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Chapter 3

Ethics and Social


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Learning Objectives
 Define ethics and understand the importance of ethical
behavior for organizations
 Discuss four perspectives on ethics and arguments for
ethical relativism and universalism
 Understand the efficiency and social responsibility
perspectives of corporate social responsibility
 Know how ethics affect individual behavior in
 Consider ways of scientifically studying organizational
 Know methods for resolving cross-cultural ethical conflicts
 Analyze your ethics and how they affect your
understanding of management and organizational
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Moral standards, not governed by

law, that focus on the human
consequences of actions

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Four Perspectives on Ethics
 Descriptive Approach
Uses methods and theories of social science
 Conceptual Approach
Focuses on the meaning of key ideas in ethics
 Normative Approach
Involves constructing arguments in defense of
basic moral positions and prescribing correct
ethical behavior
 Practical Approach
Involves developing a set of normative guidelines
for resolving conflicts of interest to improve
societal well-being

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Relativism Vs. Universalism

 Individual ethical relativism

No absolute principle of right and wrong,
good or bad, in any social situation
 Cultural ethical relativism
What is right or wrong, good or bad,
depends on one's culture
 Ethical universalism
Universal and objective ethical rules
located deep within a culture that also
apply across societies

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The Social Responsibility of
 The Efficiency Perspective
The obligation of business is to
maximize profits for shareholders
 The Social Responsibility
Managers bear a fiduciary
relationship to stakeholders

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Kohlberg’s Theory of Moral
 Stage 1 - Obedience and Punishment
Obedience to those in authority who have the
power to punish
 Stage 2 - Individualism and Reciprocity
The greatest good for the individual person
making the decision
 Stage 3 - Interpersonal Conformity
Expectations of others, including friends, family
members, and people in general
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Kohlberg’s Theory of Moral
Development (cont.)
 Stage 4 - Social System/Law and Order
Play one's role in the social system, do
one's duty, obey rules
 Stage 5 - Social Contract
“The greatest good for the greatest
 Stage 6 - Universal Ethical Principles
Principles selected freely by a person and
that the individual is willing for everyone
to live by
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Face and Ethical Behavior

 Displays an individual’s
understanding of culturally defined
moral codes as they apply to and
maintain a particular social
 Behavior that sustains the
definition of the situation supports
a person's face
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Organizational Ethics
 Internal Ethical Issues
 Discrimination
 Safety
 Compensation
 Child Labor

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Organizational Ethics (cont.)
 Cross-Cultural Ethical Issues
 Theft of Intellectual Property
 Bribery and Corruption
 Intentionally Selling Dangerous
 Environmental Pollution
 Intentional Misrepresentation in

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Studying Ethics

 Social science methods

 Study comparing U.S. and U.K.
 Corporations vary in the emphasis
on different aspects of ethics and
how they manage them
 Differences in perceptions of
corruption among countries

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Resolving Cross-Cultural
Ethical Conflicts
 U.S. approach
 Transform ethics into laws
 Global approach
 OECD views corruption in developing
countries to be particularly harmful to
their prospects for economic growth
 Convention on Combating Bribery of
Foreign Public Officials in International
Business Transactions
 Caux Round Table and the Conference
Board standards for global business
ethics and social responsibility
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Resolving Cross-Cultural
Ethical Conflicts (cont.)

 Codes of ethics
 Codify behavior that is
unacceptable under certain
 Reduce ambiguity by specifying
appropriate behavior

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Kohls and Buller’s Approaches
for Resolving Ethical Conflict
 Avoiding
One party ignores or does not deal with the
 Forcing
One party forces its will upon the other
 Education-Persuasion
One party attempts to convert others to its
position through providing information,
reasoning, or appeals to emotion

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Kohls and Buller’s Approaches
for Resolving Ethical Conflict
 Infiltration
One party introduces its cultural values to
another society hoping that an appealing
idea will spread
 Negotiation-Compromise
Both parties give up something to negotiate
a settlement
 Accommodation
One party adapts to the ethics of the other
 Collaboration-Problem Solving
Both parties work together to achieve a
mutually satisfying solution
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Values: Core and Periphery
Status Leisure

Customer satisfaction Knowledge

Society Job security

Friends Honesty
Family Worker safety
Health Freedom
Property rights
Stockholder values
Living standards
Job satisfaction
Ethics as a Competitive
Advantage in Global Business

 Ethical capability related to

perceiving interdependence,
thinking ethically, responding
 Trust as a value among
multinational corporations

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Convergence or Divergence?

 A Bureaucratic  Religious
Ethic Differences
 International  Reassertion of
Regulatory National and
Agencies Ethnic Cultures
 Diffusion of  Varying Economic
Capitalism Systems and
Worldwide Levels of

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Implications for Managers

 Develop a Framework for Evaluating

Ethical Codes and Determining
Personal Ethics
 Understand Behaviors and Ethics of
Other Societies
 Consider Approaches to Resolving
Cross-Cultural Ethical Conflicts

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