingisincreasinglyaconcerntodaywhethermadeinscience,politicsorbusiness.Mostdecisionsarejudgedasri ghtorwrong,ethicalorunethical.Regardlessofwhatanindividualorbusinessorganizationbelievesinaparticularbehaviour, whethercorrectlyornot,judgmentsdirectlyaffectstheorganizationsabilitytoachieveitsbusinessgoals.Forthisreasonalone, itisimportanttounderstandbusinessethicsandrecognizeethicalissues. Studyingbusinessethicsisvaluableforseveralreasons.Manypeoplethinkthatifanorganizationhiresgoodpeoplewithstrong ethicalvalues,itwouldbeagoodcitizenorganization.Somepeopledonotdistinguisheverydayethicalissuesfrombusinessone s.Ourconcerntherefore,shouldbeapplicationofrulesandprinciplesinthebusinesscontext.Professionalsinanyfieldincludin gbusinessmustdealwithindividualspersonalmoraldilemmasastheseissuesaffectapersonsabilitytofunctiononthejob.Nor mally,abusinessdoesnotestablishrulesorpoliciesonpersonalethicalissuessuchassex,ortheuseofalcoholoutsidetheworkpl ace. Indeed,insomecases,suchpolicieswouldbeillegal.Onlywhenapersonspreferencesorvaluesinfluenceshisorherperforman ceonthejobdoanindividualethicsplayamajorroleintheevaluationofbusinessdecisions.Itisimportanttorecognizetherelatio nshipbetweenlegalandethicaldecisionsbecausejustbeingagoodpersonhavingsoundpersonalethicsinyourownviewmayn otbesufficienttohandleethicalissuesthatariseintheorganization. 1.1.4 Reasonswhywestudybusinessethics Companiesandbusinesspeoplewhowishtothrivelongtermmustadoptsoundethicaldecisionmakingpractices. Ethicsprogramshelpmaintainamoralcourseinturbulenttimes. Ethicsprogramscultivatestrongteamworkandproductivity Ethicsprogramssupportemployeegrowthandmeaning. Ethicsprogramsareaninsurancepolicy;theyhelpensurethatpoliciesarelegal. Ethicsprogramshelpmanagevaluesassociatedwithqualitymanagement,strategicplanninganddiversitymanagement;thisb enefitneedsfarmoreattention. Ethicsprogramspromoteastrongpublicimage. Thereisanoverallbenefitsofethicsprograms:

1.1.5 Corevaluesinbusinessethics
Thefollowingarethecorebusinessvalues: Acceptresponsibilityandbeaccountableforactions. Respectandpromotehumanrightsinallourdealings Honouragreementsandcommitments Treateveryonebeingdealtwithfairly,honestlyandwithdignityandrespect Conductbusinessinanenvironmentallyresponsiblemannerinaccordancewiththeprinciplesofsustainabledevelopment. Obeyalllawsthatgovernbusiness Operateinallcountriesinaccordancewiththeprinciplesandstandardsbeingappliedinbusinessactivities Manageactivitiesforthebenefitofstakeholders Communicatetoallstakeholdersinhonestandstraightforwardmanner Carryoutactivitiesinasociallyresponsiblemannerthatbenefitthelocalcommunityinwhichthebusinessoperates Workingwithemployeestocreateenvironmentsthataresafeandhealthy Selectandtreatemployeesinafairandequitablemanner Establishaworkenvironmentthatisfreefromdiscrimination,harassment,intimidationandhostilityofanykind Respectingprivacyofemployeesandtheirfamilies 1.1.6 Characteristicsofhighlyethicalorganizations Theyareateaseinteractingwithdiverseinternalandexternalstakeholdergroups.Thegroundrulesoftheseorganizationsmake thegoodofthesestakeholdergroupspartoftheorganizations'owngood. Theyareobsessedwithfairness.Theirgroundrulesemphasizethattheotherpersons'interestscountasmuchastheirown. Responsibilityisindividualratherthancollective,withindividualsassumingpersonalresponsibilityforactionsoftheorganiz ation. Theseorganizations'groundrulesmandatethatindividualsareresponsibletothemselves. Theyseetheiractivitiesintermsofpurpose.Thispurposeisawayofoperatingthatmembersoftheorganizationhighlyvalue.An dpurposetiestheorganizationtoitsenvironment. Thereexistsaclearvisionandpictureofintegritythroughouttheorganization. Thevisionisownedandembodiedbytopmanagement,overtime. Therewardsystemisalignedwiththevisionofintegrity. Policiesandpracticesoftheorganizationarealignedwiththevision;nomixedmessages. Itisunderstoodthateverysignificantmanagementdecisionhasethicalvaluedimensions. Furtherreading MarkPastin,inTheHardProblemsofManagement:GainingtheEthicsEdge(JosseyBass,1986),providestheaboveprinciplesforhighlyethicalorganizations.

1.2 InterrelationshipbetweenValues,AttitudesandBehaviourinBusiness
Therelationshipbetweenvalues,attitudesandbehaviourinbusinessisevidencedbythefactthatonesvalues(beliefs)leadstoon edevelopingcertainattitudes(inclinationstoact)andfinallyacertainbehaviourisportrayed(actions/decisions). Businessexecutiveswhohavepositivevalueswillthereforetendtodeveloptherightattitudesandsotendtopropelthebusinesst owardsadesirabledirection.Wewillbeginbyfirstdefiningthefollowingterms: 1Values thesearefundamentalbeliefsystemsthatformthebasisforthedevelopmentoradaptationofethicalpatternsofbehavioure.g.I believeinajustandhonestsociety(MartinLutherKingJnr.). 2Attitudes

Theseareinclinationstoactinagivenwaye.g.afirmmayharbouranattitudeofhatredtowardcompetitorsoranattitudeofcomm andershipinbusiness.ForexampleKenyaBrewerieshadtobuyoutCastleLager. 3Behaviour thisisactualizedattitudeorthephysicalportrayalofcertainattitudes.Firmsthatharboursanattitudeofcomradeshipinbusiness withcompetitorswillforexample,organizecommonpurchasesystemswiththecompetitorstotakeadvantageofeconomiesof scaleunlikethatwhichharbourshatredforcompetition. ffd8ffe000104a4649460001020100c800c80000ffe20c584943435f50524f46494c4500010100000c484c696e6f02100 0006d6e74725247422058595a2007ce00020009000600310000616373704d534654000000004945432073524742000 0000000000000000000000000f6d6000100000000d32d4850202000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000001163707274000001500000003364657363000001 840000006c77747074000001f000000014626b707400000204000000147258595a00000218000000146758595a0000 022c000000146258595a0000024000000014646d6e640000025400000070646d6464000002c4000000887675656400 00034c0000008676696577000003d4000000246c756d69000003f8000000146d6561730000040c0000002474656368 000004300000000c725452430000043c0000080c675452430000043c0000080c625452430000043c0000080c746578 7400000000436f70797269676874202863292031393938204865776c6574742d5061636b61726420436f6d70616e79 0000646573630000000000000012735247422049454336313936362d322e3100000000000000000000001273524742 2049454336313936362d322e31000000000000000000000000000000000000000000000000000000 a) Desireforqualitylife qualityproducts. b) Desireforawellconservedenvironment desire to contribute in environment al desiretocreatequalityproducts creation of hig h

conservationparticipationinenvironmentalactivities(orsocialresponsibilityactivities).Thesequentialnatureofthe processaboveisimportantandshouldbeemphasizedwhenadvisingafirmthatwishestodevelopethicalbehaviourinitsoperati ons.Afirmwhosevaluesystemisskewed/strangewillmostcertainlybringforthskewedbehaviouralactions.

SelfAssessmentActivities Citeanyservicesoraproductwhereamanufacturerfollowstheabovesequence.

1.2.1 Howtoresistrequeststoactunethically RecognizeUnethicalRequestsandBiases BuyTime FindaMentor&PeerSupportGroup FindWinWinSolutions WorkwithintheFirmtoStoptheUnethicalAct PreparetoLoseYourJob(Lastresortb/citsdifficulttomakechangeeffectivelyfromtheoutside.)

SelfAssessmentActivities
IwantyoutothinkofaprojectinKenyawhichcouldnotgettoitsimplementationstageseitherduetopublicpressureorotherinter

estgroups.DoesTiominMiningCompanyinKwale,cometoyourmind? Whatweretheissuesraisedbythevillagersorstakeholdersandotherinterestgroupsthatdelayeditsimplementation? Whatdoesthattellyouaboutpeoplesroleasfarasshapingandadoptionofethicsbyorganizationsareconcerned? Whyisethicsimportantinaworkplace? Whatarethecommonunethicalbusinesspractices?

SelfAssessmentActivity

Thefollowingquestionscanbeusedforreflection.Youcantakeallorsomeofthequestionsandsitwiththemforawhile.P erhapsholditinyourattentionasyougothroughtheday,orletbeaseedinameditation.Recordyourimpressions. Letsapplywhatyouvelearnedfromthechaptertoacontextmanyofyoumaybefamiliarwith: DownloadingCopyrightedMusicFilesfromtheInternetatsiteslikeNapster,KazaaandMorpheus. Downloadingcopyrightedmusicfileswithoutpermissionofthecopyrightownerisclearlyillegal,yetthepracticecontinues. Why? Becausedownloadersusefivecommonrationalizationstojustifystealingmusicfiles.Considerthefollowingexcusesandid entifythepossiblefallaciesineach. Excuse#1:Everybodydoesit. Excuse#2:Itsthemusiclabelsfault.Theyreleasealbumswithonlyonegoodtrackperalbum,yetcharge15to20dollarsatretai l. Excuse#3:IwouldntbuytheCDanyway. Excuse#4:Musiciansandlabelsmakeenoughmoneyalready. Excuse#5:ImmerelysamplingthemusictodecideifIlikeit,justasItestdriveacarbeforeIbuyit. ..Canyouaddexamplesofmoreexcusestothelist?

Summary Ethicsinvolveslearningwhatisrightorwrong,andthendoingtherightthingwhilevaluesarethefundamentalbeliefsystemthatl eadstoonedevelopingaparticularpatternofbehaviour.Ethicalwrongdoingisincreasinglyaconcerntodaywhethermadeinsci ence,politicsorbusiness.Companiesandbusinesspeoplewhowishtothrivelongtermmustsoundethicaldecisionmakingprac ticesForthisreasonalone,itisimportanttounderstandbusinessethicsandrecognizeethicalissues. Manypeoplethinkthatifanorganizationhiresgoodpeoplewithstrongethicalvalues,itwouldbeagoodcitizenorganization.So

mepeopledonotdistinguisheverydayethicalissuesfrombusinessones.Ourconcerntherefore,shouldbeapplicationofrulesa ndprinciplesinthebusinesscontext.Professionalsinanyfieldincludingbusinessmustdealwithindividualspersonalmoraldil emmasastheseissuesaffectapersonsabilitytofunctiononthejob.

FURTHERREADING
PeopleofgoodcharacterareTRRFCC.(Pronouncedterrific) CanyouidentifytheseSixPillarsofCharacter?Gotohttp://www.charactercounts.org/defsix.htm. TheJosephsonInstituteofEthicshttp://www.josephsoninstitute.org/.ScrolldownandselecttheMakingEthicalDecisions AStepbyStepGuidelinkatthebottomofthepage.

GLOSSARY
Ethics:Learningwhatisrightorwronganddoingtherightthing. Values:Fundamentalbeliefsystem,amission,oraphilosophythatismeaningful. Behaviour:Actualizedattitudeorphysicalportrayalofcertainattitudes. Policy:Aplanofactionorprinciplechosenandagreedonbyanorganizationtobefollowedtoachieveparticularorganizationala imsandobjectives. Winwinsituation:Asituationwhereneitherpartylosesorgains.

Week 2 Topic 2 2.0 GuidelinesforManagingEthicsintheWorkplace

Lectureobjectives Toanalyzeguidelinesformanagingethicsintheworkplace Toappreciatetheroleofemployeesandmanagementinmanagingethics OutliningdetailsonDevelopingCodesofEthics Tounderstandtopmanagementsroleinsupportingethicsprogram Toidentifythekeystosuccessfulethicstraining Tounderstandtheroleofcodesofethicsinidentifyingkeyriskareasfortheorganization Tounderstandtheroleofcontinuousimprovementinimplementingethicalcomplianceprogram Thefollowingguidelinesensuretheethicsmanagementprogramisoperatedinameaningfulfashion: 1Recognizethatmanagingethicsisaprocess. 2Thebottomlineofanethicsprogramisaccomplishingpreferredbehavioursintheworkplace. 3Thebestwaytohandleethicaldilemmasistoavoidtheiroccurrenceinthefirstplace. 4Makeethicsdecisionsingroups,andmakedecisionspublic,asappropriate. 5Integrateethicsmanagementwithothermanagementpractices. 6Usecrossfunctionalteamswhendevelopingandimplementingtheethicsmanagementprogram.

7Valueforgiveness.

SelfAssessmentActivity
1. Assuminganorganizationhasdevelopedacodeofethicswhichdidnothavetheinputofemployeesorcrossfunction aldepartments,inyourviewwhatwouldbethelikelyscenarioasfarasadoptionandsustainabilityand/oreffectiven essof 2. suchcodeofethics? Citeatleasttwoindicatorsshowingthatindeedthisorganizationhasaneffectivecodeofconduct. Notethattryingtooperateethicallyandmakingafewmistakesisbetterthannottryingatall.

2.1 DevelopingCodesofEthics
Lectureobjectives Analyzingissuesthatneedconsiderationincodeofethicsformulation Outliningdifferentethicalissues Appreciatingtheroleofpersonnelincodeofethicsformulation Identifyingandreinforcingpreferredbehaviourinthecodeofethics. Notethatifyourorganizationisquitelarge,e.g.,includesseverallargeprogrammesordepartments,youmaywanttodevelopan overallcorporatecodeofethicsandthenaseparatecodetoguideeachofyourprogramsordepartments. AlsonotethatcodesshouldnotbedevelopedoutoftheHumanResourceorLegaldepartmentsalone,asistoooftendone.Codesa reinsufficientifintendedonlytoensurethatpoliciesarelegal.Allstaffmustseetheethicsprogrambeingdrivenbytopmanagem ent. Notethatcodesofethicsandcodesofconductmaybethesameinsomeorganizations,dependingontheorganization'sculturean doperationsandontheultimatelevelofspecificityinthecode(s). Considerthefollowingguidelineswhendevelopingcodesofethics: 1Reviewanyvaluesneedtoadheretorelevantlawsandregulations; 2Reviewwhichvaluesproducethetopthreeorfourtraitsofahighlyethicalandsuccessfulproductorserviceinyourarea, 3Identifyvaluesneededtoaddresscurrentissuesinyourworkplace. 4Identifyanyvaluesneededbasedonfindingsduringstrategicplanning. 5Consideranytopethicalvaluesthatmightbeprizedbystakeholders. 6Collectfromtheabovesteps,thetopfivetotenethicalvalueswhicharehighprioritiesinyourorganization(seeitem#7belowfo rexamples). 7. Examplesofethicalvaluesmightinclude FurtherReading (thefollowinglististhe"SixPillarsofCharacter"developedbyTheJosephsonInstituteof Ethics,3103061868):a)Trustworthiness:honesty,integrity,promise-

keeping,loyaltyb)Respect:autonomy,privacy,dignity,courtesy,tolerance,acceptance c)Responsibility:accountability,pursuitofexcellenced)Caring:compassion,consideration,giving,sharing,kindness,l ovinge)Justiceandfairness:proceduralfairness,impartiality,consistency,equity,equality,dueprocessf)Civicvirtueand citizenship:lawabiding,communityservice,protectionofenvironment 1Composeyourcodeofethics;attempttoassociatewitheachvalue,twoexamplebehaviourswhichreflecteachvalue. 2Includewordingthatindicatesallemployeesareexpectedtoconformtothevaluesstatedinthecodeofethics. 3Obtainreviewfromkeymembersoftheorganization. 4Announceanddistributethenewcodeofethics(unlessyouarewaitingtoannounceitalongwithanynewcodesofconductanda ssociatedpoliciesandprocedures). 5Updatethecodeatleastonceayear. 6Notethatyoucannotincludevaluesandpreferredbehavioursforeverypossibleethicaldilemmathatmightarise. QUESTIONSTOREFLECTON Whataretheindicatorsorwarningsignsoflackofcodeofethicsataworkplace,samplethefollowing;Noonewilleverknowwh atwehavedone,soletuscontinuedoingit. Itdoesntmatterhowitsdonesolongasitisdone...Everyonedoesit ..ShredthatdocumentLetushideit Noonewillgethurt .Whatisinforme.Keepquietaboutit .. Canyoukeepthelistgoing?Pleaseaddmore.

Summaryofthelecture
Managingcodeofethicsisnotanendtoitselfrather,aprocess.Thereisneedtotakeintocognizantofthepreferredbehaviourinan organizationthatgeneratesfairandjustbehaviour,inotherwords,themostpopulardisposition.Organizationsquiteoftenthan notarefacedwithethicaldilemma,whichofcourseisexpectedinanyidealsituation,butitsimperativetheiroccurrencesareavoi dedatallcost. Forethicsprogramtobepopularandseethelightofthedayitsimportantthatyouincludeallmembersaswellascrossfunctionald epartmentsandmakethedecisionsoutcomeaspublicaspossible.Thevalueofforgivenessisimportantinmanagingethics,beca useifyouwantyouremployeestoremainethical,youasamanagermustalsobepreparedtoforgive,andthatiswhatreinforcingc

odeofethicsisallabout.Circumstanceschange,socodeofethicsmustaswellbereviewedatleastyearlytoreflectcircumstantial changesdeemedfit.

FURTHERREADING
Optional:AlsoseeintheFreeManagementLibraryathttp://www.managementhelp. org:GuidetoPersonnelManagementPoliciesat: (http://www.managementhelp.org/mgmt/prsnlmnt.htm) 1OrganizationalCulturereviewtogetabasicunderstandingof"personalities"oforganizations 2StrategicPlanningspecifictodevelopingaValuesStatement 3ValuingDiversitytoconsiderthatthereareothervaluesandperspectives

GLOSSARYCodeofEthics:EthicalrulesofoperationsStrategicPlanning:Systematicanalysisoffactorsassociatedwithc
ustomersandcompetitors(theexternalenvironment)andorganizationitself(internalenvironment)toprovidethebasisforreth inkingthecurrentManagementpractices.Pillory:TocriticizesomebodystronglyinpublicEthicaldilemma:Problemsinresol vingconflictsinwhichoneoptionappearstobetheclearchoice.SWOTAnalysis:AnacronymforStrength,Weakness,Opport unity,andThreat.ItsatoolforanalyzingbothinternalandexternalsocialenvironmentCivicVirtues:Beingmindfulofenviron mentalintegrity,communityserviceandgoodcitizenshipVacuous:Showingnosignsofintelligenceorfeelings

Week 3 Topic 3 3.0 ReducingUnethicalBehaviourinanOrganization

Lectureobjectives Outlininghowtoreduceunethicalbehaviourinanorganization Differentiatebetweenbusinessethicsandethicalbusiness Studieshaveshownthatanunethicalbehaviourinanyorganizationcanbereducedtoverylowlevels.Thefollowingguidelinesa recrucialinthereductionofunethicalbehaviourinanorganization:Consistentleadership whentheorganizationsleadershipchanges,theestablishedethicalvaluesshouldremaininplace.Ethicsshouldnotbenegative lyaffectedbymanagementsuccessions.

Traditionsstandardsshouldbemaintainedthroughatraditionofintegrity. CodeofEthicswrittencodesofethicsshouldgiveexplicit(clear)guidelinesforemployeestofollow. Trainingperiodictrainingshouldclarifytheintentofcorporatepoliciesandreenforcetheseriousnessofethicalvalues. Rewardsperformanceevaluationandcompensationshouldconsidertheemployeesbehaviourwithrespecttocodeofethics. OpenClimate decisionmakingdiscussionsshouldwelcomeorconsiderdifferencesofopinionsandconsiderationoftheethicalstandards. Controls Acontrolsystemfortified/strengthenedwithethicalauditsshouldsupplementtrustwithsurveillancei.e.letemployeesknowth attheorganizationtrusttheycanworkandrelateethicallybutalsoletthemknowthatcontraventionofthecodeofethicswontgo unpunishede.g.inEPZemployershaveinstalledclosedcircuittelevisions(CCTV)tomonitorthemovementofemployeeswit hintheorganization. Punishmentviolatorsofthelawoftheorganizationscodeofethicsshouldreceivestrictandpublicpunishment. 3.1 DifferencebetweenbusinessethicsandethicalbusinessBusinessethics thisreferstohowabusinessconductsitsdaytodayoperationsinordertobeseentohaveamoralcorporatepersonalitye.g.theprod uctionofnuclearweaponscanbedoneethically,prostitutioncanalsobepracticedethically. Ethicalbusiness thishasreferencetotheentireobjectofthebusiness.Itthereforemeansthatabusinesswhosereasonforexistenceimpactsandco ntributespositivelytothesocietyisanethicalbusinesse.g.simplybecausetheproductionofnuclearweaponscanbecarriedoute thicallydoesnotjustifyitasanethicalbusinessinKenya,prostitutioncanbedoneethicallybutdoesnotmakeitanethicalbusines sinKenya.

SelfAssessmentActivity
Nowthatyoucandistinguishethicalbusinessfrombusinessethics,Inowwantyoutociteasmanyexamplesaspossible Citeexamplesofbothethicalandunethicalbehaviourdrawnfromyourknowledgeofcurrentbusinessevents. Howwouldyoudescribethecontemporarystateofbusinessethics? Howcanbusinessselfinterestalsoservesocialinterests?

Topic4

4.0 AFrameworkforUnderstandingEthicalDecisionMakingInBusiness
Lectureobjectives Understandingindividualsbehaviourinbusinessethicsdecisionmakingprocess Analyzingethicalissuesthatmakepreferenceforparticularbehaviour Identifyingtheimpactofeachframeworkonbusiness Toprovideacomprehensiveframeworkforethicaldecisionmakinginbusiness Todescribethestagesofcognitivemoraldevelopmentforindividualethicaldecisionmakinginbusiness Toexplainhowknowledgeabouttheethicaldecisionmakingframeworkcanbeusedtoimprovebusinessethics Haveyoueverwonderedwhybusinessmeninthesamebusinessareadomakedifferentbusinessdecisions? Itisplausibletoimaginethatwhentwoindividualsdothesamebusinesstheywouldinvariablymakesimilarbusinessdecision. Onthecontrarystudiesrevealotherwise.Thisparadoxtherefore,formsthebasisforustoexaminewhypeoplebehavedifferentl y,afterwhichitwillenableusseehowanindividualwouldimproveethicaldecisionprocess. Toimproveethicaldecisionmakingwithinabusinessorganization,onemustfirstunderstandhowindividualsmakeethicaldec isions.Somephilosophers,socialscientistsandotheracademicshaveattemptedtoexplaintheethicaldecisionmakingprocessi nbusinessbyexaminingthefollowing: 1. Ethicalissueintensity Thiscanbedefinedastheperceivedrelevanceorimportanceofanethicalissuetotheindividual,workgroupororganization.Eth icalissueintensityreflectstheethicalsensitivityoftheindividualorworkgrouptriggeringtheethicaldecisionprocess.Studies haveshownthatonaveragewomenhavemoreethicalintentionsthanmen(Doyouagreewiththisstatement? Supportyourresponse).Theperceptionofethicalissueintensitycanbeinfluencedbymanagementwhichcanuserewardsandp unishment,codeofethicsandvaluesfromcorporatecultureforthispurpose.Inotherwords,managerscanaffecttheperceivedi mportanceofanethicalissuethroughpositiveornegativeincentives.

SelfAssessmentActivity
Discriminationbasedonrace,sex,tribeoragesareconsideredethicalissuesbymostfirmsinKenyayetthepracticeissorampant. Howisthisso?Canyoutrytoexplainyouranswerbasedonethicalissueintensityperspective? Inyourownconsideredpinionhowelseshouldafirmensurethewrongpracticeisavoidedornippedinthebud? 2. IndividualMoralPhilosophies(KohlbergsModelofCognitiveMoralDevelopment) AccordingtoKohlbergsmodelofcognitivemoraldevelopment,differentpeoplemakedifferentdecisionsinsimilarethicalsit uationsbecausetheyareindifferentstagesofmental(cognitive)moraldevelopment.Kohlbergproposedthatindividualsdevel opthroughthefollowingsix(6)stages: Stage1:ThestageofPunishmentandObedience Apersoninthisstagewillrespondtorulesandconsidersgoodandbadintermsofthephysicalpowerofthosewhodetermines uchrules.Inotherwords,rightandwrongarenotassociatedwithanypersonalphilosophybutratherwithapersonwhohaspower

.Thisstageisusuallyassociatedwithchildrenbutsignsofthisstagearealsoevidentinadults.

SelfAssessmentActivity
Youmayhavenoticedinyourplaceofworkofasituationwherebyyourcolleagues,evenyou,exhibitdifferentialrespecttoyour ablebodiedbossvisaavisthephysicallychallengedbosswhoprobablyisamidget! CiteanotherexampleandlookatitinthelightofthisfirststageofKohlbergscognitivemoraldevelopment InlightofthisfirststageofKohlbergsModel,explainhowrespectforrulesand regulationsbychildrendifferfromthatofadults.Whatistheunderlyingdrivingforceinbothagegroups ?

Stage2:ThestageofIndividualInstrumentalPurposeandExchange:Anindividualinthisstagedefineswhatisrightasthatwhic hservesonesowninterestorneeds.Inthisstage,theindividualnolongermakesmoraldecisionsonthebasisofspecificrulesora uthorityfigures.Thispersonevaluateshisbehaviouronthebasisoffairnesstohim/her.Thatistosay,itmaybewrongforabusine ssmantogivegiftsorbribestobuycustomerloyalty.Butifgivinggiftsorbribesserveshispurposeinanattempttobuycustomerlo yaltythatwillbefinewithhim.Inthatsituation,heobservestheprincipleofYouscratchmyback,Iscratchyours.

SelfAssessmentActivity
Asashopattendantyouareconfrontedwiththetemptationofreceivingagiftfromasalespersonyetyouknowverywellt heorganizationforbidsit?Howwouldyouhandlethesituation?

Stage3:ThestageofMutualInterpersonalExpectations,RelationshipsandConformity Anindividualinthisstageemphasizestheneedsofothersthanhimself.Forexample,aproductionmanagermaybeaskedbythe managementtospeeduptheproductionlinetoincreasecompanysprofitsadthusmaintainemployeesjobs.Whenthismanage rfollowstheorder,hedoesnotonlydosotopreservehisjobbutputshimselfinthemanagementsandemployeesshoes(situatio n).

SelfAssessmentActivity

Howdoesthisstagedifferfromstagetwo Acompanyonthevergeofclosureisfacedwiththedilemmaofeither retrenchingsomeemployeesorretainingeveryoneontheunderstandingthatthosewhoaretoberetainedaccepthalfsalariestoc overthosewhoweretoberetrenched.Expoundfurtheronthisandattempttoarticulatethiscasescenariowiththisstageofdevelo pment. Stage4:ThestageofSocialSystemandConscienceMaintenance:Anindividualinthisstagedetermineswhatisrightbyconside ringhis/herdutytosocietynottojustotherspecificpeople.Dutyandrespectforauthorityandmaintenanceofsocialorderbecom esthefocalpointofthisperson,e.g.assuringthepersonalprivacyinaworkplacecouldbeviewedbysomeasanemployersduty.

SelfAssessmentActivity
Employeesattimesuseofficecomputersforthepurposesoffraudlikeinsidertrading,industrialespionageandperhaps sendingpersonalmails? Woulditbeinorderforthecompanytousecomputersecuritysoftwaretofindouteverythingaboutelectronicconversati onbetweenemployeesoncetheyhavelefttheirofficeforhome? Whatarethemeritsanddemeritsofsuchdecisionbythemanagement? Stage5:ThestageofPriorRightsandSocialContractorUtility Inthisstage,anindividualisconcernedwithupholdingthebasicrights,valuesandlegalcontractstothesociety.Individualsinthi sstagefeelasenseofobligationor/andcommitment(socialcontract)toothergroupsandrecognizesthatinsomecaseslegaland moralpointsofviewmayconflict.Toreducesuchconflictpersonsinthisstagebasetheirdecisionsontherationalcalculationofo verallutility.

SelfAssessmentActivity
IwantyounowtoconsiderinthiscontextaManagingDirectorofafirmwhoinitiatesenvironmentalconservationprogr am,whenthisMDdoesthishowwouldyouarticulatehisactionwiththisKohlbergsstageofmoraldevelopment? Whatisheorshetryingtoachieveorpreempt? Stage6:TheStageofUniversalEthicalPrinciples Anindividualinthisstagebelievesthattheyarealienablerightswhichareuniversalinnatureandconsequence.Apersoninthisst

agemaybemoreconcernedwithsocialethicalissuesandnotrelyonthebusinessorganizationforethicaldirection.e.g.abusines spersoninthisstagemightconsidertodiscontinueaproductthathascauseddeathandinjurybecausetheinalienablerighttolife makeskillingwrongregardlessofthereason.Thereforeacompanyprofitwouldnotbejustificationfromthecontinuedsaleofth eproduct.

SelfAssessmentActivity
Doahypotheticalcasescenarioofsay,whentiresarerecalledbyatiremanufacturingcompanybecausethecompanyha sjustdetectedfaultsonthetires.Trytolinkyourcasescenariowiththislaststageofmoraldevelopment. SummaryofKohlbergssixstages Kohlbergsmodelsuggeststhatpeoplecontinuetochangetheirdecisionsprioritiesbeyondtheirformativeyears.Accordingto hismodel,aspeopleprogressthroughthestagesofmoraldevelopmentandwithtime,education,andexperiencetheymaychang etheirvaluesandethicalbehaviour.Inthebusinesscontextanindividualsmoraldevelopmentcanbeinfluencedbycorporatec ultureespeciallyethicstraining. 3. CorporateCulture Thiscanbedefinedasasetofvalues,beliefs,goals,normsandwaystosolveproblemsthatemployeesoforganizationsshare.Ast imepassesacompanyororganizationcometobeseenasalivingorganismwithamindandawillofitsown,e.g.CocaCola,WaltD isney(cartoons),MacDonaldsCorp.,IBM,Proctor&Gamble,SouthWestAirlines(efficiency),GeneralMotors(GM) (salesmanship).Thecorporateculturesofsomeofthesecompanieshavegonebeyondthecallofdutytohelpcustomers.Suchatti tudescanbereinforcedthroughofferingcourses/trainingonorganizationalethics.Ethicalclimatecomponentofcorporatecult urecanbethoughtasthecharacterordecisionmakingprocessesusedtodeterminewhetherresponsestoissuesarerightorwrong .

SelfAssessmentActivity
Itistruethatattimescorporateculturecanaswellprovidetheopportunityforanethicalconduct.Iwantyoutociteanddiscusscase swherecorporateculturesworkedtothedisadvantageoftheminorityrightsorgenderbaseddiscrimination.Whataboutnepotis matwork? WhichorganizationsinKenyathatmaycometoyourmindwhichareverysynonymouswithpositiveornegativecorporatecultu res? Significantothers Thosewhohaveinfluenceinaworkgroup,includingpeers,managers,coworkers,andsubordinatesarereferredtoassignificantothers.Significantothershelpofferhelpintheformofcommentsindiscu ssionoverlunchorwhenthebossisaway.

Aworkerlearnsethicalorunethicalbehaviourthroughinteractionswithpeoplewhoarepartofhisorherintimatepersonalgroup s.Inotherwordsdecisionmakerswhoassociatewithotherswhobehaveunethicallywillmostlikelybehaveunethicallytoo. Opportunity Opportunityisatermthatdescribestheconditionsthatlimitorpermitethicalorunethicalbehaviour.Opportunityresultsfromc onditionsthateitherproviderewardswhetherinternalorexternalorfailtoerectbarriersagainstethicalbehaviour.Examplesofi nternalbarriersincludefeelingsofgoodnessandpersonalworthgeneratebyperformingaltruisticactivities.Externalrewardsr efertowhatanindividualexpectstoreceivefromotherstoreceivefromothersinthesocialenvironment.Rewardsareexternalto theindividualtothedegreethattheybringsocialapproval,statusandesteem. Summary Thekeycomponentsoftheethicaldecisionmakingframeworkprovidedinthischapterincludeethicalissueintensity,individu alcognitivemoraldevelopment,corporateculture,significantothersandopportunity.Thefactorsareinterrelatedandinfluenc ebusinessethicsevaluationsandintentionswhichresultinethicalorunethicalbehaviour.

FURTHERREADING
Ferrell,F.F.(2005).BusinessEthics:EthicalDecisionMaking&Cases.HoughtonMifflinCo.Boston.

GLOSSARYCognitiveDevelopment:MentalProcessesofunderstandingor
learningEthicalIssueIntensity:Theperceivedrelevanceorseriousnesswithwhi chanindividualaccordsaparticularethicalissueEthicalMoralDevelopment:Th eprocessesorstagesoflearningethicalissuesInstrumentalPurpose:Theunderly ingreasonswhyanindividualdecidestobehaveinaparticularunethicalwayCon scienceMaintenance:Takingaparticulardecisionwhilemaintainingconscienc eabouttheintegrity,respectorprivacyofotherpeopleSignificantOthers:Thosei ndividualswhohaveanimpactoncertainissuesthoughtheytheminority

Week 4 Topic 5 5.0 ClassificationofEthicalIssuesandProblemsinBusiness

Lectureobjective Identifyingethicalissuesinbusiness Classifyingethicalissues Appreciatinghowethicalproblemsareassociatedwithethicalissues Aconstructivesteptowardsidentifyingandresolvingethicalissuesistoclassifytheissuesrelevanttomostbusinessorganizatio ns.Ethicalissuescanbeclassifiedinrelationtoconflictofinterest,honestyandfairness,communicationandtechnology.These classificationsdoprovideanoverviewofsomemajorethicalissuesthatbusinessdecisionmakersdoface. (i) Conflictofinterest

SelfAssessmentActivity
Wheneverthetermconflictofinterestismentioned,wefindittobeverysynonymouswithorganizationespeciallypurc hasingdepartments.Conflictofinterestisnodoubtaprecursortocorruption.Canyouciteasmanyexamplesasyoucanh owthishappensorhowitleadstocorruptioninthepurchasingdepartmentsincludingingovernmentsdepartmentsonth eKenyanscene.CanyourememberwhywhenNARCgovernmentcametopowerin2002thefirstgovernmentdepartm entstobeearmarkedforreformwaspurchasingdepartment?Areyoufamiliarwiththegoingsoninsuchdepartments? Whatarethemalpractices? Conflictofinterestexistswhenanindividualmustchoosewhethertoadvancehis/herowninterests,thoseoftheorganizationort hoseofsomeothergroups.Toavoidconflictofinterestemployeesmustbeabletoseparatetheirprivateinterestfromtheirbusine ssdealings.Organizationstoomustavoidpotentialconflictofinterestinprovidinggoodsandservices.Inmanydevelopedcoun tries,itisgenerallyrecognizedthatemployeesshouldnotacceptbribes,personalpayments,giftsorspecialfavoursfrompeople thathe/shehopestoinfluencetheoutcomeofdecisions.Howeverbriberyisanunacceptablewayofdoingbusiness.Bribeshave beenassociatedwiththedownfallofmanymanagers,legislatorsandgovernmentofficials. Whenagovernmentofficialacceptsabribeitisusuallyfromabusinessthatseekssomefavour.Exampleslikethesedemonstrate thattheproblemofconflictofinterestiswidespread.Unethicalconflictsofinterestareofparticularconcernwhentheyfrustratef aircompetitionamongbusinesses. (ii) HonestyandFairness Honestyreferstotruthfulness,integrityandtrustworthiness.Fairnessisthequalityofbeingjust,equitableandimpartial.Hones tyandfairnessrelatestothegeneralmoralattributesofdecisionmakers.Atleastbusinesspeopleareexpectedtofollowallapplic ablelawsandregulations.Inaddition,theyshouldnotknowinglyharmcustomers,clientsoremployeesthroughdeception,mis representationorcoercionnorshouldtheyharmtheircompetitors.

SelfAssessmentActivity
Iwantyounowtoexplainbrieflyinthiscontextthefollowingscenarios: WhenunscrupulousmeathawkersinNaivashatownsoldforbiddengamemeattounsuspectingcustomers Whenacarteloftraderscolludetoreducepricesoftheiritemstopushoutrival/competitoroutofbusiness. Whenabigtimeentrepreneuropensasupermarketinavillageshoppingcentre Althoughpeopleinbusinessoftenactintheirowneconomicselfinterest,ethicalbusinessrelationsshouldbegroundedonfairne ss,justiceandtruth.Buyersshouldbeabletotrustsellersandlendersshouldbeabletotrustborrowers.Failuretoliveuptotheexpe ctationsortoabidebylawsandstandardsdestroystrustandmakesitdifficultifnotimpossibletocontinuebusinesstransactions. (iii) Communication

QuestionsToReflectOn
Communicationisaverypowerfultoolfortransferringinformationfromonepersontoanotherorfromonecomputertoanother. Communicationisundoubtedlyoneofthepokesturningthewheelofdevelopment.Manyatimesmanhasusedthissegmentofd evelopmentforcovertreasonsrangingfromallmanneroffraudstooutrighttheft.Wouldyoubeabletoidentifysomestylesofco mmunicationthathaveraisedethicalissues? Areyouawarethatthefollyofcommunicationisnotlimitedtofraud? Doyouagreewithmethatwesometimesusethiscommunicationtooffendotherswhetherintentionalornot? Communicationreferstothetransmissionofinformationandthesharingofmeaning.Ethicalissuesincommonrelatetoadverti singmessagesandinformationaboutaproductsafety,pollutionandemployeeworkconditions.Communicationthatisfalseor misleadingcandestroycustomertrust.Lyingisamajorethicalissuewithcommunicationsanditmaybeasignificantproblem.F alseanddeceptiveadvertisingisakeyissueincommunication.Abusesinadvertisingcanrangefromexaggeratedclaimsandco ncealedfactstooutrightlying.Exaggeratedclaimsarethosethatcannotbesubstantiated,aswhenanadvertisementstatesthatac ertainproductissuperiortoanyotherinthemarket.Sometimesdifferentinterpretationsofadvertisingmessagescreateunethic alissuesthatmustberesolvedincourt.

SelfAssessmentActivity
InKenyaforexample,thetimingofsomeadvertisementsontelevisionhaveraisedethicalconcernsliketheadvertisementofHa rpicToiletDisinfectant.Explainhowthishasraisedethicalconcerns. Anotherformofadvertisingabuseinvolvesmakingambiguousstatementswhosewordsaresoweakthattheviewers,readers,li stenersmustinterpretadvertisersintendedmessages.Thewordslikehelpsprevent,helpssight,helpsmakeyoufeel.Co nsumersmayviewsuchadvertisementsasunethical.Explainhow. (iv) Technology

QUESTIONSTOREFLECTON

Weallneedadvancedtechnologytomakeourworkeasier,quicker,andaccuratebutyouwillagreewithmeithasbecomemoreof abadmasterthanagoodservant.Thisarisesfromthefactthatwetakeadvantageofitoruseitcovertlyforselfishreasons.Weattim eshavegoodintentionsbutwemaygooverboardsuchthatasweuseit,wealsotrespassothersintermsofprivacyinvasion.What mayhavehappenednowthatweviewtechnologyinbadlight? Iwantyoutodiscusstheuseofinternet,closedcircuittelevision,patentpropertyrightsandanyotherformoftechnologicaladvan cesthathaveelicitedethicalissuesandcitewayswithwhichwecanavoidunethicalissuesarisingfromitsuse. Thefinalcategoryofethicalissuesrelaterstotechnologyandthenumerousadvancesmadeintheinternetandotherformsofelect roniccommunicationinthelastfewyears.Asthenumberofpeople whousetheinternetincreases,theareasofconcernrelatedtoitsuseincreasesaswell.Someissuesthatmustbeaddressedbybusin essincludemonitoringofemployeesuseofavailabletechnology,consumerprivacy,onlinemarketingandlegalprotectionofintellectualpropertyrightssuchasmusic,booksetc.Achallengeforcompaniestodayism eetingbusinessneedswhileprotectingemployeesdesireforprivacy.Theincreaseofelectroniccommunicationintheworkpla ceandtechnologicaladvancesthatpermitemployeemonitoringandsurveillanceprovidecompanieswithopportunitiestoobta indataaboutemployees.Thereisampleevidencethatpeopleusecompanystechnologyforpersonalbusinesswhileatwork.As urveyconductedintheUSindicatesthatagoodpercentageofemployeessurfnonworkrelatedsitesconstantlyduringworkingh ours.Electronicmonitoringallowsacompanytodeterminewhetherproductivityisbeingreducedbecauseemployeesarespen dingtoomuchtimeonpersonalwebactivitiesandtakestepstoremedythesituation.Howcompaniesaddresstheissueofemploy eeprivacywillhavebothdirectandindirecttofinancialoutcome.Evidencehasitthatpositiveoutcomesareassociatedwithhavi ngawellcommunicatedanduniformlyimplementedpolicyonconsumerprivacyandimplementationofinformationgatherin gpracticesthatsupportsbusinessneedswhileintrudingonemployeesprivacyaslittleaspossible.

Topic 6 6.0 EthicalIssuesRelatedtoParticipantsandFunctionalareasofBusiness

Lectureobjectives Identifyingethicalissuesinrelationtoparticipantsandfunctionalareasofbusiness Analyzingthenatureofethicalissues Outliningimpactsoftheethicalissues Explorewaysinsolvingtheissues (i) OwnersofBusiness Ownershaveanobligationtothesocietyandshouldbeconcernedabouttheenvironment,butsomeeitherdonotseeitsrelevance inbusinessbutchoosetoignoreorbypassenvironmentallawsbecausetheyareperceivedastooexpensivetofollow.Ownerswh odonotunderstandtheethicalissuesthattheircustomersorsocietyingeneralconsidermaypayfortheirlackofunderstandinginl ostsales.Practicesthatareconsideredstandardwithinanindustrymaybeperceivedasunethicalbyoutsiders. SelfAssessmentQuestions

Environmentalprotectionisaresponsibilityforeveryonemoresothebusinesspeople.AcoupleofyearsagoMinisterfo rFinanceannounced120%impositionofexcisedutyontheproductionofplasticbagsabovetherecommendedthicknes s.Iwantyoutodiscussthisstatementbasedonhowfailuretocomplywiththepolicymayresultintolossofbusiness. (ii) Finance Becauseofownersofabusinesshavetheresponsibilityofprovidingfinancialresourcesforitsoperations,ownersandfinancear einthesamecategory.Ownerssometimeshavetoborrowmoneyfromfriendsorfromfinancialinstitutionstostarttheirbusines sesortheymaytakeoraddadditionalownerslikepartnersandstakeholderstoobtainmoney.Newfinancialresourcesareacquir edanddeployedcancreateanunethicalandevenlegalissues. Otherfinancialissuesrelatetohowcompaniesfinancialpositionsarereportedtocurrentandpotentialinvestors,governmentag enciesandotherinterestedparties.Financialdocumentsprovideimportantinformationonwhichinvestorsbasetheirdecisions oninvestments.Ifthesedocumentscontaininaccurateinformation,whetherintentionalornot,lawsuitsandcriminalpenalties mayresult. Anotherfinancialissuerelatestowhetherbanksshouldbeheldresponsibleforknowingwhetherlargecashdepositsarebeingl aunderedtohidethedepositorsinvolvementindrugtrafficking.

QuestionsToReflectOn
SomelocalaswellasmultinationalbankshavebornethebruntofclosurefollowinggovernmentofKenyasuspicionthattheban kswereengagedinmoneylaundering.BankofCreditandCommerceInternational(BCCI)comestomymind.Arethereanyoth erfinancialinstitutionsthatcometoyourmindwhosefateresultedintosimilarconsequence? Doyoubelievethegovernmentshouldforcebankstorevealdetailsabouttheirclientssourcesoffinancesaswellasdetailsofthei rfinancialtransactions?Discussyourviewpoint. (iii)EmployeesUnlikesabotage,employeestheftmaybeanongoingroutineoccurrence.Shopliftingcostsstoreownersunpr ecedentedamountofmoney.Facedwiththesekindsoflaws,manystoreshavefocusedsecuritycamerasonbackroomsandcash registers.

QuestionstoReflecton
UchumisupermarketchainandKenyaMeatCommissionwereunderreceivershipacoupleofyearsago,whatwerethemanyrea sonscitedfortheirdismalperformancethatculminatedintotheirtemporaryclosure? Respondtothisbasedonemployeesbehaviours. Theremayalsobesituationsinwhichanemployeeisawarethebosshasbeensexuallyharassinganotheremployeebuthasnowa yofprovingtheoffense.Will speakingoutmakethingsworsefortheemployee?Andwhatwillhappentothecoworkerwhoisthevictim? Suchsituationscreateethicalissuesthatemployeesmustresolve.Whatarethedifficultiesemployeesfaceiftheyprotestorspea kout?

(iv) Management

QuestionstoReflecton
Privatizationofgovernmentownedenterprisesisanewworldeconomicorder,citesomeofthegovernmentofKenyaen terprisesthatfaceddifficultiesduringprivatizationprocessandwhy?Andwhatdoyouthinkshouldbedonetopreemptthechancesofreoccurrenceofresistancetoprivatizationinthefuture? Managersofabusinesshavebothanethicalandalegalresponsibilitytomanagethebusinessintheinterestoftheowners.Several ethicalissuesrelatetothemanagersobligationstoowners,especiallyintheareasoftakeovers,mergersandbuyoutse.g.whenab usinessfacestheprospectofbeingboughtortakenoverbyanothercompanyorindividual,themanagersdutiestothecurrentow nersmayconflictwiththeirownpersonalinterestandobjectives(jobsecurity,incomeandpower).Theirloyaltytotheorganizat ionandtotheownersandstockholdersmaybebroughtintoquestion.Amanagementteammayattempttoblockatakeoverthatw ouldbenefitshareholdersbutreducemanagementspowerandperhapsjeopardizetheirjobs.Managementshouldalsobeconc ernedaboutethicalissuesthatrelatetoemployeediscipline,dismissal,discrimination,healthandsafety,privacy,technology,e mployeebenefits,drugandsubstanceabuseintheworkplace,theenvironmentimpactoftheorganization,codesofethicsandse lfgovernancerelationswithlocalcommunities,plantclosingsandlayoffs. Anotherareaofpotentialethicalproblemformanagersisthatofthepublicconcernoverprivacyissuesanddataaccess.Somecon sumerswouldfinditaninvasionofprivacytohavemultiplecompaniesknowwhatitemstheyhadpurchasedatastore,thestateof mentalorphysicalhealthorwhatmedicationtheyaretaking. (v) Consumers Noorganizationwillsurviveunlessconsumerspurchaseitsproducts.Inanattempttosatisfycustomers,businessmustconsider notonlyconsumersimmediateneedsbutalsotheirlongtermdesires e.g. althoughpeoplewantefficient,lowcostenergytopowertheirhomes,theydonotwantenergygenerationtopolluteair,water,kil lwildlifeorcausediseases.

Questionstoreflecton
WheneveradevelopmentprojectintheruralareasofKenyaareproposed,localresidentsattimesputupresistancesucht hattheintendedprojectiseitherdelayedorcancelledalltogether.Whataresomeoftheseprojectsandcitereasonsrespon siblefortheirdelaysinimplementation?Howdoyouappreciatetheroleofconsumersinthis?

(vi) Marketing

QuestiontoReflecton Whataresomeoftheethicalissuesthatmayariseinthecourseofmarketingaproduct?
Doyounoticeanysimilaritiesbetweencommunicationandmarketingasfarasethicalissuesareconcerned? Ethicalissuesmayariseinrelationtothesafetyofproducts,theadvertisingandsellingofproducts,pricingordistributionchanne lsthatdirectstheflowofproductfromthemanufacturertotheconsumer e.g. CocacolacompanyhadtotalktotheMexicanofficialstotrytoavoidalegalbattleoveritssalesandmarketingpracticesintheMex icanmarketbecauseitwasbelievedCocacolacompanywasengagedinpracticesthatmeanttokickoutthelocalcompetition. (vii) Accounting Thefieldofaccountinghaschangeddramaticallyoverthelastdecade.Issuesthataccountantsfacedailyinvolvecomplexrulesa ndregulationsthatmustbefollowed.Accountantslifeisfilledwithrulesanddatathathavetobeinterpretedcorrectly.Asaresult accountantsmustabidebyastrictcodeofethicse.g.anaccountantmaybepersuadedbyaclienttodistortstatisticsofaccountssot hatacorporationmayappearmoreprofitablethanitactually.

Questionstoreflecton
RecentlyinKenyascandalsofmonumentalmagnituderockedsomeofthemicroandsmallfinancialinstitutions,explai nreasonsthatmighthaveledtothequagmiretheseinstitutionfoundthemselvesintoaswellastheconsequencessuffere dbytheirclients. Summary Ethicalissuescanbeexploredintermsofthemajorparticipantsandfunctionsofbusiness.Ethicalissuesrelatedtoownershipinc ludeconflictbetweenmanagersdutiestotheownersofbusinessandtheirowninterestsandtheseparationofownershipandcon trolofbusiness. Financialissuesincludequestionsofsociallyresponsibleinvestmentsandtheaccuracyofreportedfinancialdocuments.Empl oyeesfaceethicalissueswhentheyareaskedtocarryoutassignmentstheyconsiderunethical.Managersdirectlyinfluencethee thicalissuesthatevolvewithinanorganizationbecausetheyguideandmotivateemployees.Ethicalissuesrelatedtoconsumers andmarketingincludeprovidingaselectionofsafer,reliablehighqualityproductsatreasonablepriceswithoutharmingthecust omerortheenvironment.

Accountantsalsowithintherealmofbusinessethicsfacesuchpressuresascompetition,advertisingandalsodataexaggeration.

FURTHERREADING
Ferrell,Freadrick,Ferrell.(2005).BusinessEthics:EthicalDecisionMaking&Cases.HoughtonMifflinCo.Boston

Week 5 Topic7.0:ApplicationofMoralPhilosophies/TheoriestoBusinessEthics
Lectureobjectives Understandinghowmoralphilosophiesareappliedinbusiness Identifyingstrengthsandweaknessineachphilosophy Doingcasescenariostodemonstratetheapplicationofthemoralphilosophies Moralphilosophiesrefersinparticulartotheprinciplesorrulesthatpeopleusetodecidewhatisrightandwrong.Moralphilosop hersareguidelinesfordetermininghowconflictsinhumaninterestaretobesettledandforoptimizingmutualbenefitofpeopleli vingtogetheringroups.Moralphilosophiesguidebusinesspersonsastheyformulatebusinessstrategiesandresolvespecificet hicalissues.Somemanagersviewprofitsastheultimategoalofanenterpriseandthereforemaynotbeconcernedabouttheirfir msimpactonsociety.Theemergenceofcapitalismasthedominantandmostwidelyacceptedeconomicsystemnotonlybrings aboutarrangementsfortheallocationofgoodsandservicesbutalsoaffectrelationshipsintheworkforce.Consequently,thesuc cessofaneconomicsystemdependsonbothitsphilosophicalframeworkandonthepresenceofindividualswhomaintainmoral philosophiesthatbringpeopletogetherinacooperative,efficientandproductiveworkplace. Thefollowingaresomeofthetheoriesthatexplaintheindividualsbehaviourthatdeterminesdecisionsheorshemakesinbusin ess;

(a) TeleologicalTheory
ThewordteleologyisderivedfromtheGreekwordTeloswhichmeansanEnd.Thatisthetheorythatholdsthateventsandde velopmentaremeanttoachieveapurposeandhappensjustbecauseofthat.Thetheoryholdsthattherightnessofactionsisdeterm inedsolelybytheamountofgoodconsequences. Actionsarethusjustifiedbythevirtueoftheendstheyachieve.Inthistheorytheendjustifiesthemeans.Theconceptofgoodist hereforefundamentalinteleologicaltheoryandtheconceptofrightnessorobligationsaredefinedintermsofgoodness. Anexampleofateleologicaltheoryisthetheoryofutilitarianismwhichholdsthatourobligationsordutyinanysituationistoperf ormtheactionthatwillresultinthegreatestpossiblebalanceofgoodoverevil.Morebroadlywhateverprovidessomebenefitcan alsoberightlyreferredtoasgood.

Componentsofutilitarianprincipleare: (i) Consequentialism Thisutilitariantheoryholdsthattherightnessofactionsisdeterminedsolelybytheirconsequencesi.e.whyutilitarianismisatel eologicaltheory.Letusgiveourselvesanexamplehere;youaresellingprovisionsinyourshop,attimessomeoftheitemsmaybe comescarceinthemarketinthefuturesay,sugar.Youmaythereforebetemptedtohordethiscommodityinthehopethatyousellit whenthedemandishigh.Naturallywhenthedemandishighpricealsogoup.Whenthetimeofshortageofthiscommoditycomes ,youhavedonejustdonethat! Accordingtoyourclientsthepracticeisdeplorable,butasfarasyouareconcerned,thepracticewasrewarding.Youtherefore,ju stifyyouractionofhordingthiscommodityalongthegoodnessthatyouhavegained. (ii) Maximalism Thisutilitarianprincipleholdsthatarightactionisonethathasnotmerelysomegeneralconsequencesbutthegreatestamountof goodconsequencespossiblewhenthebadconsequencesarealsotakenintoconsideration. QUESTIONSTOREFLECTON Letusassumethatamrunningafactorythatmanufacturespens,asyoumaybewellaware,thereisnofoolprooffactorythatwi llneverpollutetheenvironmentinthecourseofitsoperation.Imayjustifypollutionoftheenvironmentinthecourseofmanu factureofthisitembecauseattheendofitallapenhasbeenproducedthathasanimportantutility.Inthiscaseproductionofthe penoverridestheimportanceofthehealthoftheenvironment.Whichcompaniesarenotoriousforfloutingenvironmentalr ulesinthecourseofindustrialoperations? (iii) Universalism Thisutilitarianprincipleholdsthattheconsequencestobeconcernedarethoseofeveryone.Assumingyousubscribestothisutil itarianprinciple,youmighttherefore,considertodiscontinueaproductthathascauseddeathandinjuryinyourfactorybecauset heinalienablerighttolifemakeskillingwrongregardlessofthereason.Thereforeacompanyprofitwouldnotbejustificationfro mthecontinuedsaleoftheproduct.Anotherexampleiswhenforexample,thecompanyinwhichyouaretheproductionmanager isnotdoingwellunlessyouastheproductionmanagerworkovertimeforincreasedproductiontoreturnthecompanytoitsfeetag ain.Orsimplyput,selfdenialforcommongood! (iv) HedonismThisprincipleholdsthattherightnessofactionisthatwhichproducespleasureandleisureandnopain. QUESTIONTOREFLECTON Thechurchandthegovernmenthavebeenatloggerheadsonsexeducationinschoolsandmoresocondomdistributioninanatte mpttocontainunwantedpregnanciesandthefightagainstHIV/AIDSpandemic.Bothissueshaveelicitedhotdebates.Thismea nsthechurchmaynotbecomfortablewithcondommanufacturingandsubsequentdistribution,inlightofthiscontroversyhow willthecondomsmanufacturersargueandhowdoesthisbehaviourrelatestothisutilitariancomponent? Assumingyourunabarbusinesswithintheestatewhereyoulive,chancesthatresidentswillcomplainofnoisefromyourbarori mmoralitythatattimesnightclubpresentstotheneighbourhoodaremostlikely.Whenyouarefacedwiththisethicalissueasthe barproprietor,yourlineofargumenttojustifyyouractionisthatyourbarofferspleasuresandleisureandnopain.Isthereanysubs tanceinthislineofargument?Backyourviewpoint. Prostitutionisregardedasillegalandethicalbusinesspracticeinsomanycountries,yetthepracticeisstillrampant,whatwouldd

oyouthinkisthelineofargumentbythosewhopracticeitbasedonthisutilitariancomponent? AdvantagesofTeleologicalTheories Theyagreewithourordinarymoralreasoning. Theyexplainthejustificationforvariousactionse.g.truth,lying,etc. Theyprovideanobjectivemethodformoraldecisionmakingi.e.endjustifiesthemeans.

(b) DeontologicalTheory
TheworddeontologycomesfromtheGreekwordDeonmeaningDuty.Thistheoryholdsthatcertainactionsarerightnotbe causeofsomebenefittoourselvesorothersbutbecauseofthenatureoftheseactionsorfromtherulesfromwhichtheyfollow.Ino therwords,thistheoryfocusesonthepreservationofindividualrightsandontheintentionsassociatedwithaparticularbehavio urratherthanonitsconsequences.Fundamentaltothedeontologicaltheoryistheideathatequalrespectmustbegiventoallperso ns.AnexampleofadeontologicaltheorywascoinedbyaGermanphilosophercalledImmanuelKant.AccordingtoKant,moral obligationhasnothingtodowithcircumstancesbutarisessolelyfromamorallawthatisbindingonallrationalbeings.Forexamp le,hegavethisexample Amanfindshimselfforcedbytheneedtoborrowmoney.Heknowsverywellhewillnotbeabletorepayitbuthealsoknowsthatno thingcanbeloanedtohimifhedoesntfirmlypromisetorepayitatacertaintime.Hedesirestomakesuchapromisebuthasenoug hconsciencetoaskhimselfwhetheritisnotimproperandopposedtothedutytorelievehimselfofthedistress(theneedformoney ).Whatshallhedo?

SelfAssessmentActivity
Quiteoftenwealwaystrytorespecttheruleoflawinallourdealings.Insomeinstanceswemakemistakesbybreakingthe lawthenwegiveexcuseseitherbecausewewereignorantofthelaworwedidjustignoreditoutright.Hasitoccurredtoyo uthereisnoexcuseforignoranceofthelawandyouareboundtosuffertheconsequencejustliketheonewhodeliberately committedacrime?Trytoarticulatetheaforementionedwithdeontologicaltheory. Deontologistsarguethattherearesomethingsthatweshouldnotdoeventomaximizeutility.Forexampledeontologistwouldc onsideritwrongtokillaninnocentpersonorcommitaseriousinjustice againstapersonnomatterhowmuchutilitymightresultfromdoingsobecausesuchactionwouldinfringeonthatpersonsrighta sanindividual. Theutilitarianhowevermightconsideracceptableanactionthatresultedinapersonsdeathifthatactioncreatedsomegreaterut ilitye.g.ifamanufacturingcompanyworkerfallsillordiesasaresultofconditionofworkplace,adeontologistmightsaythatthe methodofproductionmustbecorrectednomatterwhatthecostevenifitmeansbankruptingthecompanyandthuscausingallthe workerstolosetheirjobs.Incontrastautilitarianwouldanalyzeallthecostsandbenefitsofchangingproductionlineorprocesse

sanddecidesonthatbasis. AdvantagesofDeontologicalTheory Theymakesenseofcaseswhereconsequencesseemirrelevante.g.honouringcontractsorpromisesevenifthecostisveryhigh. Theyaccountfortheroleofmotivesinevaluatingactionsi.e.themotiveofanactionisusedtogaugetheaction. Thetermnatureiscrucialfordeontologists.Ingeneral,deontologistsregardthenatureofmoralprinciplesaspermanentandstab leandtheybelievethatcompliancewiththisprincipledefinesethicalness.Deontologistsbelievethatindividualshavesomecer tainabsoluterights: 1Freedomofconscience 2Freedomofconsent 3Freedomofprivacy 4Freedomofspeech 5Dueprocess(justice) Todeterminewhetherbehaviourisethicaldeontologistslookforconformitytomoralprinciples. MainDifferencebetweenTeleologyandDeontology Teleologyphilosophiesconsidertheendassociatedwiththeactionwhereasdeontologicalphilosophiesconsiderthemeans.

SelfAssessmentActivity
Inthistopicondeontologicaltheorywehaverecognizedthatdeontologistslookforconformitytomoralprinciples.Thisbelieft hereforefindsrelevancetoKenya.YoumayrememberaboutAngloleasingscandalthatrockedNARCgovernmentontheissue oftheshadowydealsthatentailedpaymentofmoneytoanonexistentfirmthatpurportedtohavesuppliedmilitaryequipmenttoKenya.Thescandalgeneratedalotofethicalquestionsanddi lemmabecausetherewastotalcommitmentbyKenyaGovernmenttopaytheshadowyfirmthroughpromissorynote.Thecontr actwasbindingsuchthateveniftherewasnothingtopayfor,thegovernmentwasdutyboundtohonourthecontract.Canyounow findrelevanceofthistheorytothissituation? Canyounoticeanyweaknessofthistheoryasfarastheabovecasescenarioisconcerned?

(c) TheRelativisticTheory
Fromtherelativisticbehaviourdefinitionofethicalbehaviourarederivedsubjectivelyfromtheexperiencesofindividualsand groups.Relativistsusethemselvesorthepeoplearoundthemastheirbasisfordefiningethicalstandards.Therelativistsobserve theactionsofmembersofsomerelevantgroupandattemptstodeterminethegroupconsensusonagivenbehaviour.Apositivec onsensussignifiesthattheactionisconsideredrightorethicale.g.ahardwaresalespersonwhoisarelativistmayattempttodeter minethegroupconsensusbeforedecidingwhethertotellprospectivebuyersaboutsay,defectsonthenails,boltsandironsheets.

SelfAssessmentActivity

CanyourememberinstanceswhenbuildingsespeciallyinurbancentresofKenyawerecollapsinginthecourseoftheirc onstruction? Atonepointintimeitwasbelieveddefectsinthebuildingmaterialswereresponsibleforthesetragedies.Doyouwanttob elievesellersofsuchbuildingmaterialswerenotawareoftheproductdefects? Iftheydid,whattheorywouldyouwanttoattributetothis?Justifyyourviewpoint. (d) VirtueEthicsTheory Amoralvirtuerepresentsanacquireddispositionthatisvaluedaspartoftheofapersonscharacters.Apersonwhohasacharacte rtraitofbeinghonestwillbedisposedtotellthetruthbecauseitisconsideredrightandcomfortable.Thisphilosophyarguesthatw hatismoralinagivensituationisnotonlyconventionalmoralityormoralrulessayhoweverjustifiedbutalsowhatmatureperson withagoodmoralcharactershoulddeemappropriate.Theproblemofvirtueethicscomesinitsimplementationwithinandbet weencultures.Thosewhopracticevirtueethicsgobeyondsocietalnormse.g.ifanorganizationclearlyapprovesofcorruption, employeeswhoadheretothevirtuesoftrustandtruthfulnesswouldconsideritwrongtosellunneededsparepartsdespitetheorg anizationsapprovalofdoingso.Somemaycallsuchpeoplehighlyethicaland,inordertorationalizetheirownbehaviour,judges uchethicsasgoingbeyondwhatisrequiredbytheirjoborsociety.Theymayarguethatvirtueespeciallyisunattainablegoalandt hatoneshouldnotbeobligedtoliveuptoitsstandards.Tothosewhoespousevirtueethics,thisargumentismeaninglessfortheyb elieveintheuniversalrealityoftheelementsofvirtue.

SelfAssessmentActivity
Youhavenowlearntwhatvirtueethicsareallabout,wouldyoubeabletorecognizethatbecauseofvirtueethicssomeindividuals inKenyawhoespouseithaveatbestlosttheirjobsandatworstpaiddearlywiththeirownlives.Areyouabletociteinstancestobac kthestatement? ThegovernmentintroducedtheofficeoftheOmbudsman;doyouthinkthismightenhanceobservanceofvirtueethics,ifyes/no, how?

(e) JusticeTheory
Justiceevaluationinbusinessrelatestoevaluationoffairness.Justiceisfairtreatmentandduerespectinaccordancewithethical orlegalstandards.Justicedealsmorewiththeissueofwhatindividualfeeltheyareduebasedontheirrightsandperformanceinth eworkplace.Therearethreetypesofjusticethatformaframeworkforevaluatingfairnessindifferentsituations: (i) Distributivejustice isbasedontheevaluationofoutcomeorresultsofbusinessrelationships.Forexampleifyoufeelthatyouarepaidlessthanyourc oworkersforthesamework,theyhaveconcernsaboutdistributivejustice. (ii) Proceduraljustice isbasedontheprocessesandactivitiesthatproduceoutcomes/resultse.g.evaluationofperformancethatisnotconsistentlydev elopedandappliedcanleadtoproblemswithproceduraljustice.Proceduraljusticeclimateisexpectedtopositivelyinfluencew orkplaceattitudesandbehavioursrelatedtoworkgroupcohesion. (iii) Interactionaljustice

thisisbasedonanevaluationofcommunicationprocessusedinthebusinessrelationships.Interactionaljusticeislinkedtofairn

essincommunicationandoftenentailstheindividualrelationshipwiththebusinessorganizationbasedontheaccurateinformat ione.g.ahirepurchasestoremayaltertheirdebtcollectionprocessesbasedonfalseinformationtoyouthatthecompanyhasbeen declaredbankruptbytheindustrialcourtandthattheyarewindingupsothatyoumaypayupyourduesbeforeexpirydate.Orwhe nyoufakeyourmedicalstatustostayawayfromworkorasanapplicantoremployeebeingmisledtoapplylateforajobwhosedea dlineislonggone. Summary TeleologicaltheoryisallaboutendjustifiesthemeanswhileDeontologicaltheoryisallaboutmeansjustifiestheend.Justic eevaluationsresultsinrestitution(payingbackascompensation)seekingrelationshipbuildingandgaugingoffairnessinthebu sinessrelationship.

GLOSSARYTeleology:IsaderivativefromtheGreekwordTelosmeaningEndinEnglish
Deontology:IsaderivativefromtheGreekwordDeonmeaningDutyinEnglish Justice:Fairness

Topic 8 8.0 OrganizationalStructureandBusinessEthics

Lectureobjectives Analyzingissuesofbothorganizationalstructures Identifyingstrengthsandweaknessesineachcase Identifyingorganizationsineachstructure Appreciatingtheroleplayedbyeachstructureoftheorganization Outliningethicalissuesthatarisefromeachstructure. 8.1 Introduction Thestructureofanorganizationisimportantinthestudyofbusinessethicsbecausebymeansofjobdescriptionsandvariousrole s,thestructurecreatesopportunitiestoengageinunethicalbehaviours.Thefollowingarethetwocommonstructuresoforganiz ations: 8.1.1 Centralizedorganization Inacentralizedstructureororganization,decisionmakingauthorityisconcentratedinthehandsoftoplevelmanagersandlittlea uthorityisdelegatedtolowerlevelsoftheorganization.Responsibilitybothinternalandexternalrestswithtoplevelmanagers. Thisstructureisonlysuitablefororganizationsthatare: Engagedinhighriskdecisionmakingandwhoselowerlevelmanagersarenothighlyskilledindecisionmakinge.g.securityfir ms,army,nuclearpowerstationsetc. Inproductionprocesseswhichareroutineandefficiencyistheprimaryconcerne.g.printingpress,teapicking.

Centralizedorganizationsstressformalrules,policiesandprocedures.Theircodesofethicsmayspecifythetechniquesfordeci sionmaking.Theseorganizationsareextremelybureaucratic.Thedivisionoflabouristypicallywelldefined.Eachworkerkno wshis/herjobandwhatisspecificallyexpectedandeachhasaclearunderstandingofhowtocarryoutassignedtasks.GeneralMo tors(GM)ofU.S.,Army,CocacolaandProctorandGambleareexamplesofsomeofmultinationalcompaniesthatwereusedtot hecentralizedstructure.Problemsthatmaycauseethicalissuesincentralizedorganizationswhereauthorityisconcentratedatt hetopare: BlameshiftingorScapegoating Peoplemaytrytotransferblamefortheiractionstootherswhoarenotresponsible. SpecializationandSignificantDivisionoflabour Employeesmaynotunderstandhowtheiractionscanaffecttheoverallorganizationbecausetheyworkinisolationorin dependentofoneanother.Thislackofconnectednessorinteractioncanresultinanemployeeengaginginunethicalbeh aviourbecausetheycannotunderstandtheoveralleffectofsuchbehaviourtotheorganization. TopDownApproach Becauseofthetopdownapproachincentralizedorganizationsandthedistancebetweenemployeesandthedecisionma kersunethicalactmayoccur. Bureaucracy Ifthecentralizedorganizationisverybureaucraticsomeemployeeswillactaccordingtotheletterofedict(setsoutrules) insteadofthespirit(conscience,discretion). Withholdingusefulinformation(Littleupwardcommunication) Toplevelmanagersmaynotbeawareofproblemsandunethicalactivitiesintheworkplacee.g.useofsweatshops.Forex ampleinKenyasflowerfarms,MagadiSaltMiningCompany,EPZetc.maybeamanifestationofthislackofupwardco mmunicationbecausesometimesusingforcedimmigrantlabour,childlabourwithattimesworking1215hourshiftswithlittlepay,lackofprotectivegearsetc.Manyoftheseproductsproducedunderthesesituationsendupi nleadingretailersstoresandthereforebeatormatchglobalcompetitiveprice,thusanunfairtradepractices.Thishappe nsbecauseoflackofupwardcommunication.Insuchsituationssuppliers,topmanagersmayclaimnottobeawareofho wtheproductsweremade. Additionallytheproblemofpoorcommunicationbetweenacompanyandasubcontractorincentralizedorganizationscanalso resultinallegationsofunethicalactivitiese.g.automobilemanufacturersutilizesubcontractorswhoprovidecomponentparts. Ifthesubcontractorfailstocommunicatedataontheproductsdefects,themanufacturerwillbeunabletoaddressperformance qualityissuesbecauseoflackofinformation;withholdingsuchinformationwouldbeunethical.

SelfAssessmentActivity
Iwantyoutothinkofaproductthatinyourviewfailstomeetendusersstandardsexpectationsandyoumaywantattributetolacko fupwardcommunication. WhatcanyousayaboutthedoorhandlesofFrenchPeugeotscars? CanyousaysomethingaboutMarshallCompanyinconnectiontothis?

8.1.2 Decentralizedorganizations Intheseorganizationsdecisionmakingauthorityisdelegatedasfardownthechainofcommandaspossible.Examplesofdecent ralizedorganizationsareNike theyarecharacterizedbycreativity,freedom,informality;SouthWestAirlinesofUSAcharacterizedbyteamwork,orientatio n,loyalty.Microsoftcharacterizedbycreativity,fastdevelopment,investigative.Suchorganizationshave: Relativelyfewformalrulesandcoordinationandcontrolareusuallyinformalandpersonal. Theyfocusinsteadonincreasingflowofinformation. Theyadaptandrecognizechangesintheexternalenvironment. Thefollowingaretheweaknessesnoticedindecentralizedorganizations: Theyhavedifficultyinrespondingquicklytochangesinpolicyandproceduresestablishedbytopmanagement. Independentprofitcentreswithindecentralizedorganizationsmaydeviatefromorganizationalobjectives. Otherfirmsmaynotlookanyfartherthanthelocalcommunityforethicalstandards.Forexample,ifafirmthatproducestoxicwa stesleavesthedecisionsondisposaltolowerleveloperatingunits,thesemanagersmayfeelthattheyhavesolvedtheirproblems olongastheyfindawayofdumpingwasteoutsidetheirimmediatecommunity.ForexampleNairobiCityCouncilhasbeendum pingitswasteswithinRuiruMunicipalityforquitesometime.AccordingtoNCCthiswasfinesinceRuirumunicipalityhadnotr aisedanyobjection.SilenceonthepartofRuiruMunicipalitymeantthatwastedisposalbyNCCwasethical.Itwillonlybeunethi calwhenRuirumunicipalityobjectsthepractice.

QuestionsToReflectOn
Atyourownverypersonallevel,canyougiveanaccountofyouractionswherebyyouhadenoughconsciencetotellyour selfthatyouractionisunethicalbutyoucontinuedwiththeaction,youonlychangeyourwaysofdoingthingswhensome oneraisesaconcern? Thefollowingarestrengthsofdecentralizedorganizations: Theygiveemployeesautonomyandextensivedecisionmakingbecausemanagementempowersemployees. Theymaybeabletoavoidethicaldilemmasbytailoringtheirdecisiontothespecificsituations, laws,andvaluesofaparticularcommunity.Unethicalbehaviourispossibleineithercentralizedordecentralizedstruct uresarisingfromcorporateculturethatpermitorencourageworkerstodeviatefromacceptedstandardsorculturesthatfailt oembracecorporateethicsandignorelegalandethicalresponsibilities.

SelfAssessmentActivity
YouarefamiliarwithNikeproductsandwehavejustdiscussedthatitscharacterizedbycreativity,freedomandformalit y,Inowwantyoutooutlinesomeoftheproductsthatsetsitapartfromothercompetitorsandexplainfurtherhowtheseattr

ibutesprobablyresponsibleforitpositioninthesportswearmarketplace.

Topic 9 9.0: TheRoleofCorporatecultureinEthicaldecisionmaking

Lectureobjectives Toassessorganizationalstructureanditsrelationshiponbusinessethics Toexaminetheinfluenceofcorporatecultureonbusinessethics Todeterminehowleadership,motivation,andpowerrelatetoethicaldecisionmakinginorganizations Toexplorehowtheworkgroupinfluenceethicaldecisions Todiscusstherelationshipbetweenindividualandgroupethicaldecisionmaking. 9.1 Introduction Acorporate(ororganizational)culturecanbedefinedasasetofvalues,beliefs,goals,norms,andritualsthatmembersoremplo yeesofanorganizationshare.Corporateculturecanbecreatedbyafounderandhisorherattitudesandconvictions,asinthecase ofMichaelDellatDellComputerCorp.Itincludesthebehaviouralpatterns,concepts,values,ceremonies,andritualsthattakep laceintheorganization.Culturegivesthemembersoftheorganization.Whenthesevalues,beliefs,customs,rules,andceremon iesareaccepted,sharedandcirculatedthroughouttheorganization,theyrepresentitsculture,allorganizations,notjustcorporat ions,havesomesortofculture. Acompanyshistoryandunwrittenrulesareapartofitsculture.ThusformanyyearsIBMsalespeopleadheredtoaseriesofunwri ttenstandardsfordealingwithclients.Thehistoryorstoriespasseddownfromemployeegenerationswithinanorganizationare likethetraditionsthatarepropagatedwithinsociety.HenryFord,founderofFordMotorCo.,leftalegacyemphasizingtheimpor tanceoftheindividualemployee. Oneconcreteexampleofthishighvalueplacedonemployeeswashisannouncementthatemployeesworldwidewouldbeprovi dedwithacomputer,printerandInternetconnectionforjust$5permonth. Corporatecultureisoftenexpressedinformally forexample,throughcomments,bothdirectandindirect,thatcommunicatethewishesofmanagement.Insomecompanies,sha redvaluesareexpressedthroughinformaldresscodes,workinglate,andparticipationinextracurricularactivities.Corporatec ulturecanevenbeexpressedthroughgestures,looks,labels,promotions,andlegends(orthelackofthese).Forexample,somepr oductionworkershavebeenaskedtowearstickersontheirhardhatstohelpinteambuildingandgettingalong. 9.1.1 Leadership

SelfAssessmentActivity

Leadershipistheabilitytoinspireandinfluencepeopletoworkandtodoasyoumaywantthemtodo.Leadershipmaybeaninborn characteristicoritcanbeacquired.Whicheverway,thecharacteristiciswhatmatters.Canyoubeabletotellapersonwithlearne dleadershiporanacquiredleadership? Ithinkthisquestionrequiresyoutoponderforawhile.Youmayholditinyourmindthenyoucanprovideananswertothatlater,yo ucanaswellsupportyourviewpointlateron. Iknowyouhaveinteractedalotwithpeoplewhomyouconsiderasleaders.Isthereanythingthatsuggeststheyareleaders? Doyouconsidersomeonewholeadspeopleastrayasaleader?Ithinkso! Yes,becausewewereinagreementwithyouthataleaderisonewhocaninfluencepeoplesviewpointoropinionshapersforthat matter.Ifyoudontagreewithmeonthis,thenIinviteyoutherefore,toreconstructanotherparallelworkingdefinitionofaleader .Isleadershiponlyconfinedtopoliticians?Areyoualeader? Doyouthinkthecurrentproblemsfacinghumanityespeciallyordinarypeopleintheworldcanbeblamedentirelyonpoorleader ship? Letmebefairforonce,andspareyouthisquestiononleadershipwithmyendlesscircumventions.Whataboutfollowership? Arentwetheoneswhoelectthem,thenturnroundandblamethem? Whenevertheyspeaktousinpublicweapplaud,evenifitstrash?Doesthatmeanwevalidateandendorsetheirleadershipstyle? Nowwherecanweputtheblame? Pleasereflectontheaboveasyouexplorewaysinwhichaleadercanindeedberegardedaleader,andwhatleadershipisallabout. Leadership,theabilityorauthoritytoguideanddirectotherstowardsachievementofagoalhasasignificantimpactonethicalde cisionmakingbecauseleadershavepowertomotivateothersandenforcetheorganizationsrulesandpoliciesaswellastheirow nviewpoints.Leadersarekeyininfluencingthecorporatecultureandethicalpostureoftheorganization. Aleadermustnotonlyhavefollowersrespectbutmustalsoprovideastandardofethicalconducttogroupmembers.Sixleaders hipstylesthatarebasedonemotionalintelligencetheabilitytomanageourselvesandourrelationshipseffectively havebeenidentifiedbyDanielColeman. (1) TheCoerciveleaderdemandsinstantaneousobedienceandfocusesonachievement,initiative,andselfcontrol.Whilethisstyleisveryeffectiveduringtimesofemergency,crisis,orcompanyturnaround,itotherwisecreatesanegati veclimatefororganizationalperformance. (2) TheAuthoritativeleader,consideredtobeoneofthemosteffective,inspiresemployeestofollowavision,facilitateschange,an dcreatesastronglypositiveperformanceclimate. (3) TheAffiliativeleadervaluespeople,theiremotions,andtheirneedsandreliesonfriendshipandtrusttopromoteflexibility,inno vation,andrisktaking. (4) TheDemocraticleaderusesparticipationandteamworktoreachacollaborativedecision.Thisstylefocusesoncommunication andcreatesanegativeclimatebecauseofthehighstandardheorshesets.Thisstyleworksbestinattainingquickresultsfromhigh lymotivatedindividualswhovalueachievementandtaketheinitiative.

(5) ThePacesettingleadercancreateanegativeclimatebecauseofthehighstandardsheorshesets.Thisstyleworksbestinattaining quickresultsfromhighlymotivatedindividualwhovalueachievementsandtaketheinitiative. (6) TheCoachingleaderbuildsapositiveclimatebydevelopingskillstofosterlongtermsuccessanddelegatesresponsibilityandisskilfulinissuingchallengingassignments.Themostsuccessfulleadersdonotr elyononestylebutaltertheirtechniquesbasedonsituationalcharacteristics.Everydaybusinessmanagersandleadersmakede cisionswhichaffecttherightsandinterestsofothers,bothwithinandoutsidethebusinesses.Ithasbeenarguedthatmoralorethic alframeworkistheproductoftimeandplaceandnotnecessaryglobalconcepts.Thisistosaythatleadershipethicsasappliedino neenterprisemaydifferincomparisontoanotherfirm,evenofthesamesizeandnature. However,entrepreneurswhocareaboutethicalperformanceintheirfirmscanusetheirinfluenceasleadersandownerstoencou rageandeveninsistthateveryoneintheirfirmsdisplayhonestyandintegrityinalloperations.Ethicalvaluesareestablishedbyle adersinallorganizations,andthoseatlowerlevelstaketheircues/directionsregardingproperbehaviourfromthepronounceme ntsandconductoftoplevelmanagement. Insmallfirms,unlikeinlargeones,theroleofaleaderismorepronouncedandhisethicalinfluenceiseasilyassertedandpassedri ghtdowntootheremployees.Onthecontrary,theroleoftheleaderofalargefirminthedisseminationanddiffusionofhisinterpre tationofethicalbehaviourtolowercadrecanbedifficultbecausehisprecepts(consensus)mustfirstbeacceptedandsharedbyot herleadersindifferentdivisions.Thiskindofconsensusonethicalconcernsisparticularlyimportantinordertocreateuniformit yofthefirmsethicalstandardsfromtopmanagementtothelowestlevels. Aleadersbehaviourhasmuchgreaterinfluenceonemployeesthanhisorherstatedphilosophy.Insmallfirms,forexample,the potentialforestablishinghighethicalstandardsthroughtheentrepreneursrightbehaviourisgreat.Anentrepreneurwhobelie vesintruthfulness,honestyandintegritycaneasilyinsistthatthosevaluesbefollowedthroughouttheorganization. Itthereforeholdsthatthepersonalintegrityofthebusinessownerisprobablythegreatestforceinensuringethicalperformanceo foperationsinthefirm.Thedominantroleoftheleadergiveshimapowerfulvoiceandanupperhandinshapingtheethicsofthefir m. Leadershipisalsoimportantbecausemanagerscanuserewardsorpunishmentstoencourageemployeebehaviourthatsupport sorganizationalgoals.Rewardsandpunishmentarepartoftheconceptofopportunityintheethicaldecisionmakingframeworkdiscussed.Researchershaveidentifiedfourdimensionsofleaderbehaviourrelatingtorewardandpunish ment.

SelfAssessmentQuestion
1. WhatisyourtakeonMauForestComplexinvasionandimpendingevictiononleadership? Doyouseeanythingwrongwiththissituation?Ifyes,whatkindof 2. leadershipisneededhere?Remember!Thereareseveraltypesofleadership,whichonearethese? Andwhichoneisappropriatetothistopicalissue?

In1997theUnitedStateofAmericarefusedtosign/ratifytheKyotoprotocol.Thisangeredboththehighlyindustrializednation sliketheG7andthedevelopingnations.RatificationoftheKyotoprotocolmeantthatthesignatorynationscommittedthemselvestocuttin gdownemissionsofgreenhousesgasesfromtheirindustrialactivitiestoanacceptablelevel.Weareallawareenvironmentalde gradationhascontinuedtodateandthedevelopedcountriesareresponsibleforit.HowdoyouarticulatethisfacttothethenUSlea dership? Reward Performance contingentrewardbehaviour.Theleadergivespositivereinforcements,suchasrecognitionandpraise,forsubordinatesgood performance.Forexample,asubordinatemightbepraisedfordoingtheright,orethical,thingeventhoughprofitswerenot maximized. Performance contingentpunishmentbehaviour.Theleaderusesnegativereinforcements,suchasreprimands,forsubordinatespoorperfor mance.Thusasalesmanagermaypunishasalespersonthatusedasunethicalsalestechniquebydockingthesubordinatespayor withholdingthecommission. Noncontingentrewardbehaviour.Theleadergivespositivereinforcementregardlessofsubordinatesperformance.Aproduction manager,forinstance,mightignoreunethicalbehaviourorpoorqualityworkandbeaniceguytoeveryone. Noncontingentpunishmentbehaviour.Theleadergivesnegativereinforcementregardlessofsubordinatesperformance.Forexa mple,afinancemanagermightpunishaworkerwhopointedoutthatsomefinancialdocumentsrequiredbyagovernmentregula toryagencywereinaccurate. Performancecontingentbehavioursaremostproductiveinencouragingethicalbehaviour.Inaddition,performancecontingentrewardbehaviourisgenerallyassociatedwithhigherlevelsofemployeeperformanceandsatisfaction.Noncontingentpunishmentbehaviourisgenerallybelievedtohaveanegativeeffectonperformanceandsatisfaction,withnoncontingentrewardbehaviourdeliveringmixedresults. 9.1.2 Motivation Aleadersabilitytomotivatesubordinatesisakeyconsiderationinmaintaininganethicalorganization.Motivationisaforcewi thintheindividualthatfocuseshisorherbehaviourtoachieveagoal.Tocreatemotivation,anorganizationoffersincentivestoen courageemployeestoworktowardorganizationalobjectives.Understandingmotivationisimportantinthemanagementofot hers,andithelpsexplaintheirethicalbehaviour.Forexample,apersonwhoaspirestohigherpositionsinanorganizationmaysa botageacoworkersprojecttomakethatpersonlookbad.Thisunethicalbehaviourisdirectlyrelatedtothefirstemployeesambition(moti vation)toriseintheorganization. Asbusinesspeoplemoveintomiddlemanagementandbeyond,higherorderneeds(social,esteem,andrecognition)tendtobec omemoreimportantrelativetolowerorderneeds(salary,safety,andjobsecurity).Researchhasshownthatcareerstage,age,organizationsize,andgeographiclocati onvarytherelativeimportanceofrespect,selfesteemandbasicphysiologicalneeds.

Fromanethicsperspective,needorgoalsmaychangeasapersonprogressesthroughtheranksofthecompany.Thisshiftmaycau seorhelpsolveproblems,dependingonthecurrentethicalstatusofthepersonrelativetothecompanyorsociety.Forexample,ju niorexecutivesmightinflatepurchaseorsalesorders,overbilltimeworkedonprojects,oracceptcashgratuities.Astheycontin ueuptheladderandareabletofulfiltheseneeds,suchconcernsmaybecomelessimportant.Consequently,thesemanagersmay gobacktoobeyingcompanypolicyorcultureandbemoreconcernedwithinternalrecognitionandachievement. 9.1.3 Power Aseconddimensionofleadershipispowerandinfluence.Powerreferstotheinfluenceleadersandmanagershaveoverthebeha viouranddecisionsofsubordinates.Anindividualhaspoweroverotherswhenhisorherpresencecausesthemtobehavediffere ntly.Exertingpowerisonewaytoinfluencetheethicaldecisionmakingframework. Asuperiorinanauthoritypositioncanputstrongpressureonemployeestocomply,evenwhentheirpersonalethicalvaluesconfl ictwiththesuperiorswishes.Forexample,amanagermightsaytoasubordinate,Iwanttheconfidentialdataaboutourcompeti torssalesonmydeskbyMondaymorning,andIdontcarehowyougetit.Asubordinatewhovalueshisorherjoborwhodoesnot realizetheethicalquestionsinvolvedinthetaskmayfeelpressuretodosomethingunethicaltoobtainthedata. Therearefivepowerbasesfromwhichonepersonmayinfluenceanother: 1RewardPower:Rewardpowerreferstoapersonsabilitytoinfluencethebehaviourofothersbyofferingthemsomethingdesir able.Typicalrewardsmightbemoney,status,orpromotion.Consider,forexample,aretailsalespersonthathastwowatches(aT imexandaCasio)forsale.LetusassumethattheTimexhasahigherlevelofqualitythantheCasiobutispricedaboutthesame.Wit houtanyformofrewardpower,thesalespersonwouldlogicallyattempttoselltheTimexwatch.However,ifCasiogavehimane xtra10percentcommission,hewouldprobablyfocushiseffortsonsellingtheCasiowatch.Thiscarrotdanglinghasbeensho wntobeveryeffectiveingettingpeopletochangetheirbehaviourinthelongrun.Intheshortrun,however,itisnotaseffectiveasc oercivepower. 2Coercivepower:Isessentiallytheoppositeofrewardpower.Insteadofrewardingapersonfordoingsomething,coercivepow erpenalizesactionsorbehaviour.Asanexample,supposeavaluableclientasksanindustrialsalespersonforabribeandinsinuat esthathewilltakehisbusinesselsewhereifhisdemandsarenotmet.Althoughthesalespersonbelievesbriberyisunethical,sheh asbeentoldbyherbossthatshemustkeeptheclienthappyorloseherchanceatpromotion.Thebossisimposinganegativesanctio nifcertainactionsarenotperformed. 3LegitimatePower:Legitimatepowerstemsfromthebeliefthatacertainpersonhastherighttoexertinfluenceandothershavea nobligationtoacceptit.Thetitlesandpositionsofauthoritythatorganizationsbestowonindividualsappealtothistraditionalvi ewofpower.Manypeoplereadilyacquiescetothosewhowieldlegitimatepower,sometimescommittingactsthatarecontraryt otheirbeliefsandvalues.

SelfAssessmentTest
Inbusiness,ifasuperiortellsanemployeetoincreasesalesnomatterwhatittakesandifthatemployeehasastrongaffiliat iontolegitimatepower,heorshemaytryanythingtofulfilthatorder.Giveatleasttwoexamplestobackthestatement. 4.

ExpertPower:Expertpowerisderivedfromapersonsknowledge(ortheperceptionthatthepersonpossessesknowledge).Exp ertpowerusuallystemsfromasuperiorscredibilitywithsubordinates.Credibility,andthusexpertpower,ispositivelyrelatedt othenumberofyearsapersonhasworkedinafirmorindustry,thepersonseducation,orthehonoursreceivedforperformance.E xpertpowerispositivelyrelatedtothenumberofyearsapersonhasworkedinafirmorindustry,thepersonseducation,orthehon oursreceivedforperformance.Expertpowercanalsobeconferredonapersonbyotherswhoperceivetheindividualasanexpert onaspecifictopic.Arelativelylowlevelsecretarymayhaveexpertpowerbecauseheorsheknowsspecificdetailsabouthowthebusinessoperates. Expertpowermaycauseethicalproblemswhenitisusedtomanipulateothersortogainanunfairadvantage.Physicians,lawyers ,orconsultantscantakeunfairadvantageofunknowingclients.Accountingfirmsmaygainextraincomebyignoringconcernsa bouttheaccuracyoffinancialdataprovidedinanaudit.

SelfAssessmentTest
Whatarethemainconcernsofthegeneralpublicasfarasthecredibilityandintegrityofprofessionalslikelawyers,docto rs,accountantsareconcerned.Havetheircredibilitybeenputtoquestion? CiteinstancesKenyansseemtohavereservationsaboutexpertswhileseekingfortheirprofessionalservices.Trytoarti culateyourviewpointwiththistypeofpower. ffd8ffe000104a4649460001020100c800c80000ffe20c584943435f50524f46494c4500010100000c484c696e6f02100 0006d6e74725247422058595a2007ce00020009000600310000616373704d534654000000004945432073524742000 0000000000000000000000000f6d6000100000000d32d4850202000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000001163707274000001500000003364657363000001 840000006c77747074000001f000000014626b707400000204000000147258595a00000218000000146758595a0000 022c000000146258595a0000024000000014646d6e640000025400000070646d6464000002c4000000887675656400 00034c0000008676696577000003d4000000246c756d69000003f8000000146d6561730000040c0000002474656368 000004300000000c725452430000043c0000080c675452430000043c0000080c625452430000043c0000080c746578 7400000000436f70797269676874202863292031393938204865776c6574742d5061636b61726420436f6d70616e79 0000646573630000000000000012735247422049454336313936362d322e3100000000000000000000001273524742 2049454336313936362d322e31000000000000000000000000000000000000000000000000000000 5. ReferentPower:Referentpowermayexistwhenonepersonperceivesthathisorhergoalsorobjectivesaresimilartoanothers. Thesecondpersonmayattempttoinfluencethefirsttotakeactionsthatwillleadbothtoachievetheirobjectives.Thus,whenrefe rentpowerisused,onepersonsattemptstoinfluenceanothersdecisionwillbeseenasbeneficial.

Questiontoreflecton


Considerthefollowingsituation:LisaJones,amanagerintheaccountingdepartmentofamanufacturingfirm,hasaske dMichaelWong,asalesperson,tospeedupthedeliveryofsalescontracts,whichusuallytakeaboutonemonthtoprocess afteradealisreached.Michaelproteststhatheisnottoblamefortheslowprocess.Ratherthanthreatentoslowdeliveryof Michaelscommissionchecks(coercivepower),Lisamakesuseofreferentpower.SheinvitesMichaeltolunch,andth eydiscusssomeoftheirworkconcerns,includingtheproblemofslowmovingdocumentation.Theyagreethatifdocumentprocessingcannotbespeededup,bothwillbehurt.Lisathensugge ststhatMichaelstartfaxingcontractsinsteadofmailingthem.Heagreestogiveitatry,andwithinseveralweeksthecontr actsaremovingfaster.Lisasjobismadeeasier,andMichaelgetshiscommissionchecksalittlefaster. 9.2 GroupdimensionsoforganizationalstructureandcultureTypesofGroups AnInformalgroupisdefinedastwoormoreindividualswithacommoninterestbutwithoutanexplicitorganizationalstructure.

9.2.1 FormalGroups
1. Committees:Acommitteeisaformalgroupofindividualsassignedtoaspecifictask.Oftenasinglemanagercouldnotcomplete thetask,ormanagementmaybelievethatacommitteecanrepresentdifferentconstituenciesandimprovecoordinationandimp lementationofdecisions. Workgroupsareusedtosubdividedutieswithinspecificfunctionalareasofacompany.Forexample,onanautomotiveassembl yline,oneworkgroupmightinstalltheseatsandinteriordesignelementsofthevehiclewhileanothergroupinstallsallthedashbo ardinstruments.Productionsupervisorscanthenspecializeinaspecificareaandprovideexpertadvicetoworkgroups. 2. InformalGroups Thesegroupsareusuallycomposedofindividuals,oftenfromthesamedepartment,whohavesimilarinterestsandwhobandtog etherforcompanionshiporforotherpurposesthatmayormaynotberelevanttothegoalsoftheorganization.Forexample,fouro rfivepersonswhohavesimilartastesinoutdooractivitiesandmusicmaydiscusstheirinterestswhileworkingandtheymaymee toutsideworkfordinner,concerts,sportsevents,orotheractivities.Otherinformalgroupsmayevolvewiththepurposeofformi ngaunion,improvingworkingconditionsorbenefits,gettingamanagerfiredorprotestingworkpracticestheyviewasunfair. 3GroupNorms GroupNormsarestandardsofbehaviourthatgroupexpectoftheirmembers.Justascorporatecultureestablishesbehaviourgui delinesformembersoftheentireorganization,sogroupnormshelpdefineacceptableandunacceptablebehaviourwithinagrou p;inparticular,groupnormsdefinethelimitondeviationfromgroupexpectations. Mostworkorganizations,forexample,developnormsgoverningtheirrateofproductionandcommunicationwithmanageme

nt,aswellasageneralunderstandingofbehaviourconsideredrightorwrong,ethicalorunethical,withinthegroup.Forexample, anemployeewhoreportstoasupervisorthatacoworkerhascoveredupaseriousproductionerrormaybepunishedbyothergroupmembersforthisbreachofconfidence.Other membersofthegroupmayglareattheinformant,whohasviolatedagroupnorm,andrefusetotalktoorsitbyhimorher. Summary Corporateculturereferstothepatternsandrulesthatgovernthebehaviourofanorganizationanditsemployees,particularlythei rsharedvalues,beliefs,customs,concepts,ceremonies,andrituals.Thesesharedvaluesmaybeformallyexpressedorunspoke n.Aculturalethicsauditisconductedtoidentifyanorganizationscorporateculture.Beforetheauditisconducted,itishelpfulto haveaframeworkforassessingthecorporateculture.Thischapterpresentssuchaframework,delineatingtheorganizationalcu ltureascaringintegrative,apathetic,orexacting.Thecorporatecultureethicalauditcanhelpidentifytraitsthatcreateethicalco nflict.Iftheculturerewardsunethicalbehaviour,peoplewithinthecompanyaremorelikelytoactunethically. Leadership,theabilityorauthoritytoguideotherstowardachievementofagoal,hasasignificantimpactontheethicaldecisionmakingprocessbecauseleadershavepowertomotivateothersandenforcetheorganizationsrulesandpoliciesaswellastheiro wnviewpoints.Aleadermustnotonlygaintherespectofhisorherfollowersbutalsoprovideastandardofethicalconduct.Sixlea dershipstyleshavebeenidentifiedbasedonemotionalintelligence.Thesixtypesarecoercive,authoritative,affiliative,democ ratic,pacesetting,andcoaching.Inaddition;leadershipisimportantbecausemanagershavethepowertorewardofpunishempl oyeesandtoencouragebehaviourthatsupportsorganizationalgoals.Performance contingentrewardsandpunishmentsaremostproductiveinencouragingethicalbehaviour. Motivationisaninternalforcethatfocusesanindividualsbehaviourtoachieveagoal;itcanbecreatedbyincentivesanorganiza tionoffersemployees.Motivationcanbeusedtoinfluencetheethicalbehaviourofothers. Powerreferstoaleadersinfluenceoverthebehavioursanddecisionsofsubordinates.Rewardpowerisexercisedbyprovidings omethingdesirabletootherssothattheywillconformtothewishesofthepowerholder.Coercivepower,incontrast,penalizesac tionsandusesfeartochangebehaviour.Legitimatepowerstemsfromthebeliefthatsomeonehastherighttoexertinfluence,whe reasothershaveanobligationtoacceptit.Expertpowerisderivedfromapersonsknowledge.Referentpowermayexistwheno nepersonperceivesthathisorhergoalsorobjectivesaresimilartoanothersgoalsorobjectives.Thesefivepowerbasescanbeus edtomotivateindividualseitherethicallyorunethically. Inadditiontothevaluesandcustomsthatrepresentthecultureofanorganization,individualgroupswithintheorganizationofte nadopttheirownrulesandvalues.Themaintypesofgroupsareformalgroups whichincludecommittees,workgroups,teams,andqualitycircles andinformalgroups.Informalgroupsoftenfeedaninformalchannelofcommunicationcalledthegrapevine.Groupnormsar estandardsofbehaviourthatgroupsexpectoftheirmembers.Theyhelpdefineacceptableandunacceptablebehaviourwithina

group,especiallydefiningthelimitondeviationfromgroupexpectations.Sometimesgroupnormsconflictwiththevaluesandr ulesprescribedbytheorganizationsculture.

Week 6 Topic 10 10.0: EthicalDilemmas

Analyzingethicaldilemmasbasedonpreferredframework Solvinganethicaldilemma Appreciatingtheroleofaframeworkfordilemmaresolution. 10.1 DefinitionofanEthicalDilemma Perhapstoooften,businessethicsisportrayedasamatterofresolvingconflictsinwhichoneoptionappearstobetheclearchoice. Forexample,casestudiesareoftenpresentedinwhichanemployeeisfacedwithwhetherornottolie,steal,cheat,abuseanother, breaktermsofacontract,etc.However,ethicaldilemmasfacedbymanagersareoftenmorerealtolifeandhighlycomplexwithnoclearguidelines,whetherinlaworofteninreligion. Whenwearepresentedwithanadministrativesituationcallingforanalysisandjudgment,certainquestionssuggestthemselve snaturallyasaninitialinventory. Ethicsinvolveslearningwhatisrightorwrongandthendoingtherightthing. 10.1.1 MethodstoResolveEthicalDilemmas: EthicsTools:ResolvingEthicalDilemmas(withRealtoLifeExamples) Organizationsshoulddevelopanddocumentaprocedurefordealingwithethicaldilemmasastheyarise.Ideally,ethicaldilem masshouldberesolvedbyagroupwithintheorganization,e.g.,anethicscommitteecomprisedoftopleaders/managersand/or membersoftheboard.Considerhavingstaffmembersonthecommittee,aswell.Thefollowingtwomethodscanbeusedtoaddr essethicaldilemmas. (NotethatTheGoldenRuleisprobablythemostcommonmethodtoresolveethicaldilemmas.Theruleexistsinvariousformsin manyoftheworldreligions.) 10.1.2 MethodOne 1Definetheproblem 2Identifythestakeholders 3Identifythepracticalalternatives 4Determinethemeasurableeconomicimpactofeachalternative 5Identifytheimmeasurableeconomicconsequencesofeachalternative. 6Arriveatalternativedecision(canyousleepoverit!!!) 2DecidehowtoimplementthedecisionNowletmeanalyzeeachoneofthesestepsgoingbymethodone.AssumingIamamanag erfacedwithanethicaldilemmainareallifesituation. 1.DefinetheProblemAsamanager,whensolvingtheproblem,Ihavetoidentifytheproblemwelltoknowwhetheritislegalbyex

aminingthesituationandgettingthefactsright.Sincethisisanethicalproblem,Iammorallyexpectedtotakeactionthatc onflictswithmypersonalinterest.Makingadecisionisnecessarybecausewithoutadecisionworkwillcometoastandst ill.Utilitarianismistheethicaldoctrinethatthemoralworthofanactionissolelydeterminedbyitscontributiontotheove rallutility.Meaningthatthemoralworthofanactionisdeterminedbyitsoutcome.Thisiswheretheprincipleoftheen djustifiesthemeansisapplied.Theissueofpayoffistheproblem,shoulditbeacceptedornotinorderforthecompanyto getwhatitwantsornotacceptitandfindotherwaysindealingwiththesituation. 2.IdentifytheStakeholdersStakeholdersarethoseindividualsorgroupswhodependontheorganizationtofulfiltheirowngoal sandonwhom,inturn,theorganizationdepends.Internalandexternalstakeholderswouldusuallyincludeemployees, customers,vender,thelocalcommunity,financialinstitutions,customers,suppliers,shareholdersandunions.Abusin esshasmoralresponsibilitiestothestakeholdersbecausestakeholdershavearightoftherunningoftheinstitutionandth eyalsohavecertainrightswithregardtohowthebusinessoperatesanddecisionsmade. Thestakeholdersarethosewhohavetheinterestofthebusinessatheart.Theyhavetobeconsultedbecausewhateverdec isiontakenwillalsoaffectthemandtheyalsohavetocontributeinthedecisionmaking.Therelationshipsofthestakehol dersalsomattersalotinanydecisionmaking.Aretheyexternalorinternalstakeholders? Itisimportanttoobtainalltherelevantfactsregardingstakeholdersperspectiveviewstakingintoconsiderationtheiru nderstandingofthefactsofthematter,themeaningofthekeyconceptsandtheconflictsintheirdifferenceviewsofthesit uation. Thecoretenetofutilitarianismisthateverybodysinterestshouldbeconsideredequallywhenmakingdecisions.Thein terestofallthosewhowillbeaffectedbytheoutcomeofthedecisionmustbeinvolved.Theyhavetotakepartinthedecisi onmakingbecausewhatevertheoutcomeistheywillberesponsibleandthedecisionhastorespecttherightsofeveryone . Theethicsofcareisnormativeethicaltheorythatisaboutwhatmakesactionsrightorwrong.Ethicsofcareemphasizeso ntheimportanceofrelationshipsasaresponsetoanotherintheirterms.Itfocusesonthemoralvalueofbeingpartialtowa rdsthoseconcretepersonswithwhomwehavespecialandvaluablerelationshipsandthemoralimportanceofrespondi ngtosuchpersonsasparticularindividualswithcharacterthatdemandaresponsetothemthatwillnotextendtoothers. 3.IdentifythePracticalAlternativesThepracticalalternativesareidentifiedbyexaminingthemintermsofcriteriatogettokno wwhichcriteriabestmeetthecriteriaofthedesiredresultsbytestingrightverseswrongandrightversesright.Thesealter nativescanthenbecomparedtogettherightonethatmeetsthecriteriaused.Aftercomparisonofthealternativesisdonet henthechoosingofthealternativethatbestmeetsthedesiredcriteriaisdoneandthereshouldbenolimittowhathaswork edwellbecauseproblemsarenotthesameandeachproblemishandleddifferently. Justicehastobeseentobedoneanydecisionmakingwhileidentifyingthepracticalalternatives.Justiceisjustbehaviour ,aconcernforgenuinerespectandtreatmentwhichistoberegardedasfairandequal.Justiceistheadministrationoflaw whichordainslegislationcomposedbyajudgeormagistrateofcourtsoflawinacountryorstatewithobjectivetoprotect victimsandpursueperpetratorslawfully.

Whatshouldbetakenintoconsiderationaretheeffectsofthecourseofactionandwhichalternativewillresultasthebesto verall.Aretherightsoftheaffectedpeopletakencareof? Theotherviewpointsmustalsobetakenintoaccountandgettheareasofmoralagreement. 4.DeterminethemeasurableeconomicimpactofeachalternativeBydeterminingthemeasurableeconomicimpact,yougettok nowwhatthecompanyshouldbereadyforintermsofeconomicmatters.Willthealternativeaffecttheeconomicsituati onofthecompanyandifso,isitforthegoodorfortheworse.Isthereanythingelsethatcanbedonetomakethesituationgo odifitisworse? Thisiswhatshouldbelookedintobythecompany.Thisistheeconomicimpactthatcanbegaugedandcalculatedandthe amountexpectedknown. 5.IdentifytheimmeasurableeconomicconsequencesofeachalternativeThisistheeconomicconsequenceswhichcannotbem easuredorareendless.Itisnotpossibletocalculatehowmuchthecompanyshouldexpecttogainorlosebecausethecons equencesarenotmeasurablebutitisimportanttonotetheirexistencesothatthecompanyitreadytoplananddealwiththe outcome.Willitaffectthenormaloperationsofthecompanyortherewillbenomajoreffect. 6.Arriveatalternativedecision(Canyousleepoverit!!!)Aftertakingalltheimportantfactsintoconsideration,Icometoaconclu sionandarriveatadecision.Thedecisionhastobeevaluatedandtobecheckedwhetherornottheproblemhasbeenaddre ssedwell.Ihavetotakeintocognizantwhetherthedecisionmayalsobeaffectedbyrulessetbyorganizationsinceorgani zationshavepoliciesgoverningthem.AmIproudofthedecisionIhavetakeandreadytotellyourbossaboutit? Thispositionwillbevalidforalongperiodoftimeandamwillingtodiscusstheproblemwiththeaffectedpartieswithcon fidenceknowingthatIhavetakentherightpathtoaddressestheproblem.Icanlivewiththisdecisionbecauseitisawisede cision. 7.DecidehowtoimplementthedecisionThelaststepistheimplementationofthedecision.Thereshouldbegoodreasonstosho whowthedecisionhasbeentaken.Thejusticetheoryhasbeentakenintoconsiderationsothedecisiontakencanbewellj ustified.Theutilitarian,focusingontheprincipalsandstandardsinmakingthedecisionssothedecisiontakentreatsever yoneinthesamewayanddoesnotfavoranyone.Thisdecisionrespectstherightsofeveryone.Itisreadyforimplementati onandtheimplementationplanisinprocess. 10.1.3 MethodTwo ThinkingThroughaCaseSituation Whenwearepresentedwithanadministrativesituationcallingforanalysisandjudgment,certainquestionssuggestthemselve snaturallyasaninitialinventory: Arethereethicallysignificantissuesinthiscaseanddotheycallforadecision? Iswhatweearliercalledteleopathyapersonaloranorganizationalhazardinthiscase? DoIunderstandthesourceorgenesisoftheproblemsinthecasehowtheycametobe?

CanIdiscernamidstthesometimescomplexissuesinthecasesituationthosethatarethemost central,themostsignificantfortheresolutionofalltheothers?Isthereamostsalientormostbasicmoralchallenge? Whatareseveralrealisticalternativesoroptionsthatthedecisionmakerinthiscasemustchooseamonginrespondingtothe mostsalientchallenge? Howdoeseachoftheseoptionslookthroughthenormativelensesofthefouravenuesofethicalreasoning? Whataremyrecommendeddecisionandmysuggestedactionplanforimplementingit? CanIgivemyselfandothersareasonablejustificationfortheselectionofthisalternativeoroptionfromamongthoseavaila ble?Ifeachavenuerepresentsamoralvoice,arethevoicesinharmonyoraretheyindiscord? Ifharmony,doesthisfitwithmymoralcommonsense? Ifdiscord,whichavenueshouldreceivemoreemphasis,i.e.,whichshouldpr evailoroverride?CanIexplainwhy? AmIpreparedtoseethiskindofresolutioninsimilarcaseswhenthesameaven uesappeartobe in conflict? Inordertomaketheapplicationoftheaboveinventoryofquestionsmoredirectandeasiertoremember, wecanorganizethemintoafivestepcaseanalysisprocess(the5Dsinthefigurebelow). FiveDsforCaseAnalysis FiveElementsofaCaseAnalysis10.1.4 RealtoLifeExamplesofComplexEthicalDilemmas ffd8ffe000104a4649460001020100c800c80000ffe20c584943435f50524f46494c4500010100000c484c696e6f02100 0006d6e74725247422058595a2007ce00020009000600310000616373704d534654000000004945432073524742000 0000000000000000000000000f6d6000100000000d32d4850202000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000001163707274000001500000003364657363000001 840000006c77747074000001f000000014626b707400000204000000147258595a00000218000000146758595a0000 022c000000146258595a0000024000000014646d6e640000025400000070646d6464000002c4000000887675656400 00034c0000008676696577000003d4000000246c756d69000003f8000000146d6561730000040c0000002474656368 000004300000000c725452430000043c0000080c675452430000043c0000080c625452430000043c0000080c746578 7400000000436f70797269676874202863292031393938204865776c6574742d5061636b61726420436f6d70616e79 0000646573630000000000000012735247422049454336313936362d322e3100000000000000000000001273524742 2049454336313936362d322e31000000000000000000000000000000000000000000000000000000 ffd8ffe000104a4649460001020100c800c80000ffe20c584943435f50524f46494c4500010100000c484c696e6f02100 0006d6e74725247422058595a2007ce00020009000600310000616373704d534654000000004945432073524742000 0000000000000000000000000f6d6000100000000d32d4850202000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000001163707274000001500000003364657363000001 840000006c77747074000001f000000014626b707400000204000000147258595a00000218000000146758595a0000 022c000000146258595a0000024000000014646d6e640000025400000070646d6464000002c4000000887675656400 00034c0000008676696577000003d4000000246c756d69000003f8000000146d6561730000040c0000002474656368 000004300000000c725452430000043c0000080c675452430000043c0000080c625452430000043c0000080c746578 7400000000436f70797269676874202863292031393938204865776c6574742d5061636b61726420436f6d70616e79 0000646573630000000000000012735247422049454336313936362d322e3100000000000000000000001273524742 2049454336313936362d322e31000000000000000000000000000000000000000000000000000000

BelowaresomeoftheelevencasesofethicaldilemmaswhichIwantyoutolookateachoneofthemcarefullyandtrytosolveatleas ttwo.Imaywantyoutotrythetwoasapartofyoursemesterassignment.Iwillcommunicatethistoyouonline.Youareatlibertyto choosethemethodofsolvingthedilemma.

Selfassessmentactivities
Assumeyouareamiddlemanagerinthecompanywithaboutathousandemployees.Howwouldyourespondtoeachofthefo llowingsituations? 1)Yourenegotiatingcontractwithaverylargecustomerwhoserepresentativehashintedthatyoucouldalmostcertainlybeass uredofgettinghisbusinessifyougavehimandhiswifeanallexpense paidcruisetoMombasa.Youknowtherepresentativesemployerwouldntapproveofsuchapayoff,butyouhavethedis cretiontoauthorizesuchexpenditure.Whatwouldyoudo? 2)YouhavetheopportunitytostealKshs.100,000/=fromyourcompanywithabsolutecertaintythatyouwouldnotbedetectedo rcaught.Wouldyoudoit? 3)YourcompanypolicyonreimbursementformealswhiletravellingonCompanybusinessisthatyouwillberepaidforyourou tofpocketcosts,nottoexceedKshs.860/=aday.Youdontneedreceiptsfortheseexpenses thecompanywilltakeyourword.Whentravelling,youtendtoeatatfastfoodplaceandrarelyspendinexcessofKshs.100/=a day.MostofyourcolleaguesputinreimbursementrequestsintherangeofKshs.300/=toKshs.500/=adayregardlessofwha ttheiractualexpensesare.Howmuchwouldyourequestforyourmealreimbursement? 4)Anotherexecutive,whoispartofasmallplanningteaminwhichyoureamember,frequentlyhasthesmellofalcoholonhisbre ath.YouvenoticedthathisworkhasntbeenuptostandardlatelyandhisshoddyworkmaycostyourjobashisHeadofDept. Whatwouldyoudo? 5)Acustomer(orclient)askedforaproduct(orservice)fromustoday.Aftertellinghimyourprice,hesaidhecouldn'taffordit.Yo uknowhecouldgetitcheaperfromacompetitor.Shouldyoutellhimaboutthecompetitororlethimgowithoutgettingwhatheneeds?Whatshouldyoudo? 6)Yourcompanypridesitselfonitsmeritbasedpaysystem.Oneofyouremployeeshasdoneatremendousjoballyear,sohedeservesstrongrecognition.However,he 'salreadypaidatthetopofthesalaryrangeforhisjobgradeandyourcompanyhastoomanypeopleinthegradeabovehim,soy oucan'tpromotehim.Whatshouldyoudo? 7)Yourcompanypridesitselfonhiringminorities.OneAsiancandidatefullyfitsthejobrequirementsforyouropenposition.H owever,you'reconcernedthatyourcustomerswon'tunderstandhislimitedcommandoftheEnglishlanguage.What shouldyoudo?" 8)Yourtopsoftwaredesignersuddenlyrefusedtouseyouremailsystem.Heexplainedtoyouthat,asaChristian,hecouldnotuseaproductbuiltbyacompanythatprovidedbenefitstoth epartnersofhomosexualemployees.He'dbasicallycuthimselfofffromyourteam,creatingamajorobstacletoyourproduc

tdevelopment.Whatshouldyoudo? 9)Yourbosstoldyouthatoneofyouremployeesisamongseveralotherstobelaidoffsoon,andthatyouarenottotellemployeeyet orhemighttellthewholeorganizationwhichwouldsoonbeinanuproar.Meanwhile,youheardfromyouremployeethathep lanstobuybracesforhisdaughterandanewcarpetforhishouse.Whatshouldyoudo? 10)Yourcomputeroperatortoldyouhe'dnoticedseveralpersonallettersprintedfromacomputerthatyouwereresponsibletom anage.Whileyouhadnospecificpoliciesthenagainstpersonaluseofcompanyfacilities,youwereconcerned.Iapproached theletterwritertodiscussthesituation.Shetoldyoushe'dwrittenthelettersonherowntimetopracticeusingyourwordproce ssor.Whatshouldyoudo?

FURTHERREADING
Optional:alsoseeintheFreeManagementLibraryathttp://www.managementhelp.org: 1Feedback 2Listening Questioning 3Conflict(interpersonal) 4Negotiating 5ValuingDiversity

GLOSSARY Dilemma:Whenanindividualisfacedwithtwooptionstodecideonandyetnoneofthemseemstobetheclearchoice.Discern:To knoworunderstandsomethingthatishardtounderstand.Telepathy:Directcommunicationofthoughtfrompersontoanotherw ithoutspeech.Discord:Whentwoormorethingsarenotinharmony.

Week 7 Topic 11 11.0: EthicsintheBusinessDisciplines

Lectureobjectives Outliningethicalissuesinthebusinessdisciplines Appreciatingthemagnitudesofdilemmas Outliningwaystosolvetheethicaldilemmas 11.1 Ethics&HumanResourceManagement Therearevariousethicaldilemmasthatfaceaworker.Organizationsmightdiffer,perspectiveschangebutsimilarconflictsand stakeholdersexist.Thesearee.g. Drugtesting

SelfAssessmentActivity
Ifyouwereanemployerofanorganization,howethicalorunethicalisitforyoutohaveallyourworkerstestedfordrugabuse? Whatwouldbetheeffectsandimplicationsofthetesttoonewhohasneveruseddrugs? 1. Compensation Someworkersalwaysbelievethattheyarebeingunderpaidfortheirwork.Somefeelunappreciatedortreatedunfairly.Ethicsrequiresequalpayforallthosedoingsamejobandhavesa meacademicqualification,equaltreatmentforallincludingdifferentsexes,races,colours,nationalitiesetc 2. Comparablework Thiscallsforthedeterminationofthecompensationtobepaidtoapositionbasedonthejobsintrinsicvalueincomparisontowag esbeingpaidforothersrequiringcomparableskills,effortandresponsibilityandhavingcomparableworthtotheorganization. 3.SexualharassmentTreatingsomeonedifferentlybecauseofhisorhergenderisunlawful.Thiscanbeoftwotypes:Quidpr oquowhereasupervisoroffersajobinexchangeofsexualactivityorrefusestogivedeservingbenefitsforanemployeetillhe/shecom pliessexually. 4. Directdiscrimination Somefirmsexercisedirectdiscriminationwherebysomeraces,colours,gendersarenotemployedoronlyemploysuchpeople smallnumberse.g.blacksAmericaearly19 century.
th

SelfAssessmentActivity
Incaseswheresomefirmspracticediscriminationandothersdonot,thosediscriminatingwouldhavejustasmallcrosssectionofpeopletoemployleavingundiscriminatingonestogetmorequalifiedpeopletoemployandsoproducingmorequality goodsandservicesandhencelesscosts.Discriminatingfirmsmaybefinallypushedoutofmarket(oranoptiontocloseorchange ).Howdoyouagreeordifferwiththisstatement,discussthemeritsanddemerits? Mytakewouldbethatthemarketcouldfailtocorrectitifthediscriminatingfirmheldamonopolyonitsgoodorservice.Doyouag reewithmyview?Justify. 5. Employeesprivacy Anothervitalethicalissueisthequestiononprivacy.Manyschoolsofthoughtassertthatitdependsonthetypeofthetestandthep urpose.Eventhoughdrugtestingisnotasolutiontothedrugproblemespeciallyinthewestitmaygivethefirmsabetterhandleofit .Somepeoplearecompletelyopposedtodrugtestingwithanargumentthatthereisinaccuracyofthetestsand(sogivingfalseimp ressionofthetestedperson),itsinconveniencing,possibleviolationsofprivacy,fearofjoblossondetection,andtheoverallcost .

SelfAssessmentActivity Whatsprivacyasfarasanemployeeisconcerned?Whatsnotpartofprivacy?
Howethicalorunethicalisittogetintoonesprivacy? Aredrugtestingandothertypesoftestinge.g.urinalysisethicalorunethical? 6. EmployeeLoyaltyWhistleBlowing

Whistleblowingoccurswhenanemployeeinformsthepublicofinappropriateactivitiesgoingoninsidetheorganizatione.g. whenanindividualisaskedtoonfederalreportingdocumentstoprotectthefirm.Hemaytellthepublicaboutitandchoosenottoli easrequiredbytheexecutive. Acertainschoolofthoughtcontendsthatwhistleblowingisnotjustifiedunlessthefollowingcharacteristicsarepresent: a. Itsdonewiththerightmoralmotive. b. Theindividualhasexhaustedallinternalavenuesfordissent. c. Theindividualsbeliefregardinginappropriateconductisbasedonevidencethatwouldpersuadeareasonableperson. d. Theindividualhascarefullyanalyzedthesituationtodeterminetheseriousnatureoftheviolation,theimmediacyofthespecific ityoftheviolation. e. Theindividualsactioniscommensuratewithresponsibilityforavoidingand/orexposingmoralviolations. f. Theactionhassomechanceofsuccess,exposingand/avoidingthemoralviolation.

SelfAssessmentActivity
AstudycarriedoutintheUSrevealedthatoutof1,423individualemployeessurveyed,49%feltthatitwasacceptabletotakestapl ersfromwork,14%feltthatpenswereappropriate,while13%feltthatitwasallrighttotakehomecomputerdiskettesforpersona luse.Someoftheexcusesgivenwerethattheemployeesfeltthattheygavetheirbosstoomuchthatwentunrewarded. Howethicalorunethicaldoyouconsiderthistobe? Whatdoyouthinkmakesworkersfeelthatthefirm(s)owethemsomethinginadditiontotheirsalaries? Whatcouldbedonetoincreaseordecreasealoyaltyfeeling? Whistleblowersarethereforepersonswhosoundanalarmfromwithintheveryorganizationinwhichtheywork,aimingtospot lightneglectorabusesthatthreatenthepublicinterest. Keythings Actsforpublicinterest. Drawsattentiononthepubliconapointworthytheirconcernratherthanjustinterestoramere information. NB:Hedoesallthisatariskofbeingfired,demoted,ostracized,orbeingattackedoftheythatheisaccusing.

SelfAssessmentActivity
Howethicalorunethicaldoyouthinkitistosacksuchkindofaperson? Howethicalorunethicalishisact? Whatcanboththewhistleblowersandcorporationdotofosterreasonedtrustandtoavoidvictimization? Whataboutsituationinwhichtheemployeesfeelthattheyhavetogooutsidethecompanytogetconcernsaddressed? OutlinecasesofwhistleblowinginKenyaandhowfartheissuewentandwhetheritisworthdoingsoinacountrylikeKenyawher eimpunityistheorderoftheday?

Topic 12 12.0: ApplicationofEthicsinHiringandPromotion

Lectureobjectives
Identifyingdilemmasinhiringandpromotion Outlinesolutionstotheemergingethicalissues

SelfAssessmentActivity Inconnectionwithhumanresourcemanagement,whatdoyouthinkismeantbydownsizingofafirm?
Isdownsizingeverethical?

Theveryactofforcingpeopletoleavetheiremploymentisheadoncollisionwithethicsrelatedquestions. Thetruthisthatunlessanorganizationwasdesignedexpresslyandovertlyforthepurpose,itsnotinbusinesstoprovideemploy ment.Jobsareactuallythebyproductsofsuccessfulorganizationalendeavours,nottheirintendedoutput. AcertainfirmBetahasbeenoperatingforthelast10years.However,itsnowfacinghighcostsinproductionandinotherareaso foperationaswell.Itsnowconsideringdownsizingasoneoftheoptions/solutionsintheirsituation.

SelfAssessmentActivity
Whatfactorswouldyouadvisethemtoconsiderintheirdownsizing? Whatdoyouthinkwouldbeeffectsandthefeelingsoftheythataredownsized?(thosewholeave) 1. Whatdoyouthinkwouldbeeffectsandfeelingsonthepartthatareleftafter 2. downsizing? Whatdoyouconsidertobeofgreatimportanceinconsiderationforafirmthatwantstopromotesomeofitsmembersofstaff? Youmanagealocalmovietheatrethatispartofanationalchainthathasnodatingpolicyforemployeesbecauseitemploysmanyteenagers.Inaddition,thecompanyhasapromotionwithinpolicyandd atingamongemployeescouldresultinamajorconflictofinterestinthefuture. Becausemanyoftheemployeessocializewithoneanotherafterworkinghours,youhaveignoredthenodatingpolicy.Thenyourassistantmanagerinformsyouthatshehasfallenmadlyinlovewithoneofthetickettakers.Youcancontinuetoignorethenodatingpolicy,fireyourassistantmanagerandortickettakerortransferthelessvaluableemployee(thetickettaker).Whatwouldyoudo?

PART II

Week 8 Topic 13

13.0: CorporateSocialResponsibility CourseOutline

Rationale Thebasicideaofsocialresponsibilityemanatesfromtherealizationoftheimportanceoftherelationshipbetweenbusinessorg anizationsandtheirvariousstakeholders.Thisrelationshipneedstobemanagedwellforthemutualbenefitofallthepartiescon cernedtoavoidconflictsofinterestsinpursuanceofthegoalsandaimsofeachofthestakeholders. Courseobjectives Bytheendofthiscourse,youareexpectedtobeableto: Understandtherelationshipbetweenbusinessenterprisesandtheirvariousstakeholders. Understandtheevolutionandvariousmodelsonsocialresponsibility. Appreciatetheroleandexpectationofeachstakeholderinsocialresponsibility. Appreciatetheimportanceofsocialresponsibilityinbusiness. Understandtheimportanceofthestakeholderapproachtosocialresponsibility. Explainthecontinuumofsocialresponsibilityandtheeffectofvariousoptionsoncompanyprofitability. Describeasocialauditandexplainitsimportance. DiscusstheeffectoftheSarbanesOxleyActof2002ontheethicalconductofbusiness. ComparetheadvantagesofcollaborativesocialinitiativeswithalternativeapproachestoCSR. Explainthefiveprinciplesofcollaborativesocialinitiatives. Comparethemeritsofdifferentapproachestobusinessethics. Explaintherelevanceofbusinessethicstostrategicmanagementpractice. CourseContent 1. Introduction Meaningofsocialresponsibility Approachestosocialresponsibility 2. Evolutionofsocialresponsibility Profitmaximizationmanagement Trusteeshipmanagement Qualityoflifemanagement 3. Modelsofsocialresponsibility Economicmodel Socialeconomicmodel 4. Mainareasofsocialresponsibilityinbusiness Argumentsforsocialresponsibility Argumentsagainstsocialresponsibility Whymoremanagersareconcernedwithsocialresponsibility Fivepropositionsofsocialresponsibility 5. Corporatepowersandissues Socialaudit Roleofgovernmentinsocialresponsibility

6. Relationshipoffirmtostakeholders Employees Consumers Competitors Stockholders Dealers Suppliers Naturalenvironmente.g.pollution 7. Socialresponsibilityandmanagementfunctions Planningforsocialresponsibility Organizingforsocialresponsibility Controlfunction 8. Socialresponsibilityandbusinessethics Socialresponsibilityandmarketingethics Factorsinfluencingbusinessethicalbehaviour ConsumerethicsandsocialresponsibilityReferences 1ArdieB.Carroll,ManagingCorporateSocialResponsibility 2ThombariHenry,BusinessandSociety 3BowieN.E.BusinessEthics 4BoatrightJohnR.(S.T)EthicsandConductofBusiness 5DrummongJohn(S.T)ManagingBusinessEthics 6Guy,MaryE.(S.T)EthicalDecisionMakinginEverydaySituation 7S.PrakashSethi,PrivateEnterpriseandPublicPolicy

13.1 CorporateSocialResponsibilityinBusinessEthics
Lectureobjectives UnderstandthemeaningofCSR IdentifydifferenttypesofCSR OutlinestakeholdersinCSR QUESTIONSTOREFLECTONAslongasthereispovertyintheworld,Icanneverbereach..Aslongasdiseasesarera mpant,Icanneverbehealthy IcanneverbewhatIoughttobeuntilyouarewhatyououghttobeDr.MartinLutherKingJr. Theabovewasafamousquotebythelatecivilrightsadvocate,Dr.MartinLutherKingJr.Thequotefindsmuchrelevancetothev eryessenceofCorporateSocialResponsibility,canyoufindouthow? CorporateSocialResponsibilitycanbedefinedasthemanagementsobligationtomakedecisionsandtotakeactionsthatwillen hancethewelfareandinterestofthesocietyaswellastheorganizations.

AnalyzingDr.MartinLuthersquoteandtheworkingdefinitionofcorporatesocialresponsibility,wouldyoubeabletodrawap arallel?HeusedthefirstpersonsingularIfourtimesandsecondpersonsingularyoutwotimes.WhatdoestheIpersonify? Orwhatyousymbolize? IwanttobelieveIstandsfororganizationsandyouforthesocietythatorganizationsshouldserve.Doyouagreewithme? Ifyes/no,supportyouranswer. Ifindeedthereisaparallel,thenthatvalidatestheveryreasonwhycorporationsneedtoenhancethewellbeingofasociety. Corporatesocialresponsibility(CSR)canbedefinedasthemanagementsobligationtomakedecisionsandtotakeactionsthat willenhancethewelfareandinterestsofthesocietyaswellastheorganizations.CSRisarealizationthateverycorporateorganiz ationiscreatedandoperateswithinasocietyandshouldthereforecontributetothedevelopmentandwellbeingofthatsociety. Asociallyresponsiblefirminteractswithitsenvironmentinwaysthatarenotjustbeneficialtothefirmbutalsotothesociety.The rearefourkindsofsocialresponsibilityi.e.legal,ethical,economic,discretionaryandphilanthropic. 13.2 Typesofsocialresponsibilities 1. EconomicResponsibilities Thedutyofmanagers,asagentsofthecompanyowners,istomaximizestockholderwealth.Economicresponsibilitiesarethem ostbasicsocialresponsibilitiesofbusiness.Aswehavenoted,someeconomistsseetheseastheonlylegitimatesocialresponsibi lityofbusiness.Livinguptotheireconomicresponsibilityrequiresmanagerstomaximizeprofitswheneverpossible.Theessen tialresponsibilityofbusinessisassumedtobeprovidinggoodsandservicestosocietyatareasonablebyprovidingproductivejo bsforitsworkforce,andtaxpaymentsforitslocal,state,andfederalgovernments..

2. LegalResponsibilities ThefirmsobligationstocomplywiththelawsthatregulatebusinessactivitiesLegalresponsibilitiesreflectthefirmsobligatio nstocomplywiththelawsthatregulatebusinessactivities.Theconsumerandenvironmentalmovementsfocusedincreasedpu blicattentionontheneedforsocialresponsibilityinbusinessbylobbyingforlawsthatgovernbusinessintheareasofpollutionco ntrolandconsumersafety.Theintentofconsumerlegislationhasbeentocorrectthebalanceofpowerbetweenbuyersandsell ersinthemarketplace.AmongthemostimportantlawsaretheFederalFairPackagingandLabellingActthatregulateslabelling proceduresforbusiness,theTruthinLendingActthatregulatestheextensionofcredittoindividuals,andtheConsumerProduct SafetyActthatprotectsconsumersagainstunreasonablerisksofinjuryintheuseofconsumerproducts. Theenvironmentalmovementhashadasimilareffectontheregulationofbusiness.Thismovementachievedstricterenforcem entofexistingenvironmentalprotectionsanditspurredthepassageofnew,morecomprehensivelawssuchastheNationalEnvi ronmentalPolicyAct,whichisdevotedtopreservingtheUnitedStatesecologicalbalanceandmakingenvironmentalprotecti

onafederalpolicygoal.Itrequiresenvironmentalimpactstudieswhenevernewconstructionmaythreatenanexistingecosyste m,anditestablishedtheCouncilonEnvironmentalQualitytoguidebusinessdevelopment. 3. EthicalResponsibilities Thisisthestrategicmanagersnotionofrightandproperbusinessbehaviour.Ethicalresponsibilitiesareobligationsthattransc endlegalrequirements.Firmsareexpected,butnotrequired,tobehaveethically.Someactionsthatarelegalmightbeconsidere dunethical.Forexample,themanufactureanddistributionofcigarettesislegal.Butinlightoftheoftenlethalconsequencesofsmoking,manyconsiderthecontinuedsaleofcigarettestobeunethical. 4. DiscretionaryResponsibilities Responsibilitiesvoluntarilyassumedbyabusiness,suchaspublicrelations,goodcitizenship,andfullcorporateresponsibility .Discretionaryresponsibilitiesarethosethatarevoluntarilyassumedbyabusinessorganization.Theyincludepublicrelations activities,goodcitizenship,andfullcorporatesocialresponsibility.Throughpublicrelationsactivities,managersattempttoen hancetheimageoftheircompanies,products,andservicesbysupportingworthycauses.Thisformofdiscretionaryresponsibili tyhasaselfservingdimension.Companiesthatadoptthegoodcitizenshipapproachactivelysupportongoingcharities,publicserviceadv ertisingcampaigns,orissuesinthepublicinterest.Forexample,teamsintheNationalFootballLeagueprovidetimeoffforplaye rsandotheremployeesafflictedwithdrugoralcoholaddictionswhoagreetoenterrehabilitationprograms. 5. PhilanthropicDimension Thisdimensionofsocialresponsibilityreferstobusinesscontributiontothelocalcommunityandtosociety.Itprovidesfour(4) majorbenefitstosocietybyimprovingthequalityoflife,reducinggovernmentinvolvement,developingthestaffleadershipski llsandbuildingstaffmorale.Companiescontributesignificantamountsofmoneytoeducation,thearts(TuskerProjectFame), environmentalcausesandthedisadvantagedbysupportinglocalandinternationalcharitableorganizationse.g.DettolFounda tion,RattansiFoundation,e.t.c.

SelfAssessmentActivity Nameasmanycharitableorganizationsaspossibleyoudeemhavebeencarryingoutphilanthropicresponsibilities
13.3 TheStakeholdersApproachtosocialresponsibility Indefiningorredefiningthecompanymission,strategicmanagersmustrecognizelegitimaterightsofthefirmsclaimants.The seincludenotonlystockholdersandemployeesbutalsooutsidersaffectedbythefirmsactions.Suchoutsiderscommonlyinclu decustomers,suppliers,governments,unions,competitors,localcommunities,andthegeneralpublic.Eachoftheseinterestgr oupshasjustifiablereasonsforexpecting(andoftenfordemanding)thefirmsatisfiestheirclaimsinaresponsiblemanner.Ingen eral,stockholdersclaimappropriatereturnsontheirinvestment;employeesseekbroadlydefinedjobsatisfactions;customers

wantwhattheypayfor;suppliersseekdependableBuyers;governmentswantadherencetolegislation;unionsseekbenefitsfort heirmembers;competitorswantfaircompetition;localcommunitieswantthefirmtobearesponsiblecitizen;andthegeneralpu blicexpectsthefirmsexistencetoimprovethequalityoflife. Stockholders:Participationindistributionofprofits,additionalstockofferings,assetsonliquidation;voteofstock;inspection ofcompanybooks;transferofstock;electionofboardofdirectors;andsuchadditionalrightsashavebeenestablishedinthecontr actwiththecorporation. Creditors:Legalproportionofinterestpaymentsdueandreturnofprincipalfromtheinvestment,Securityofpledgedassetandr elativepriorityineventofliquidation,Managementandownerprerogativesifcertainconditionsexistwiththecompany(sucha sdefaultofinterestpayments).Employees:Economic,social,andpsychologicalsatisfactionintheplaceofemployment,Freed omfromarbitraryandcapriciousbehaviouronthepartofcompanyofficials.Shareinfringebenefits,freedomtojoinunionandp articipateincollectivebargaining,individualfreedominofferinguptheirservicesthroughanemploymentcontract,Adequate workingconditions. Customers:Serviceprovidedwiththeproduct;technicaldatatousetheproduct;suitablewarranties;sparepartstosupportthepr oductduringuse;R&Dleadingtoproductimprovement;facilitationofcredit. Suppliers:Continuingsourceofbusiness;timelyconsummationoftradecreditobligations;professionalrelationshipincontra ctingfor,purchasing,andreceivinggoodsandservices. Governments:Taxes(income,property,andsoon);adherencetotheletterandintentofpublicpolicydealingwiththerequireme ntsoffairandfreecompetition;dischargeoflegalobligationsofbusinesspeople(andbusinessorganizations);adherencetoanti trustlaws. Unions:Recognitionasthenegotiatingagentforemployeesandopportunitytoperpetuatetheunionasaparticipanttothebusine ssorganization. Competitors:Observationofthenormsforcompetitiveconductestablishedbysocietyandtheindustryandbusinessstatesman shiponthepartofpeers. Localcommunities:Placeofproductiveandhealthfulemploymentinthecommunity.Participationofcompanyofficialsinco mmunityaffairs,provisionorregularemployment,fairplay,reasonableportionofpurchasesmadeinthelocalcommunity,inte restinandsupportoflocalgovernment,supportofculturalandcharitableprojects. Thegeneralpublic:Participationinandcontributiontosocietyasawhole;creativecommunicationsbetweengovernmentalan

dbusinessunitsdesignedforreciprocalunderstanding,assumptionoffairproportionoftheburdenofgovernmentandsocietya ndfairpriceforproductsandadvancementofthestateofthearttechnologythattheproductlineinvolves.

SelfAssessmentActivities
Definethetermsocialresponsibility.Findanexampleofacompanyactionthatwaslegalbutnotsociallyresponsible.Defendyo urexampleonthebasisofyourdefinition. Describeyourselfasastakeholderinacompany.Whatkindofstakeholderroledoyouplaynow? Whatkindofstakeholderrolesdoyouexpecttoplayinthefuture? Whatsetstheaffirmativephilosophyapartfromthestakeholderphilosophyofsocialresponsibility? Inwhatareasdothetwophilosophiesoverlap?

Week 9 Topic 14 14.0: CorporateSocialResponsibility&Profitability

Abusinesshasadutytoserveitsclientsaswellasthefinancialinterestofstakeholders. Lectureobjectives UnderstandwhytherewasresurgenceofCSR CompareprofitabilityofCSRvisavissocialresponsibility ToappreciatetheroleofCRSonmissionstatement 14.1 CSRandthebottomline Thegoalofeveryfirmistomaintainviabilitythroughlongrunprofitability.Untilallcostsandbenefitsareaccountedfor,however,profitsmaynotbeclaimed.Inthecaseofcorporatesocia lresponsibility(CSR),costsandbenefitsarebotheconomicandsocial.Whileeconomiccostsandbenefitsareeasilyquantifiabl e,socialcostsandbenefitsarenot.Managersthereforerisksubordinatingsocialconsequencestootherperformanceresultsthat canbemorestraightforwardmeasured. Thedynamicawareness(CSR)andsuccess(profit)iscomplex.Whileoneconceptclearly;notmutuallyexclusiveoftheother,it isalsoclearthatneitherisaprerequisiteoftheother.Ratherthanviewingthesetwoconceptsascompeting,itmaybebettertoview CSRasacomponentinthedecisionmakingprocessofbusinessthatmustdetermine,amongotherobjectives,howtomaximizeprofits. Performance Toexploretherelationshipbetweensociallyresponsiblebehaviourandfinancialperformances,animportantquestionmustfir stbeanswered:Howdomanagersmeasurethefinancialeffectofcorporatesocialperformance? CriticsofCSRbelievethatcompaniesthatbehaveinasociallyresponsiblebehaviourandfinancialperformance,animportantq uestionmustfirstbeanswered:Howdomanagersmeasurethefinancialeffectofcorporatesocialperformance?

CriticsofCSRbelievethatcompaniesthatbehaveinasociallyresponsiblemanner,andportfolioscomprisingthesecompanies securities,shouldperformmorepoorlyfinanciallythanthosethatdonot.ThecostsofCSRoutweighthebenefitsforindividualf irms,theysuggest.Inaddition,traditionalportfoliotheoryholdsthatinvestorsminimizeriskandmaximizereturnbybeingable tochoosefromaninfiniteuniverseofinvestmentopportunities.Portfoliosbasedonsocialcriteriashouldsuffer,criticsargue,be causetheyarebydefinitionresided.Thisreasonshouldincreaseportfolioriskandreduceportfolioreturn. 14.2 CSRtoday CSRhasbecomeaprioritywithAmericanbusiness.Inadditiontoacommonsensebeliefthatcompaniesshouldbeabletodowe llbydoinggood,atleastthreebroadtrendsaredrivingbusinesstoadoptCSRframeworks:theresurgenceofenvironmentalism ,increasingbuyerpower,andtheglobalizationofbusiness. 1. Theresurgenceofenvironmentalism TheCoalitionforEnvironmentallyResponsibleEconomies(CERES)wasformedtointheUStoestablishnewgoalsforenviro nmentallyresponsiblecorporatebehaviour.ThegroupdraftedtheCERESPrinciplestoestablishanenvironmentalethicwith criteriabywhichinvestorsandotherscanassesstheenvironmentalperformanceofcompanies.CompaniesthatsignthesePrinc iplespledgetogovoluntarilybeyondtherequirementsofthelaw. 2. Increasingbuyer Theriseoftheconsumermovementhasmeantthatbuyersconsumersandinvestors areincreasinglyflexingtheireconomicmuscle.Consumersarebecomingmoreinterestedinbuyingproductsfromsociallyres ponsiblecompanies.Oneexampleofconsumerpoweratworkistheeffectiveoutcryoverthedeathsofdolphinsintunafisherme nsnets.Investorsrepresentasecondtypeofinfluentialconsumer.Therehasbeenadramaticincreaseinthenumberofpeopleint erestedinsupportingsociallyresponsiblecompaniesthroughtheirinvestments.Socialinvestorscomprisebothindividualsan dinstitutions.Muchoftheimpetusforsocialinvestingoriginatedwithreligiousorganizationsthatwantedtheirinvestmentsto mirrortheirbeliefs. 3. Theglobalizationofbusiness Managementissues,includingCSR,havebecomemorecomplexascompaniesincreasinglytranscendnationalborders:Itisdif ficultenoughtocometoaconsensusonwhatconstitutessociallyresponsiblebehaviourwithinoneculture,letalonedeterminec ommonethicalvaluesacrosscultures.Inadditiontodifferentculturalviews,thehighbarriersfacinginternationalCSRinclude differingcorporatedisclosurepractices,inconsistentfinancialdataandreportingmethods,andthelackofCSRisgrowingabro ad.TheUnitedKingdomhas30ethicalmutualfundsandCanadaoffers6sociallyresponsiblefunds. Oneofthemostcontentioussocialresponsibilityissuesconfrontingmultinationalfirmspertainstohumanrights.Forexample, manyU.S.firmsreducetheircostseitherbyrelyingonforeignmanufacturedgoodsorbyoutsourcingtheirmanufacturingtofor eignmanufactures.Theseforeignmanufacturers,oftenChinese,offerlowpricingbecausetheypayverylowwagesbyU.S.stan dards,eventhoughtheyareextremelycompetitivebyChinesepayrates.

WhileChineseworkersarehappytoearnmanufacturerwagesandU.S.customersarepleasedbythelowerpriceschargedforfor eignmanufacturedgoods,othersareunhappy.TheybelievethatsuchU.S.firmsarefailingtosatisfytheirsocialresponsibilities .SomeU.S.workersandtheirunionsarguethatjobsintheUnitedStatedarebeingeliminatedordevaluedbyforeigncompetition .Somehumanrightsadvocatesarguethattheworkingconditionsandlivingstandardsofforeignworkersaresosubstandardwhe ncomparedwithU.S.standardsthattheyvergeoninhumane.Therefore,advocatesapplypressureonsuchcompaniesasCitiban k,CocaCola,IBM,andUnocaltoforcetheircontractortoimprovehumanrightsconditionsfortheiremployees.

SelfAssessmentActivity

1. Namefivepotentiallyvaluableindicatorsofafirmssocialresponsibilityanddescribehowcompanyperformanceinea chcasecouldbemeasured.

14.3 CSRseffectonthemissionstatement
Themissionstatementnotonlyidentifieswhatproductorserviceacompanyproduces,howitproducesit,andwhatmarketitserv es,italsoembodieswhatthecompanybelieves.Assuch,itisessentialthatthemissionstatementrecognizethelegitimateclaims ofitsexternalstakeholders,whichmayincludecreditors,customers,suppliers,government,unions,competitors,localcomm unities,andelementsofthegeneralpublic.ThisstakeholderapproachhasbecomewidelyacceptedU.S.business.Forexample, asurveyofdirectorsin291ofthelargestsoutheasternU.S.companiesfoundthatdirectorshadhighstakeholderorientations.Customers,government,stockholders,employ ees,andsociety,inthatorder,werethestakeholdersthesedirectorsperceivedasmostimportant. Indevelopingmissionstatements,managersmustidentifyallstakeholdergroupsandweightheirrelativerightsandabilitiestoa ffectthefirmssuccess.SomecompaniesareproactiveintheirapproachtoCSR,makingitanintegralpartoftheirraisondtre(e .g.,Ben&Jerrysicecream);othersarereactive,adoptingsociallyresponsiblebehaviouronlywhentheymust(e.g.,Exxonafter theValdezincident). 14.3.1 Socialaudit Asocialauditattempttomeasureacompanysactualsocialperformanceagainstthesocialobjectivesithassetforitself.Asocial auditmaybeconductedbythecompanyitself.However,oneconductedbyanoutsideconsultantwhowillimposeminimalbiase smayprovemorebeneficialtothefirm.Aswithafinancialaudit,anoutsideauditorbringscredibilitytotheevaluation.Thiscredi bilityisessentialifmanagementistotaketheresultsseriouslyandifthegeneralpublicistobelievethecompanyspublicrelation spronouncements. Careful,accuratemonitoringandevaluationofacompanysCSRactionsareimportantnotonlybecauseCSRactionsbytheirna

tureareopentointensepublicscrutiny.TomakesureitismakinggoodonitsCSRpromises,acompanymayconductasocialaudit ofitsperformance. Oncethesocialsauditiscomplete,itmaybedistributedinternallyorbothinternallyandexternally,dependingonthefirmsgoal sandsituation.Somefirmsincludeasectionintheirannualreportdevotedtosocialresponsibilityactivities;otherspublishasep arateperiodicreportontheirsocialresponsiveness.

Topic 15 15.0: SatisfyingCorporateSocialResponsibility

Bytheendofthislecture,youshouldbeableto: UnderstandeffortsbycompaniesinsatisfyingCSR Appreciatethebenefitofmutualcollaborativesocialinitiatives Outlineprinciplesofmutualcollaborativesocialinitiative ToappreciatethelimitsofCSR DiscussthefutureofCSRCorporatesocialresponsibilityhasbecomeavitalpartofthebusinessconversation.Thei ssueisnotwhethercompanieswillengageinsociallyresponsibleactivities,buthow.Formostcompanies,thechallengeishowb esttoachievethemaximumsocialbenefitfromagivenamountofresourcesavailableforsocialprojects.Researchpointstofive principlesthatunderscorebetteroutcomesforsocietyandforcorporateparticipants.

SelfAssessmentActivity Doyouthinkabusinessorganizationintodayssocietybenefitbydefiningasociallyresponsibleroleforitself?
Whyorwhynot?

15.1 ThecoreoftheCSRdebate TheproperroleofCSR theactionsofacompanytobenefitsocietybeyondtherequirementofthelawandthedirectinterestsofshareholders hasgeneratedacenturysworthofphilosophicallyandeconomicallyintriguingdebates. ThereisnoshortageofoptionswithwhichbusinessescanadvancetheirCSRgoals.Thegreaterchallengeisfindingtherightbala nce.Philanthropywithoutactiveengagementcashdonations,forinstancehasbeencriticizedasnarrow,selfserving,andoftenmotivatedtoimprovethecorporationsreputationandkeepnongovernmentalorganization(NGO)criticsandothernaysayeratbay.However,redirectingthecompanytowardasociallyrespo nsiblemission,whileseeminglyattractive,mayhavetheunintendedconsequencesofdivertingbothmanagersandemployeesf

romtheircoremission. 15.1.1 Mutualadvantagesofcollaborativesocialinitiatives Thetermsocialinitiativedescribesinitiativesthattakeacollaborativeapproach.Researchonalliancesandnetworksamongco mpaniesincompetitivecommercialenvironmentstellsusthateachpartnerbenefitswhentheotherbringsresources,capabiliti es,orotherassetsthatitcannoteasilyattainonitsown.Thesearecombinativecapabilitiesorotherassetsthatitcannoteasilyattai nonitsown.Thesecombativecapabilitiesallowthecompanytoacquireandsynthesizeresourcesandbuildnewapplicationsfro mthoseresources,generatinginnovativeresponsestorapidlyevolvingenvironments. 15.1.2 Fiveprinciplesofsuccessfulcollaborativesocialinitiatives TherearefiveprinciplesthatarecentraltosuccessfulCSIs,asshowninExhibit3.9.WhenCSRinitiativesincludemostorallofth eseelements,companiescanindeedmaximizetheeffectsoftheirsocialcontributionswhileadvancingbroaderstrategicgoals. WhilemostCSIswillnotachievecompletesuccesswithallfiveelements,someprogresswitheachisrequisiteforsuccess.Here arethefiveprinciples,alongwithexamplesofcompaniesthathaveadheredtothemwell. 1IdentifyalongtermdurablemissionCompaniesmakethegreatestsocialcontributionwhentheyidentifyanimportant,longstandingpolicychallengeandtheyparticipateinitssolutionoverthelongterm.Companiesthatstepuptotackleproblemsthatar eclearlyimportanttosocietyswelfareandthatrequiresubstantialresourcesaresignallingtointernalandexternalconstituenci esthattheinitiativeisdeservingofthecompanysinvestment.Amongthemoreobviousexamplesofsocialchallengesthatwilld emandattentionforyearstocomearehunger,inadequatehousing,illhealth,substandardeducation,anddegradationoftheenvi ronment. 1. 2. ContributeWhatWeDoCompaniesmaximizethebenefitsoftheircorporatecontributionswhentheyleveragec orecapabilitiesandcontributeproductsandservicesthatarebasedonexpertiseusedinorgeneratedbytheirnormal operations.Suchcontributionscreateamutuallybeneficialrelationshipbetween 2. thepartners;thesocialpurposeinitiativesreceivethemaximumgainswhilethecompanyminimizescostsanddiversions. 2ContributespecializedservicestoalargescaleundertakingCompanieshavethegreatestsocialimpactwhentheymakespecializedcontributionstolargescalecooperativeefforts.Thosethatcontributetoinitiativesinwhichotherprivate,public,ornonprofitorganizationsarealsoactivehaveaneffectthatgoesbeyondtheirlimitedcontributions. 3WeighgovernmentsinfluenceGovernmentsupportforcorporateparticipationinCSIs oratleastitswillingnesstoremovebarriers canhaveanimportantpositiveinfluence.Taxincentives,liabilityprotection,andotherformsofdirectandindirectsupportforb usinessallhelptofosterbusinessparticipationandcontributetothesuccessofCSIs. 4AssembleandvaluethetotalpackageofbenefitsCompaniesgainthegreatestbenefitsfromtheirsocialcontributionswhenthe yputapriceonthetotalbenefitpackage.Thevaluationshouldincludeboththesocialcontributionsdeliveredandthereputatione ffectsthatsolidifyorenhancethecompanyspositionamongitsconstituencies.Positivereputation byconsumers,suppliers,employees,regulators,interestgroups,andotherstakeholders isdrivenbygenuinecommitmentratherthanepisodicorsporadicinterest;consumersandotherstakeholdersseethroughnomin alcommitmentsdesignedsimplytogarnershorttermpositivegoodwill.Thepubliccansmellif[aCSReffort]isnotlegitimate. 15.2 ThelimitsofCSRstrategies Researchsuggeststhatsuchsingle-

mindeddevotiontoCSRmaybeunrealisticforlarger,moreestablishedcorporations.Forexample,someanalystshavesuggest edthattheintensefocusonsocialresponsibilitygoalsbythemanagementteamatLeviStrauss&Co.mayhavedivertedthecomp anyfromitscoreoperationalchallenges,acceleratingthecompanysclosureofallofitsNorthAmericanmanufacturingoperati ons. Largercompaniesmustmovebeyondtheeasyoptionsofcharitabledonationsbutalsosteerclearofoverreachingcommitments .Thisisnottosuggestthatcompaniesshouldnotthinkbig researchshowsthatprojectscanbebroadinscaleandscopeandstillsucceed.Rather,itsuggeststhatcompaniesneedtoviewthei rcommitmentstocorporateresponsibilityasoneimportantpartoftheiroverallstrategybutnotletthecommitmentobscuretheir broadstrategicbusinessgoals. 15.3 ThefutureofCSR CSRisfirmlyandirreversiblypartofthecorporatefabric.Managedproperty,CSRprogramscanconfersignificantbenefitstop articipantsintermsofcorporatereputation;intermsofhiring,motivation,andretention;andasameansofbuildingandcementin gvaluablepartnerships.Andofcourse,thebenefitsextendwellbeyondtheboundariesoftheparticipatingorganizations,enric hingthelivesofmanydisadvantagedcommunitiesandindividualsandpushingbackonproblemsthatthreatenfuturegeneratio ns,otherspecies,andpreciousnaturalresources. Thatisthepositiveperspective.ThemorepricklyaspectofCSRisthatforalloftheirresourcesandcapabilities,corporationswill facegrowingdemandsforsocialresponsibilitycontributionsforbeyondsimplecashorinkinddonations.Aggressiveprotesterswillkeeptheissueshot,employeeswillcontinuetohavetheirsay,andshareholderswillp assjudgmentwiththeirinvestmentsandtheirvotes. Thechallengeformanagement,then,istoknowhowtomeetthecompanysobligationstoallstakeholderswithoutcompromisi ngthebasicneedtoearnafairreturnforitsowners.

SelfAssessmentActivity
Whichofthethreebasicphilosophiesofsocialresponsibilitywouldyoufindmostappealingasthechiefexecutiveofalargecorp oration?Explain DoyouthinksocietysexpectationsforcorporatesocialresponsibilitywillChangeinthenextdecade?Explain

Topic 16 16.0: EvolutionofCorporateSocialResponsibility

Lectureobjectives Bytheendofthislecture,youshouldbeableto:

Discussevolutionofsocialresponsibilityinbusiness Identifymodelsonsocialresponsibility Analyzedifferencesbetweeneconomicandsocioeconomicmodels Outlinecurrentperspectivesonsocialresponsibility.Theconceptofsocialresponsibilityofbusinessmanagersinrecenty earshasbecomeapopsubjectofdiscussionanddebatewithinbothbusinessandacademiccircles.Alookbackthroughbusiness historyrevealsthatpeoplehavealwaysheldsomeconceptoftheresponsibilityownedbybusinessmanagerstosociety.Itisthec ontentionherethatconceptsofsocialresponsibilityhavemovedthroughthreedistinctphases: 1. ProfitMaximizingmanagementThisconceptwasthebeliefthatbusinessenterprisesandtheirmanagementaswellhavebutone th singleobjectivei.e.tomaximizeprofits.Itwaswidelyacceptedasaconceptthroughoutthe19 th centuryandtheearlypartofthe20 century.Itwasacceptedsimplybecausethegoalsofthesocietywerejustthesame maximizationofprofits.Generally,thesocietyhasbeenfacedbytheproblemofeconomicscarcity;therefore,economicgrowt handaccumulationofwealthwereprimarynationalgoals. Aprofitmaximizingmanagerbelievedthatwhatisgoodformeisgoodformycountry.Theviewsofthemanagerstowardsemp loyeeswouldbestatedaslabourisacommoditytobeboughtandsoldinthemarketplace.Theyalsobelievedthatemployeespe rsonalproblemsshouldbeleftathome. 2. TrusteeshipmanagementThisphaseemergedinthe1930sanditresultedfromstructuralchangesinbothbusinessinstitutionsa ndthesociety.Themanagersofbusinessenterpriseswereresponsiblenotsimplyformaximizingstakeholderswealthbutalsof ormaintaininganequitablebalanceamongthecompetingclaimsofcustomers,employees,suppliers,creditorsandthecommu nity. Therewasthedevelopmentofapluralisticsociety.Managersbelievedthatmoneyisimportantbutsoarepeopleandthatlabourh ascertainrightswhichmustberecognized.Theyalsobelievedthataccountabilityofmanagementistotheowners,customers,e mployees,suppliersandotherstakeholders.Theyalsorecognizedthatemployeeshaveneedsbeyondtheireconomicneeds.Ma nagersalsorecognizedthevalueofgroupparticipation. 1QualityoflifemanagementThequalityoflifemanagementbelievedinenlightenedselfinterest,contributioninterestsandthe societysinterests.Theybelievedthatwhatisgoodforthesocietyisgoodforourcompany.Theyalsobelievedthatprofitisnece ssarybutpeoplearemoreimportantthanmoney.Theybelievedthecompanyshouldbeartheresponsibilityforproducinganddi stributingproductsinsufficientquantitiesattherighttimeandrightplacewiththenecessaryqualityinformationandservicesne cessarytosatisfyconsumerneeds.Theyalsobelievedthattheymustpreservetheenvironmentofthemanagementwastotheow ners,contributorsandsociety.Employeedignity,theybelievedhastobesatisfiedandthatgroupparticipationisfundamentaltot heirsuccess. 2ManagerialvaluesValuesarebeliefsandattitudesofapersonwhichformhisframeofreference.Theyhelpdeterminethebeha viourwhichanindividualdisplays.Allmanagershaveasetofvalueswhichaffecttheirdecisions,butthevaluesarenotthesamef oreachmanager.However,oncetheyareingrainedinthemanager,theydonotchangeexceptoveraconsiderableperiodoftime. Summary Thecontrastamongthethreesetsofvaluescreatesanawarenessofthedifferingideologiesofmanagerialdecisionmakers.Ama nagerialsetofvaluesisimportantbecausevaluesdeterminethedecisionsmanagermake.Theyarethenormsformanagerialstat ementsofanorganizationsfollowsintryingtoaccomplishtheseobjectivesaswellasstrategiesandtacticswhichareused.They becomethestandardsuponwhichthemanagerunconsciouslyusestosortoutonealternativefromanother.Theydeterminethet onesofhisactions.

Topic 17 17.0: ModelsofCorporateSocialResponsibility

1EconomicModel 2Socioeconomicmodel 17.1 EconomicModel Afirmexiststoproducegoodsandservicesandearnreasonableprofitandprovidejobs.Itbelievesthatsocietybenefitsmorewhe nbusinessisleftalonetoproduceandmarketprofitableproductsneededbythesociety.Tothem,socialresponsibilityisgovern mentsbusiness.Theyfeelthatpayingtaxesisenoughasbysodoingtheyfulfilsocietysneedsindirectly. 17.1.2 SocioEconomicModel Itbelievesthatbusinesshasresponsibilitynotonlytostockholdersbutalsotocustomers,suppliersandgeneralpublic.Theyplac eemphasisnotonlyonprofitsbutalsoontheimpactofbusinessdecisiontosociety.Ithasbeenincreasinglyadoptedbecause: 1Manyfirmswerebeginningtotakeprideintheiractivity. 2Businessisdominatedbycorporateformofownershipandthesecorporationsarecreatorsofsociety. 3Itisbesttotakeinitiativetoavoidlegalinitiativeagainstthem. Differencesbetweeneconomicandsocioeconomicmodels Economic Socioeconomic 1. Exploitnaturalresources 1. Conservenaturalresources 2. Decisionsareinternalbased 2. Decisionsaremarketbased 3. Profit/economicreturnsaretheir 3. Qualityoflifeistheirmajorconcern majorconcern 4. Theyareinterestedinthewellbeingofthefirm 4. Moreinterestedonthefirmitself andalsothecommunity 5. Indirectlyresponsibletotheneedsof 5. Theyfeeltheyaredirectlyresponsibletothe thesociety needsofthesociety. 17.2 WhymoreManagersareconcernedaboutSocialResponsibility. 1Theexpectationsofthesocietyaboutsocialresponsibilityarenotcrystallizedintoaconsensusbutthereiseverysignwithsocia lproblems.Businessesareveryresponsibletopublicopinion.Themanagersofbusinessesknowthatasabusinessgetslargerthe publictakesmoreofaninterestinitbecauseithasgreaterimpactonthesociety,therefore,managersseektomaintainproperimag eoftheircompanyinthepublicmind. 2Itisintheselfinterestofbusinessmentoassumesocialresponsibilitiese.g.providingjobs,improvingrelationsinworkplacese tc.RalphLazarusputsthematterbluntlyinthewords:.Therecanbenoprofitsforanycorporationinadisintegratingcommun itytogether,improveitandmakeitmoresatisfactoryaplacetolive,workandraiseafamily.ArjayMilleraddsanewdimensioni nthesewords:Undercurrentconditionsmanagementcannoteffectivelydischargeitslonglearnedresponsibilitiestosharehol

dersunlessitalsobehavesresponsiblytowardsemployees,customers,government,educationandthepublicatlarge.Theabili tyofacorporationtoprotectandenhancethestakeholdersequitydependscruciallyupontheprosperity,goodwillandconfiden ceofthelargercommunity.Acceptanceofalargemeasureofresponsibilitytowardsthecommunityistherefore,goodaswellasg oodcitizenship. 3Businesshasgreaterpowerandifthispowerisnotusedinsociallyresponsibleways,itcouldbetakenaway.Managerswouldw anttobeinvolvedinsocialresponsibilityactivitiestosurvive. 4Therearenowprofessionalmanagerialgroupswhothinkintermsofthelongrangegrowthandwelfareoftheircompanies.Thisfosterspoliciesandactionstodischargesocialresponsibilities. 5Youngmenandwomenwhohavedifferentviewsabouttheexerciseofcorporatepowerareenteringtheranksoftopmanageme nt.Theyacceptagreaterassumptionofsocialresponsibilitiesthanwouldtheircounterparts. 6Somemanagersmayfeelthatcertainsocialresponsibilitieswillbringalegitimacytheydonotthinktheyhavefromthepublicin asituationwherestockdispersalleavesthemincontrolofpropertytheydonotownorwholestockholdersdonotcontrolthem. 7Businessmanagerialknowledgecancontributetothesolutionofsocialproblems.Therefore,managersarenotonlywillingbu tareeagertousethisknowledge.

SelfAssessmentActivity
HowmuchshouldsocialresponsibilitybeconsideredinevaluatinganOrganizationsoverallperformance? Isitnecessarythatanactionbevoluntarytobetermedsociallyresponsible?Explain Doyouthinkanorganizationshouldadheretodifferentphilosophiesofcorporateresponsibilitywhenconfrontedwithdifferen tissues,orshoulditsphilosophyalwaysremainthesame?Explain. 17.3 Currentperspectiveonsocialresponsibility Businessneedforsocialresponseandsocialresponsibilityhasbeendiscussedloudlyandatlength.Themodernsocietypresents businesswithimmenselycomplicatedproblems.Technologyhasadvancedtolevelsthattestintellectualcapacities,marketsh avebecomemorecomplexandinternationalinscopeanddifficultnewproblemsofsocialissuesandsocialresponsibilityhavea risen. Afteralongperiodofcontroversy,thedebateoverbusinessandsocialissueshadnowreachedsomematurity.Outofthismaturit y,adegreeofuniformsupportisdevelopingforcertainsocialpropositionstoguidetheconductofbusinessaswellasofotherinsti tutions.Thefivepropositionsforsocialresponsibilitywillcollectivelybecalledthesocialresponsibilitymodel. 1SocialresponsibilityandpowerSocialresponsibilityarisesfromsocialpower.Modernbusinesshasimmensesocialpowerin suchareasasemployment,environmentalpollutionetc.Ifbusinesshaspower,then,ajustrelationshipdemandsthatbusinessal sobearsresponsibilityforitsactionsinthoseareas.Thefundamentalassumptionofthismodelisthatsocietyhasentrustedabusi nesssocietysresourcesandtherefore,businessisexpectedtomanagetheseresourcestoaccomplishitsmissionsaswilltrusteef orsociety.Asatrusteeitservestheinterestsofallclaimantsontheorganizationratherthanonlythoseofowners,consumers,ore mployees. nd 2. AnopensysteminterfaceThe2 basicpropositionisthatbusinessshalloperateasatwowayopensystemwithopenreceiptofinputfromsocietyandopendisclosu reofitsoperationstothepublic.Thissocialresponsibilitymodel postulatesapolicyoffulldisclosureinwhichbothproductsandsocialdataaboutafirmareavailableinthesamewaythateconomi cdataareavailable.Toaccomplishtheobjectiveoffulldisclosure,thesocialauditisproposed.Thesocialauditisanecessaryinst rumentofdeterminewhetherabusinesshasbeenusingitssocialassetsresponsibly.Itshowswhereprogresshasbeenmadeand wheredeficienciesremain.Itisausefulguidetomanagementforimprovingitsperformance,acheckandbalanceonmismanage mentofresourcesandanopendisclosuretothoseinterestedinsocialperformance. rd 3. CalculationofSocialCostsThe3 basicpropositionisthatsocialcostsaswellasbenefitsofanyactivity,product,orserviceshallbethoroughlycalculatedandconsi deredinordertodecidewhethertoproceedwithit.Inthepast,thetwofactorsconsideredwere:

Technicalfeasibility Economicprofitability Now,businesshasathirdfactortoconsider thesocialeffectsofanactivity.Inmakingthesekindsofdecisionsbothshortandlongruncostsmustbeconsidered.Acostbenefitanalysiswillbemadepriortodeterminewhethertoproceedwiththeactivityandthus,socialcostswillbegivensignifican tweightindecisionmakingprocess.Businessesareexpectedtomakeresponsibledecisionsbasedonthoroughexaminationofc ostsandbenefitsandifnecessary,onlyafterthesegroupsaffectedhavebeeninvolved. 1TheUserPaysThe4 propositionisthatthesocialcostsofeachactivity,productorserviceshallbepricedintoitsothattheconsumerortheuserpaysfor hisconsumption.Thisphilosophyholdsthatafairconsumerpriceforaproductorserviceisonethatincludesallcostsofproducti onincludingsocialcosts.Historically,societyorsomeoneelsehashadtobearthesesocialcostswhiletheconsumerbenefitedfro mreducedproductprices.But,whentheburdenbecameheavyforthesocietytobear,itwasfeltthattheconsumershouldpayfort heconsumptions,includingthecostsinthenameinthepublicinterestpassingoncoststotaxpayersratherthantousersofthatpart icularproductorservice,e.g.companyuseswateradischargewastesintheriverwithinpayingforit,thereforelowcostofproduct ionsincetheydonotpayforit.Someoneelsepaysforclearingthewater. th 2SocialResponsibilityasCitizenA5 basicpropositionisthatbeyondsocialcostsbusinessinstitutionsascitizenshaveresponsibilitiesforsocialinvolvementinarea softheircompetencewheremajorsocialneedsexist.Inthispropositionbusinessactionsareonlyindirectlyrelatedtocertainsoc ialproblems,butnevertheless,businessissupposedtosolveproblems.Itisbasedonthereasoningthatbusinessisamajorsociali nstitutionthatshouldbearthesametypesofcitizenshipcostsforsocietythatanindividualcitizenbears.Businesswillbenefitfro mabettersocietyjustasanycitizenwillbenefit.Therefore,businesshasaresponsibilitytorecognizesocialproblemsoractively useitstalenttohelpsolvethem.Businesswillnothavetheprimaryresponsibilityforsolvingproblemsbutitshouldprovidesuffi cientassistance. Conclusion Thesociallyresponsibleorganizationsbehaveissuchawaythatitprotectsandimprovesthesocialqualityoflifealongsideitsow nqualityoflife. Inessencequalityoflifereferstothedegreetowhichpeopleliveinharmonywiththeirinnerspirit,theirfellowmenandnaturesp hysicalenvironment. Businesshassignificanteffectoneachofthese.Itcansupportharmonyamongpeopleaswellasintheenvironment.Therefore,s ocialresponsibilitymodelseekstoimprovethequalityoflifethroughthe5propositions. Certainobservationscanbemadeconcerningtheimplementationofthesocialresponsibilitymodel.i)Itappliestoallorg anizationsi.e.allorganizationshaveequalresponsibilitiesfortheconsequencesoftheiractions. * Itappliestoallpersonsinalloftheirliferoles. ii) Themovementtowardsgreatersocialresponsibilityisnotafadbutafundamentalchangein socialdirections.Businessexecutiveswilldotheirorganizationsgrievousdamageiftheyassume
th

socialresponsibilityismerelysomethingtobeassignedtoathirdassistantwithactiontobe takenonlywhenabsolutelynecessaryandwhentheorganizationisbackedintoacorner. iii) Socialresponsebybusinesswillincreasebusinesseconomiccosts.Socialresponsibilityisnota freerideoramatterofsimplegoodwill.

Topic 18 18.0: CorporatePowersandIssues

Lectureobjectives Discusscorporatepowersandissues UnderstandtheroleofgovernmentinCSR IdentifydimensionMixModelforAchievingGreaterCorporateSocial 18.1 Thesepowersinclude: 1Economicpower 2Socialpower 3Politicalpower Economicpower Thisistheabilityoftheholdertoinfluenceevents,activitiesandpeoplebyvirtueofcontrolovereconomicpressures,particularl yproperty. Socialpower Thisistheabilitytoinfluencesocialactivities,valuesandsystems. Politicalpower Abilitytoinfluencepublicpoliciesandlawse.g.politicalcampaignslobbying,ownersinleadershippositionetc.Corporations exercisethesepowersinternallyoveremployeesandtheuseofresourcesandexternallyovercustomers,suppliers,competitors ,government,investorsandthecommunityatlarge. SocialAudit:Aconceptformonitoringandmeasuringthesocialperformanceofbusinessorganizations.Manyorganizationsa reinsupportforthedevelopmentofsocialauditsandsocialaccountingsystemsforbothoffensiveanddefensivereasons.Howe ver,thereisnogeneralagreementonwhetherfirmsshouldmakesuchsocialauditspublicvoluntarilybutwillberequiredatoneti meortheothertorevealsuchinformationtothegovernment. Thus,itsimportantfororganizationstodevelopsocialauditsvoluntarily. Socialauditsinorganizationscanalsobeusefulforselfappraisalintermsof: Bringinggreaterawarenessofpotentialsocialvulnerabilitiesandopportunitiesinthemarket. Developeffectivecontrol,evaluationandrewardsystems. Gaingreatercredibilityexternally. Sixmajorsegmentsofasocialaudit

1Employment,trainingandadvancementofminority(handicapoftheunderprivileged). 2Theanalysisoftheenvironmenthowhavetheyhelpedreducepollution? Howhavetheycomeintomaintainagoodenvironment?Whataretheirenvironmentalactivities? 3Consumerism involveshealth,safetyandintegrityofproductsandservicessoldreliableinformationasabasisforconsumerchoice,andaplatf ormfromwhichaconsumercanbeheard. 4Businessconcernwithcommunityhousing,education,culture,recreationandbetterfunctionoflocalandnationalgovernme nt. 5Provisionofsociallyneededservices. 6Employingtheunderprivilegedinanofficeorsectiontohandlethesocialconcernsissues. 18.2 TheroleofgovernmentinSR Inmanycases,governmentseffortstogetbigcorporationstobecomemoresociallyresponsibleareoftengreatlytamperedbyth eexcessiveinfluencethecorporationsexertoverthegovernment.Throughthisinfluence,corporationsareusingthegovernme ntpowertoprotectthem.Ofparticularconcernweretheconcentrationofpowerincorporategiants,largepoliticalcampaignsco ntributions,otherwaysinwhichcorporationstheirleadersandownershelptoelectpoliticians,lobbyinginappointingandcontr ollingregulationsetc. Itisthereforeimportanttosubstantiallylimitthesocialpowerofcorporationsandinparticulargovernmentsshouldenforcethef ollowinginsupportofgreatersocialresponsibility. 1Thereisneedforstifferpenalties,criminalprosecutionsandindividualaccountability. 2Thereisneedformoreeffectivegovernmentregulationsandcontrol. 3Thegovernmentshouldensuregreatercompulsorypublicdisclosure. 4Thegovernmentcouldgiveincentivestothosefirmsthataresociallyresponsive(i.e.differentialtaxtreatment,subsidies,andl owcostsloans). 5Thegovernmentshouldparticipatethusencouragingotherstodolikewise. 18.3 Adynamicsevendimensionmixmodelforachievinggreatercorporatesocialresponsibility Inawayofsynthesisandsummary,thereisneedtodevelopamultidimensionapproachtocorporatesocialresponsibility.However,thereisnooneeasiestorbestwaytoachievegreaterandmoree ffectivecorporatesocialaction:anumberofsimultaneousapproachesareclearlyneeded.Themodelisadynamiconesinceitem scontainedinoneparticulardimensionatagiventimemayshifttootherdimensionsovertime. 1CriminalActionsTheindividualorcorporatecriminalactionsshouldbeprosecutedmorethanitisthecasenow.Thiswoulddo muchtobringaboutgreateraccountabilityandchangethemotivationofcorporationsasawhole,aswellasthosewhoownmana geandrunthem. 2GovernmentControls,Regulations,StandardsandPenaltiesThiswouldinvolvecompulsorycorporateactionandcomplian ceinsuchareasasemployment,pollution,landuse,etc.Itwouldinvolveprescribedminimalstandardsinsomecases,quotasand timetableswhichifnotadheredtowouldrequireadequatejustification.Muchstifferpenaltiesandmuchmoreeffectiveenforce mentarerequiredthannowexistforvariouskindsofviolationsandabuses. 3GovernmentIncentivesandSupportProgramsGovernmentincentivesfortheprivatesectormaybedesirabletohelpcreatean ddevelopsocialmarketforlowcosthousing,stimulatevariouskindsofcorporatetrainingandadvanceprograms,butmuchmor eshouldbedonetodevelopgovernmentincentiveprogramsatalllevels.Governmentincentivesandsupportprogramsshouldn otusuallyremainineffectoncethesocialproblemstheyareaimedatareresolved.Abetterjoboflinkingspecifictypesofincentiv

estospecificindustriesandtypesoffirmsisalsoimportant. 1. 4. SocialIndicatorsandSocialNormsThedevelopmentofsocialindicatorsandnormsatthenational,provincial,distr ictandthelocallevels,aswellasfordifferentsectorsandindividualcorporationscoulddomuchtoencouragecorpor ationstobecomemoresociallyresponsible.Greatercompulsorypublicdisclosureandsocialauditwouldalsobere quiredtomakethisworkmoreeffective,e.g.,foroilindustries,paperindustries,automobile 2. industries,etc,thereshouldbesocialindicatorsandnormsdealingwithpollution.Forfirmsmanufacturingandselli ngcarse.g.GM,drugse.g.Smithkline,Beecham,fooditeme.g.Unileverandmanyotherproducts,thereshouldbep roductandserviceeffectivenessindicatorswhicharenoteffectivelycoveredbythegovernmentstandardsorregula tions.Forfirmsinsuchsectorsasconstruction,buildingmaterials,housing,transportation,banking,thereshouldb eindicatorsinvolvingurbanrenewalanddevelopment. 4AFreeMarketforSocialResponsibilityFirmsshouldbefreetodeterminehowmuchandwhatkindofsocialinvolvementtobei nvolvedin,theyshouldtakeintoaccounttheirpotentialcomparativeandcompetitiveadvantagesaswellasthelikelyreactionsa ndexpectationsofthesociety.Tomakethefreemarketmoreeffectivethen,greaterpublicexposureisrequired. 5CorporateInnovationMoreeffectiveandcreativecorporateinnovationcandomuchtoovercomemajorsocialproblems.This involves,notonlydevelopingnewproductsandservicestoservesocialmarkets,butitalsoinvolvesselfwareinnovationsofthemanagerialandorganizationaltypes,e.g.socialaudits,newinformationsystems,newtoolsandtechniq ues,etc.SuchinnovationwouldgreatlyhelpmakethefreemarketforSRmuchmoreeffective. 6ChangingCorporateIdeologiesandManagerialAttitudeintheDirectionofGreaterSRCorporationsshouldbeengagedinSR responsibilitiesnotonlybecauseofsocialpressureorthreatofgreatergovernmentcontrol,butbecauseitisproperandgoodfort hesociety.Wherethecostsarenotsignificanttheyshouldvirtuallyalwaysbewillingtoundertakeactivitiesthatwouldimprovet hequalityoflife.ThewaysinwhichcorporationsrespondtoSRissuesfrequentlytendtodependinlargepartontheideologies,va lues,andattitudesofthosewhorunandmanagethem. Week 10

Topic 19 19.0: RelationshipoftheFirmtoStakeholders

Lectureobjectives Outlinerelationshipofthefirmtostakeholders Discussresponsibilitytotheenvironment OutlineadvantagesanddisadvantagesofCSR 19.1 Relationshipofthefirmtothestakeholders A)RelationshipoftheEmployeetotheFirmDuetothechangingexpectationsandstandardsoflife,employeesaremoreconcern edabouttheirrights,safetyandwelfare.So,theyconsiderthefollowingwhenlookingforjobs:goodworkingconditions,goods alary,jobsecurity,worksatisfaction,childcareissues,otherbenefits(loans,housing),andemployeetreatment. SpecificDevelopmentsintheWorkAffectingEmployees 1Computersretrenchment 2Increasedmobilityofemployeesinsearchofgreenerpasturesbetterjobs. 3Professionalswithdividedloyalty,e.g.thosewhoquestiontheactionsofthecompany.EmployeeRightsandSourcesofThese RightsSourcesofrights: 1Law

2Employeesunions 3ContractsoremployerspromisesGeneralrights 1Freedomofexpression 2Fairtreatment 3Righttoajobandnottobefiredwithoutcause 4Privacy,safetyandhealthActionsthataManagerConsideronJobClaim 1Whenoneisfireditshouldbewithagoodreasonwhichshouldbesupportedbydocumentedfacts. 2Dealingoodfaithwithallemployees. 3Themanagershouldinvestigateanyclaimfully. 4Themanagershouldalwaysstayonthesideofthelaw.RightstodueProcessandFairTreatmentTheemployeehasarighttorece iveanimpartialreviewofhisclaimsandgivenfairtreatment,e.g.withoutbiasorfavouringanyside.Thecompanieshaveemplo yeesconstitutionandconsentsofsetsclearlydefinedandrightsofprotection.RequirementsofDueProcessandFairTreatment 1Theremustbeaprocedureorrulestofollow. 2Itmustbesufficientlyvisibleandwellknown. 3Itmustbeeffective. 4Itmustbeinstitutionalized. 5Itmustapplytoallemployees.ManagementResponsetoDueProcessandFairTreatment 1Thereshouldbeanopendoorpolicybytopmanagement. 2Assignhumanresourceexecutiveresponsibilitytoinvestigateemployeegrievances. 3Themanagementmayuseassistantseniorexecutive.FreedomofSpeechasEmployeesRightathisWorkPlaceAwhistleblow erisanindividualwhoreportstotheoutsidepartye.g.tothemediaorgovernmentagenciesthatsomethingiswrong,illegal,uneth icalandheknowsorsuspectshisemployerofcommitting.Therearefourelementsinwhistleblowing: 1Thewhistleblower 2Theorganizationtowhichitismadeagainst. 3Thepartytowhomitismade. 4Theactorcomplainitself. Awhistleblowerisanemployeeofanyinstitutionwhobelievesthateitherhasbeenorderedtoperformsomeactorhasobtainedk nowledgethattheinstitutionisengagedinactivitieswhich:a)Arebelievedtocauseunnecessaryharmtothirdparties.b)Areinvi olationtohumanrights.c)Runcounterthedefinedpurposeoftheinstitution.Andinformthepublicaboutit. ConsequencesofWhistleBlowing 1Exclusiontomeetingsyouearlierattended. 2Lossofbenefitsandprivileges. 3Assignmentoflessdesirablework 4Pressuretodropchargesagainstthecompany. 5Thereismorestringentcriticismatworkeverythingthewhistleblowerdoesismuchcriticized. MeasurestoPreventWhistleBlowers 1Assureemployeesthattheorganizationwillnotinterferewiththeirpoliticalfreedom. 2Theorganizationsgrievancesprocedureshouldbestreamlinedsothatemployeescanviewtheirfeelingsinsteadofwhistlebl owing. 3Theorganizationshouldnotdealharshlywiththewhistleblowers. 4Theorganizationshouldrecognizeandcommunicaterespectforindividualfeelingsandconcernfortheiremployees. 5TheorganizationconceptforSRshouldbeinterpretedtoemployeestoensurethatitisnotbeinginterpretedwrongly.

SelfAssessmentActivity
WhistleblowersareincreasinglybecomingbolderinKenyaunlikeinthepast.Canyouciteincidencesofwhistl eblowingthatoccurreddecadesago? Whathavebeentheconsequencesofsomeofthewhistleblowersthatyouknowof? Canyoualsoevaluatetheoutcomeintermsofthesuccessofwhistleblowing?Hasitbornefruit? Privacy,SafetyandHealthTheemployerhastherighttokeeppersonalaffairstooneselfandtoknowhowinformationabouthise mployeeisbeingused.Thesamewouldalsoapplytotheemployee.Heshouldkeephispersonalinformationtohimself.Inbusine ss,itreferstotherighttobeleftaloneorrelatedrighttoautonomy,independenceorrightsofindividualsorgroupstogetforthemse lveswhen,howandwhatextentinformationiscommunicatedtoothers.PrinciplestoconsiderinRightstoPrivacya)Collection anduseofpersonaldetailsbyemployers: Informationcollectedfromemployeesshouldnotbeacommoditytobesold,exchangedorreleasedwithouttheownersconsen t. Informationcollectedshouldbethatwhichisabsolutelynecessaryandnotmore. Theemployeesshouldhaveaccesstotheinformationthatiskeptbytheemployer.b)Honestytesting Canbeusedthroughtheuseof: Formeremployer Referees Otheremployeesc)Totestfordrugusetheyassumethatdrugaddictsmightbeunproductive.d)Useofpolygraphs machinesthatrecordcertainbodilychangestoshowwhenyouarelying. RightstoHealthinWorkPlacesTherearetwocontroversialissuesinthisline: 1Aids 2Smoking 19.2 Discussionquestions 1. HowshouldAIDSvictimsbetreatedatworkplace? Acceptedandlookedatpositively. Allowedtoworkwithothers. Caredforandunderstood. Allowedtoworkinareasoflessstrain. Counsellingprograms. Sickoffsshouldbeprovidedwhentheyneedthem. Allowedtoleaveworkwhentheycantworkanylonger. Goldenhandshakersiftheycantworkanylonger. Encouragethemtoenrolinorganizationsdealingwithsuchpeople. Themanagementshouldkeeptheirdiseasesecretifitisnotyetknown. 2. ShouldtheemployerortheemployeerevealthattheyhaveHIVAIDS? Foremployers,theymaynotneedtorevealthesickness. EmployeesneedtorevealthattheyhaveAIDS

3. WhatPoliciesthatneedtobeimplementedtohelp/caterforAIDSvictims? Thefollowingmustfirstbeconsidered: PatternsofbehaviourthatleadtoAIDS. Thosewhoaremostlyaffected. PoliciesStrategies 1EducateAIDSpatientsandthesociety 2Counselling 3Costsharing 4Supportcentresstartedbytheorganization 5Theymustnotbeisolated 4. Shouldsmokingbeencouragedordiscouragedattheworkplace? Shouldbediscouraged: 1Noteveryoneinanorganizationsmokes.Theyshouldbeprotectedfrompassivesmoking. 2Smokingcanbeasourceofdangerfire,pollutionetc. 3Smokingcanbeacauseofcontaminationespeciallyinfoodmanufacturingcompanies. 4Smokingisasourceofabadpictureofanorganization. 5Smokingisharmfultothehealthofpeople. 6Pollutestheenvironment. IsitrighttobetestedifyouhaveAIDS?Argumentsfor: 1. Thecompanycanintroducecounsellingprogramsandsowillbeimprovingconditionsforothers.ArgumentsAgainst 1Disclosureshouldbevoluntary. 2Decreasesteamworkduetostressandfrustration. 3Increasesharassmentforsufferers. 4Leadstojobinsecurity. 5Killsthevictimfasterduetostigma 6Mayresultinothersocialevilslikedrinkingordrugabusetocoverupfrustrations. 7Mayleadtobiasnessduringpromotionsandjobrotation. 8Mayleadtoretrenchment,sackingorearlyretirement FamilyRelationshipinBusiness Themainpurposeofabusinessistocreateacustomerandtherefore,thecustomerandnottheproductisthemajorfocusofanybusi ness.Theirmajordutyismarketingandnotproduction. ConsumerismConsumerismhasbeendefinedassocialmovementseekingtoaugmentstherightsandpowersinrelationtoselle rs.Ithaselementsofaprotestmovementinwhichconsumersareprotestingagainstwhattheyperceivetobeunfairtreatmentby business.Itrepresentsacheckandbalancefunctionofthemarketsystem. RightsofsellersInafreeenterpriseeconomicsystem,sellersareassumedtohavecertainrights: Righttoofferforsaleanyproductstheywishinanysizeorstyle,i.emanyincludedangerousproductsifwarningsandcontrolsare provided. Righttopriceproductsanywaytheywishsolongasitdoesnotviolateantitrustlawsorgovernmentpolicies.

Mauuseasmuchmoneyastheywishtoadvertisetoinducebuyerstopurchaseanduseanymessagethatisnotmisleadingordishonest. Mayuseanybuyingincentiveprogramthatisnotcontrarytolaw.Buyersrights Righttobuyornotbuyastheychoose. Righttoexpectproductstobesafeandtoexpecttheproducttobewhatthesellertellsthemitwill be.Attheheartoftheconsumermovementisanattempttoexpandthetraditionalrightsandpowersofbuyersandtomakethe maneffectivecounterbalancetotherightsandpowersofsellers.In1962AmericanPresidentJohnF.Kennedyinaspecialmessa getocongress,outlinedfourbasicconsumerrightsthatshouldbeguaranteedbylawifnecessary.Itwascompiledastheconsume rbillofrights. 1Therighttosafetytobeprotectedagainstthemarketingofgoodswhicharehazardoustohealthorlife. 2Therighttobeinformed tobeprotectedagainstfraudulent,deceitfulorgrosslymisleadinginformation,advertising,labellingorotherpracticesandtob egiventhefacts(needed)tomakeaninformedchoice. 3Therighttochoose tobeassured,wheneverpossibleaccesstoavarietyofproductsatcompetitivepricesandthoseindustrieswherecompetitionisn otworkableandgovernmentregulationissubstitutedtobeassuredsatisfactoryqualityandserviceatfairprices. 4Therighttobeheard tobeassuredthatconsumerinterestswillreceivefullandsympatheticconsiderationinformulatingofgovernmentpolicyandfa irandexpeditionstreatmentinitsadministrativetribunals. FourBasicRightsofaCustomer 1Righttosafety 2Righttobeinformed 3Righttomakeachoice 4Righttobeheard WhatBusinessOweCustomers 1Qualityproductsandoffairvalue. 2Productsthatsatisfyreasonableexpectations. 3Fulldisclosureofproductsspecifications. 4TruthfulandHonestadvertisementofproducts. 5Safeproductsandwarningofpossibledangers. ExamplesofConsumerProblems 1Misleadinginformation 2Absenceofreliableinformationaboutgoodsandservices. 3Highpricesofmanyproducts. 4Poorqualityproducts. 5Failureofcompanytoliveuptotheirpromises. 6Misleadingpackagingorlabelling. 7Inadequateguaranteeandwarrants. 8Theconsumernotknowingwhattodowhentheproductisfaultyorwrongorexpired. AdvertisementsCriticsagainstAdvertisements 1Exaggerationinformation(some)maynotbenecessary. 2Increasespriceofproduct. 3Misleading 4Cancausecustomerstobuywhattheydidntintendtobuy.

Benefits 1Creatingawareness 2Entertainment 3Clearaccurateandeducativeinformation 4Createsemployment. 5Increasesstandardoflivingthroughawarenessandcustomersatisfaction. 6Qualityimprovementasaresultofcompetition. 7Reductionof/betterprices 8Providesvarietytocustomerstherearemanysimilarproductsadvertised(comparisonbuyingisenhanced) AbusesinAdvertisements 1Therecouldbeconcededfactsinwhichcasetheadvertisementscouldnotbetellingthetruthorcouldbehidingsomefacts. 2Ambiguousadvertisingunclearadvertisementsmeansdifferentthings. 3Psychologicalappeals someadvertisementsdesignedtopersuadethecustomersonthebasisofhumanemotionsandemotionalneedsinsteadofreasoni ng. 4Exaggeratedclaimssomeproductsdontachievewhattheyaresaidtoachieve,inadvertisements. C)RelationshipofFirmtoCompetitorsAcompetitorisordinarilynotanenemybutarival. Howshouldbusinesspeopletreatcompetitors? 1. Nobusinesspersonshouldgivecustomerinformationaboutacompetitorwiththeaimofdestroyingthem.Inthefollowingc ircumstances,however,youcangivesuchinformation: Tostopacompetitorfromusingunfairpractices. Topreventacompetitorfromcheatingorharmingaconsumer 2. Competitorsshouldenjoyfaircompetitioninregardtopricing,advertisingetc. D)RelationshipoffirmtoStockholdersStockholdershavethefol lowingresponsibilities 1Helptosupportleisureclass. 2Provideresourcesfornoncommercialinstitutionalactivities. 3Theycanformareserveofliquidpropertytoprovideforoldage. Responsibilitiesoftheorganization/firmtothestockholders/rights: 1Rightoffullinformationaboutcompensationtogetherwiththeinformationaboutitspotentialimpactonearningsandthevalu eofstock. 2Righttoinformationaboutdividendsandretailedearningsandthevalueforstock. 3Righttohavethereportphrasedinawaythatanordinarystockholdercanunderstandandmakesomeintelligentjudgment. E)RelationshipofFirmtoDealersThedealerhasthef ollowingrights: 1Toobtaingoodsontimewhenordered.

2Contractsshouldbehonoured. 3Righttochasetheproducts. 4Rightforfairprices 5Rightforfulldisclosureaboutproducts. F)RelationshipofFirmtoSuppliersThesuppliershaveresponsibilitiestothecompanyandrightsaswell.Theseresponsibilitie sinclude: 1Responsibilitytosupplytherightquantityattherighttime. 2Paymentsshouldbeprompt. 3Thesuppliershouldnotbreachthecontract. 4Suppliersdeservefair. G)BusinessandthepollutedenvironmentRelevantquestio nsare: Whyshouldwebeconcernedaboutpollution? WhatshouldbethenationalconcerninKenya? WaterpollutionWatercanbesaidtobepollutedwhenitisunclean.Manypeopledisagreewiththis.Chemicalengineersargueth atwaterispollutedwhenithaslowoxygencontent.CausesofWaterPollution 1Sedimentsfromlanderosion. 2Mineralsandchemicalsfromtheindustries. 3Radioactivesubstances. 4Organicchemicals 5Domesticsewageandotheroxygendemandingwastes 6Petroleumcompounds 7Agriculturewaste Effects 1Diseases 2Deathofplantsandanimals 3Reductionofsafedrinkingwater AirPollutionCauses/sourcesTheyareeithermanmadesourcesornaturalcauses Manmadesources 1Industrialprocessesgasemissione.g.sulphuroxide,nitrogenetc. 2Transportation 3Solidwastedisposal Naturalsources 1Volcaniceruptions 2Cyclonesandtornados 3Smokeparticlesfromforestfires 4PollengrainsParticularPollutants 1Dusteithermanmadeornatural 2Fumesfromindustries 3Mistandfog

4Smokeparticlefoundasaresultofincompletecombustion.ItcouldbemanmadeornaturalEffects 1Economiclossesdamagetoproperty,rust(e.g.acidrain)rot,discoloration,affectvegetation(e.g.frost) 2Increasedrisksofaccidents. 3Causediseasese.g.asthma,bronchitis,etc. 4Effectondomesticanimals 5Affectsthepsychologyofpeople. ClassificationPollutantsareeither:Primaryemittedtotheatmosphere.Secondaryformedintheatmosphere Whatcanbedonetocheckpollution?Thegovernmentshouldcomeupwithantipollutionpoliciesandensuretheyarefollowed.NoisepollutionCauses/sources 1Factories 2Automobiles 3Clubsloudmusic * Somearemanmade(industries)whileotherse.g.thunderisnatural. Effects 1. Impairshearinginthelongrun(damageeardrums) Solutiontotheproblemofnoisepollution 1Useofsoundproofwallsinindustries. 2Replacingoldmachines 3Provideemployeesinnoisyindustrieswithearplugs. 4Interruptthepathofnoisebyusingawalletc. CommunitynoisecontrolSourcesofcommunitynoisearefrom: 1Aircraft 2Traffic(highwaytraffic)hooting,exhaustnoise 3Construction Controlofhighwaynoises 1Makingquietervehicles 2Highwayscouldberoutedawayfrompopulatedareas. 3Loweringspeedlimits. 4Divertingtheflightpathsawayfromthepopulatedareasandwhenevernecessarytohavepilotsuselessthanmaximumpower whenthetakeoffcarriesthemoveranoisesensitivearea. 5Manufacturersshouldproducequieteraircrafts. 6InstallaircompressorsSolidwasteThisinclude:a)Domesticwaste foodwaste,rubbish,cans,glass,paper,plastic.b)Commercialwaste agriculturewaste,abandonedvehicles,constructionrubble. DangersofSolidwaste 1Causediseasesthereareatleast22diseasescausedbysolidwaste. 2Killplantsandpreventothersfromgrowing 3Accidentse.g.tinsandglass.

Solidwastemanagement 1Collectionprivateorpubliccollectors(e.g.towncouncils,municipalcouncils). 2Disposalburning,reducingthevolumethatyoudispose. 3Compostpits. 4Recoveryrecycling,usingthemforotherpurposes. Solidwasteproblemsshouldbeattackedfrombothendsthesourceandthedisposalmethods.

AdvantagesofCorporateSocialResponsibility 1Improvesthefirmspublicimage 2Meetsthepublicsexpectations 3Fulfilsitsethicalobligationtosociety 4Givesbusinessachancetosolvesocialproblems 5Createsabetterenvironmentforall 6Placestheresourceswheretheproblemsarefinancialandnonfinancial 7Createsabalancebetweenresponsibilityandpower 8Profitsthefirminthelongruni.e.buildsasustainableclientele 9Avoidsconflictwiththegovernmenti.e.itregulatesitself 10Businessescontributetosocialproblemssoitisonlyfairthattheyhelpsolvethem. DisadvantagesofCorporateSocialResponsibility 1Givesbusinesstoomuchpower 2Violatestheprofitmaximizationprinciple 3Businesslacksthenecessarysocialskills 4Costsofsocialresponsibilityincreasepricesi.e.nobenefittotheclientbecauseheshouldersthecosts 5Itisadiversionoforganizationalgoals 6Canmakeagovernmentcomplacent(layback)initsroleofofferingsocialservices 7Fostersorcreatesunfaircompetitioni.e.thesocietytendstorespondbettertothosefirmswhocanaffordtosethugesumsofmon eyapartforcommunityprojects 8Businessesarenotaccountabletothesocietybuttotheirshareholders 9Returnsoccurringasaresultofcorporatesocialresponsibilitiescannotbemeasured/quantified. Week 11

Topic 20 20.0: SocialResponsibility&ManagementFunctions

Lectureobjective Bytheendofthislecture,youshouldbeableto: Discussocialresponsibilityandmanagementfunctions AnalyzeSocialResponsibilityIssues Outlinecurrentmodelofsocialaudit IdentifySpecialProgram UnderstandcorporateSocialResponsiveness

DefinitionofSocialForecastingItisasystematicprocessofidentifyingsocialtrendsandtheirunderlyingattitudes,analyzingth esesocialchangesfortheirrelevancetotheorganizationandintegratingthesefindingswithotherforecast.Manyfirmstodayha verecognizedtheneedforforecastingsocialtrendsinthesocietyandhavemobilizedtheirplanningenergiesinthisdirection. 20.1 Socialforecastingisinfourphases: 1Recognitionofneed usuallydonebythetopmanagement.Ithelpsthemintheirplanningeffortandtheyareabletoutilizeeconomicandtechnological forecast. 1. 2. Assessment managementassessesthetrendsinsocialenvironmentintermsoftheirrelevancetotheorganization. 2. Italsoinvolvesthedesignandutilizationofamethodologybywhichdevelopmentinthesocialenvironmentcouldb eidentifiedandappraisalastheirpotentialrelevancetothefirmsoperations. 2Analysis thiswouldnecessitatethatthisdevelopmentbesubjectedtoapenetratingthoroughanalysisaimedatdeterminingtheprobablec onsequencesandimpactonthefirm. 3Implementationrequirethatthesocialfocusbeintegratedintothestrategicplanningfunctionoftheenterprise. 20.2 Evidenceshowingthatmanyorganizationshaveinstitutionalizedsocialforecasting Acompanythathasformalizedsocialforecastingshouldhavethefollowing: 1Itmustidentifysocialtrendsandanalyzesocietalchangeforrelevancetotheorganizationonformalbasis. 2Thefindingsofthesocialforecastingeffortareintegratedwithotherforecasts. 3Thechiefexecutiveisperceivedbyorganizationmembersashavingapersonalconvictionwhichrecognizesthatthesocialenv ironmenthasagreatimpactontheorganization. 4Thetimehorizonusedforforecastingsocialtrendscoverfiveormoreyears. 5Differenttimehorizonswillbeusedintheidentificationanalysisandintegrationphasesofthesocialforecastingprocess. 6Itwilluseinternaltechniquestosupplementtheexternalidentificationofsocialchange. 7Theanalysisofsocialtrendstogetorganizationalrelevancemakesuseofmultipleinternaltechniques. 8Multipletechniqueswillbeimplementedtodevelopapriorityassessmentoffuturesocialdemandsandissues. 9Theprocessisdirectedbyapersonreportingdirectlytotheexecutive,deputyGM,GM,orChairmanoftheboard. 10Socialforecastisdevelopedbyseveral(atleast3forecasts)inthesamedepartment. 11Managerialpersonnelfromatleast3differentdepartmentswillassistinformulatingthesocialforecast. 20.3 Organizingforsocialresponsibility Theorganizingfunctionismoreconcernedwithcreatingastructuralframeworkwithinwhichplanscanbecarriedoutandgoals achieved.Therefore,itinvolvesgroupingmanagersandworkersintorelationshipsthatmosteffectivelygettheworkdone.Som ecompaniesappointasocialresponsibilitymanagerandothersacorporateresponsibilityofficer.AnalyzingSocialResponsibi lityIssuesAsoneanalysisthesocialresponsibility,heshould: 1Identifyanddefineperformancecategoriesrelevanttothesocialresponsibilityreviewofthecompany. 2Brieflyreviewperformanceacrossallactivitycategoriesinordertoidentifyareasofhighopportunityandtogetanoverviewfo rresourceallocationdecisionsthatmustbemadelater. 3Selectthemostcriticalactivityareaandpreviewperformanceindepthinthem. 4Developabasicstrategyforeachactivityarea. 5Setspecificbutrealisticobjectivesfornewprogramsorforrevisionsinexistingactivities. 6Develop,implementandmonitortheneworrevisedprograms. 7Integratethisprocess/approachintothebasicmanagementprocess.

Variablethatshowshowacompanyorganizesitssocialactivityefforts 1Thequalityofpersonnelinvolved. 2Thedegreeoftheircommitmenttothesocialresponsibilityissues. 3Theirabilitytosecuretheirlinemanagementinputandsupportforpolicychanges. 4Theircapacitytofollowthroughanimplementingnewprogramsetc. PossibleapproachesinorganizingSRefforts 1Theofficer:ThefirmappointinganofficertolookintoSR.Hemustbeinareasonablyhighlevelposition.Wellrespectedandsu pportedbythestaff.Sometimestherecouldberotationdependingonthepolicyofthecompanycouldbe2years,5yearsetc. 2Thetaskforce:Thetaskforceshouldbecarefullyselected.Theymustgetpeoplewhoareknowledgeableinvariouskeyoperati ngelementsofthebusiness.Drawingmanypeopletogetherisagoodwayofgettingsomethingstarted. 3Thepermanentboardcommittee:Membersneedalotofsupportbecausetheyarenotemployeesoftheorganization.Unlessthe yaregivenallthesupportandrelevantinformationtheymayfailinsettingtheprograms.Therateofprogressmightalsobeverysl ow. 4Permanentmanagementcommittee:Consistsofemployeesofthatfirmbutmoresowiththetopmanagement. 5Permanentorganizationgroup:Agroupthatcontinuouslyengagesinanalyzing,resolvingandrespondingtocorporatesocial responsibilityissues.Itsadvantageisthatovertime,itcanbuildupstrongercommunicationlinesthananyotherapproach.Their disadvantageisthattheycaneasilydriftfromthemainstreamofactivityandbecomenarrowlyfocusedonanissue. 20.4 Controlfunction Socialperformancecanbeassessedthroughthesocialaudit.CurrentmodelofsocialauditIthasquiteanumberofelements: 1Definitionmeasurementofcompanysprogresstowardssocialgoals. 2Purposethefirmsevaluationofitssocialperformance. 3. Apparentmotive Satisfyingthecorporateconscience Improvingfinancialwisdomofsocialprograms Publicrelations Enhancecredibilityofthebusinessfirm 4. Natureofissuesaudited Companyperformanceinminorityemployment. Pollutionoftheenvironment Workingconditions Communityrelations Consumerismissues 3Useofsocialaudit therearetwoschoolsofthought.One,itshouldonlybeformanagementuse.Two,itshouldbeapublicdocument. 4Methodology monetarymeasuringandappraisingallaspectsofsocialperformanceusingvarioustechniquese.g.costbenefitanalysis. 5Bywhoitshouldbeconductedaconsultantorinternal. 20.5 Formatofasocialperformancereport Thereporthastwoparts: 1Mainstreamissues 2Specialprogram MainstreamIssues 1Whatarethekeypublicissuesfacingthecommunity? 2Whichoneshavethegreatestpotentialtoadverselyaffectprofitabilityandwhichonespresentsomemarketingopportunities. 3Whataretheproblemsencounteredandprogressmadeduringthepreviousyearindealingwitheachmajorissue? 4Inrelationtothecompetitors,whatistheirpositioninpublicpolicyarea?

20.6 Specialprogram Thispartshouldpresentsolutionto: 1Howmuchdoourspecialsociallyorientedprogramcosttheorganizationcomparedtoalternativeusesoffunds? 2Arethesespecialprogramsmeetingtheirsocialobjectives? 3Aretheylikelytoprovidealongrangetotheorganization? 20.7 Corporatesocialresponsiveness Corporatesocialresponsivenessmeansknowinghowtomanageacompanysrelationswithexternalsocial,politicalandgover nmentforcesthatcanaffectthecompanyperformance.Thefirmtriestointeractwithhersurroundingsocialenvironmentinway sthatwillbemutuallybeneficialtothecompanyandthesociety. Businessfirmsrespondtoexternalsocialchangeindifferentways.Therearethreemainapproachesthatarecommonlyusedbyc ompanies: 1AdaptiveStrategy:Itspracticedbyfirmschangeonlyafterforcedtodosobystrongoutsidepressures.Thefirmchangesafters omesignificantsocialchangeisalreadyunderway. 2ProactiveStrategy:Firmsmanipulatetheenvironmentinwaysthatwillbetotheiradvantage.Thesefirmsseektobeontopofw hateverchangesthatisoccurringintheirenvironment. 3InteractiveStrategy:Firmstriestofindwaystoharmonizeacompanysowngoalswiththechangingneedsandexpectationsof thepublic.

21.0: ConsumerEthicsandSocialResponsibility
Thesocietalmarketingconceptstressesmarketingsocialresponsibilitybynotonlysatisfyingtheneedsofconsumersbutalsopr ovidingforsocialresponsibility.Howeveragreementonthenatureandscopeofsocialresponsibilityisoftendifficulttocomeb ygiventhediversityofvaluespresentindifficultsocietal,businessandorganizationalcultures. 21.1 NatureandSignificanceofMarketingEthics Ethicsarethemoralprinciplesandvaluesthatgoverntheactionsanddecisionsofanindividualorgroup.Theyserveasgui deonhowtoactnightlyandjustlywhenfacedwithmoraldilemmas.

Agoodstartingpointforunderstandingthenatureandsignificanceofethicsisthedistinctionbetweenlegalityandethicalityofb usinessdecisions.Whileethicsdealwithpersonalmoralprinciplesandvalues.Lawsaresocietysvaluesandstandardsthataree nforceableincourts.Thisdistinctioncansometimesleadtorationalizationthatifabehaviouriswithinreasonableethicalandleg allimits,thenitisnotreallyillegalorunethical.Butwhatarethelimits?

ffd8ffe000104a4649460001020100c800c80000ffe20c584943435f50524f46494c4500010100000c484c696e6f02100 0006d6e74725247422058595a2007ce00020009000600310000616373704d534654000000004945432073524742000 0000000000000000000000000f6d6000100000000d32d4850202000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000001163707274000001500000003364657363000001 840000006c77747074000001f000000014626b707400000204000000147258595a00000218000000146758595a0000 022c000000146258595a0000024000000014646d6e640000025400000070646d6464000002c4000000887675656400

00034c0000008676696577000003d4000000246c756d69000003f8000000146d6561730000040c0000002474656368 000004300000000c725452430000043c0000080c675452430000043c0000080c625452430000043c0000080c746578 7400000000436f70797269676874202863292031393938204865776c6574742d5061636b61726420436f6d70616e79 0000646573630000000000000012735247422049454336313936362d322e3100000000000000000000001273524742 2049454336313936362d322e31000000000000000000000000000000000000000000000000000000 UnethicalIllegalLegalityLegal Therehasbeenpublicoutcryaboutethicalpracticesofbusinesspeople.InUnitedStatespublicopinionsurveysshowthat58%a dultsratetheethicalstandardsofbusinessasonlyfairorpoor&90%thinkwhitecollarcrimesisverycommon. 21.1.2 Factorsthatinfluencebusinessethicalbehaviour ffd8ffe000104a4649460001020100c800c80000ffe20c584943435f50524f46494c4500010100000c484c696e6f02100 0006d6e74725247422058595a2007ce00020009000600310000616373704d534654000000004945432073524742000 0000000000000000000000000f6d6000100000000d32d4850202000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000001163707274000001500000003364657363000001 840000006c77747074000001f000000014626b707400000204000000147258595a00000218000000146758595a0000 022c000000146258595a0000024000000014646d6e640000025400000070646d6464000002c4000000887675656400 00034c0000008676696577000003d4000000246c756d69000003f8000000146d6561730000040c0000002474656368 000004300000000c725452430000043c0000080c675452430000043c0000080c625452430000043c0000080c746578 7400000000436f70797269676874202863292031393938204865776c6574742d5061636b61726420436f6d70616e79 0000646573630000000000000012735247422049454336313936362d322e3100000000000000000000001273524742 2049454336313936362d322e31000000000000000000000000000000000000000000000000000000 Personalmoralphilosophy&Ethicalbehaviour Researchershaveidentifiedthefollowingasthemajorcategoriesoffactorsthatinfluenceethicalbehaviour. 1SocietalCulture&Norms:Culturereferstothesetofrefers,ideas&attitudesofahomogenousgroupofpeoplethataretransmitt edfromonegenerationtothenext.Cultureaffectsethicalrelationshipsbetweenindividuals,groupsandtheorganizationsandin stitutionstheyform.Inthisway,cultureservesasthesocializingforcethatdictateswhatismorallyrightandjust.Thismeansthat moralstandardsarerelativetoparticularsocietyse.g.inWesterncountriescopyrights,trademarksandpatentsareveryimport antandunethicalandillegaltocopy.IntheEasternCountrieslikeKorea.Taiwan&Mexicocopyingisacceptable. 2BusinessCultureandPractices:Businessculturecomprisestheeffectiverulesofthegame,theboundariesb/ncompetitiveand unethicalbehaviourandthecodeofconductinbusinessdealings.Businesscultureaffectsethicalconductbothinexchangerelat ionshipb/nsellersandbuyersandincompetitivebehaviouramongsellers. EthicsofCompetition:TwokindsofUnethicalbehaviouraremostcommoninethicsof competitions. a)IndustrialEspionage:IstheclandestinecollectionoftradesecretsorproprietaryInformationaboutcompanycompetiti ons.ThispracticeismostprevalentinhightechnologyindustrieswheretechnicalknowhowandsecretsseparateIndustryleadersfromfollowerse.g.Electronics,pharmaceuticalsetc. b)Thesecondformofunethicalcompetitivebehaviourisgivingandreceivingbribesandkickbacks.Theseareoftendisgu isedasgifts,consultantfees,andfavour. 1OrganizationCultureandExpectations:corporateculturereflectsthesharedvalues,beliefs,andpurposesofemployeesthata

ffectindividualandgroupbehaviour.Corporate/organizationalcultureofacompanycanbedemonstratedinthedressingcode, mannerofwork,employeerelationship,companycodeofethics&ethicalbehaviourofmanagementandcoworkers. 2PersonalMoralPhilosophyandEthicalBehaviour:Ethicalchoicesarebasedonthepersonalmoralphilosophyofthedecision maker.Moralphilosophyislearnedthroughtheprocessofsocialization withfriendsandfamily,andbyformaleducation.Itisalsoinfluencedbythesocietal,businessandcorporatecultureinwhi chapersonfindshimorher. 21.2 Consumerethicsandsocialresponsibility Consumeralsohasanobligationtoactethicallyandresponsibilityintheexchangeprocessandintheuseanddispositionofprodu cts. Unethicalpracticesofconsumersareaseriousconcerntomarketers.Theseincludefilingwarrantyclaimsaftertheclaimperiod, misredeemingcoupons,makingfraudulentreturnsofmerchandise,recordingcopyrightedmusic,video,cassettesorcompute rsoftwareetc.Thecosttomarketersislostsalesrevenueandpreventionexpensesarehuge. SUMMARY Inthischapter,wehavestudiedcorporatesocialresponsibilitytounderstanditandtolearnhowourbusinesscanoccasionallyus edsomeoftheirresourcestomakedifferential,positiveimpactsonoursociety.Wealsolookedatbusinessethicstogainanappre ciationfortheimportanceofmaintainingandpromotingsocialvaluesintheworkplace.