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 Copyright © 2012 Pearson Education, Inc.
Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter
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Hall Pearson Education, Inc. publishing as Prentice Hall 5-2
 From Obligation to Responsiveness
to Responsibility
• Social Obligation - the obligation of a business to
meet its economic and legal responsibilities and
nothing more. (maximize profits)
• Social Responsiveness - when a firm engages in social
actions in response to some popular social need.
(volunteer during natural disasters)
• Social Responsibility - a business’s intention, beyond
its legal and economic obligations, to do the right
things and act in ways that are good for society.
(continuous donation and regular volunteering at an
non profit organization)
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The Classical View
• Management’s only social responsibility is to
maximize profits (create a financial return) by
operating the business in the best interests of
the stockholders (owners of the corporation).
• Expending the firm’s resources on doing
“social good” unjustifiably increases costs that
lower profits to the owners and raises prices
to consumers.

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The Socioeconomic View
• Management’s social responsibility goes beyond
making profits to include protecting and improving
society’s welfare.
• Corporations are not independent entities
responsible only to stockholders.
• Firms have a moral responsibility to larger society to
become involved in social, legal, and political issues.
• “To do the right thing”

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Socially Responsible Investment (SRI)
Green Management
• Socially Responsible Investing (SRI)- companies
apply social and environmental criteria to
investment decisions. SRI funds usually will not
invest in companies that are involved in liquor,
gambling, tobacco, nuclear power, weapons, price
fixing, fraud.
• Green Management - managers consider the impact
of their organization on the natural environment.

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 Exhibit 5-2: Green Approaches

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 How Organizations Go Green
Managers and organizations can do many things to protect and preserve
the natural environment
• Legal (or Light Green) Approach - firms simply do what is legally
required by obeying laws, rules, and regulations willingly and without
legal challenge.
• Market Approach - firms respond to the environmental preferences
of their customers. (Biodegradable containers)
• Stakeholder Approach - firms work to meet the environmental
demands of multiple stakeholders—employees, suppliers, and the
community. (going paperless)
• Activist Approach - firms look for ways to respect and preserve the
environment and be actively socially responsible. (Ecofriendly
Resorts)

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Managers and Ethical Behavior
• Ethics is defined as principles, values and beliefs
that define what is right and what is wrong.
• High profile financial misconduct at companies
such as Enron, Worldcom, Lehman Brothers,
and others often lead us to conclude that
businesses aren’t always ethical.
• Whether someone behaves ethically or
unethically when faced with an ethical dilemma
is influenced by several variables.
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Exhibit 5-3: Factors that Determine Ethical
and Unethical Behavior

Individual
Issue Intensity
Characteristics

Stages of Ethical/Unethical
Ethical Moral Moderators
Dilemma Behavior
Development

Structural
Variables

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Exhibit 5-4: Stages of Moral Development

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Stages of Moral Development

A measure of independence from outside

influences
•Preconventional- a person’s choice of right and
wrong depends on personal consequences.
•Conventional- ethical decisions rely on living up
to the expectation of others.
•Principled- Individual’s have their own absolute
rights and often they are that regardless of
majority opinion
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Individual Characteristics
Personality and values determines whether a person
behaves ethically or not.
• Ego Strength - the strength of a person’s convictions.
People with high ego strength are likely to resist
impulses.
• Locus of Control - the degree to which a person
believes they control their own fate. People with
internal locus of control believe they control their own
destinies and have higher consistency with their moral
judgement. People with external locus of control rely
less on being moral.
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Structural Variables
• An organization’s structural design that might
influence an employee's ethical judgement.
• Examples include:
– Performance appraisal systems based on high
unrealistic target
– Focusing only on the outcome and not at the
process utilized to reach that outcome
– Rewards or recognition for ethical behavior

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 Issue Intensity
How important is an ethical issue is to an individual and
concentration of effect. Factors suggest that
•Greatness of harm: The larger the number of people harmed
•Consensus of wrong: The more agreement that the action is
wrong
•Probability of harm: The greater the likelihood that the action
will cause harm
•Immediacy of consequences: The sooner the consequences of
the action will be felt
•Proximity to victim: The closer the person feels to the victim

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Issue Intensity

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Ethics in an International Context
• Ethical standards are not universal
– Social and cultural differences determine
acceptable behaviors.
• Code of Ethics - a formal statement of an
organization’s primary values and the ethical rules it
expects its employees to follow.

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Promoting Positive Social Change
• Whistle-Blower - individuals who raise ethical
concerns or issues to others.
• Social Entrepreneur - an individual or
organization who seeks out opportunities to
improve society by using practical, innovative,
and sustainable approaches.

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