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ninth edition STEPHEN P. ROBBINS PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie Cook The University of West AlabamaThe University of West Alabama MARY COULTER 2007 Prentice Hall, Inc. 2007 Prentice Hall, Inc. All rights reserved.All rights reserved. Social Responsibility Social Responsibility and Managerial Ethicsand Managerial Ethics ChapterChapter 5 5 2007 Prentice Hall, Inc. All rights reserved. 52 L E A R N I N G O U T L I N E L E A R N I N G O U T L I N E Follow this Learning Outline as you read and study this chapterFollow this Learning Outline as you read and study this chapter. . What is Social Responsibility?What is Social Responsibility? Contrast the classical and socioeconomic views of social Contrast the classical and socioeconomic views of social responsibility.responsibility. Discuss the role that stakeholders play in the four stages Discuss the role that stakeholders play in the four stages of social responsibility.of social responsibility. Differentiate between social obligation, social Differentiate between social obligation, social responsiveness, and social responsibility.responsiveness, and social responsibility. 2007 Prentice Hall, Inc. All rights reserved. 53 L E A R N I N G O U T L I N E L E A R N I N G O U T L I N E Follow this Learning Outline as you read and study this chapterFollow this Learning Outline as you read and study this chapter. . Social Responsibility and Economic PerformanceSocial Responsibility and Economic Performance Explain what research studies have shown about the Explain what research studies have shown about the relationship between an organizations social involvement relationship between an organizations social involvement and its economic performance.and its economic performance. Define social screening.Define social screening. Explain what conclusion can be reached regarding social Explain what conclusion can be reached regarding social responsibility and economic performance.responsibility and economic performance. 2007 Prentice Hall, Inc. All rights reserved. 54 L E A R N I N G O U T L I N E (contd) L E A R N I N G O U T L I N E (contd) Follow this Learning Outline as you read and study this chapter.Follow this Learning Outline as you read and study this chapter. The Greening of ManagementThe Greening of Management Describe how organizations can go green.Describe how organizations can go green. Relate the approaches to being green to the concepts of Relate the approaches to being green to the concepts of social obligation, social responsiveness, and social social obligation, social responsiveness, and social responsibility.responsibility. Values-Based ManagementValues-Based Management Discuss what purposes shared values serve.Discuss what purposes shared values serve. Describe the relationship of values-based management to Describe the relationship of values-based management to ethics.ethics. 2007 Prentice Hall, Inc. All rights reserved. 55 L E A R N I N G O U T L I N E (contd) L E A R N I N G O U T L I N E (contd) Follow this Learning Outline as you read and study this chapter.Follow this Learning Outline as you read and study this chapter. Managerial EthicsManagerial Ethics Discuss the factors that affect ethical and unethical Discuss the factors that affect ethical and unethical behavior.behavior. Describe the important roles managers play in Describe the important roles managers play in encouraging ethical behavior.encouraging ethical behavior. 2007 Prentice Hall, Inc. All rights reserved. 56 L E A R N I N G O U T L I N E (contd) L E A R N I N G O U T L I N E (contd) Follow this Learning Outline as you read and study this chapter.Follow this Learning Outline as you read and study this chapter. Social Responsibility and Ethics in Todays WorldSocial Responsibility and Ethics in Todays World Explain why ethical leadership is important.Explain why ethical leadership is important. Discuss how managers and organizations can protect Discuss how managers and organizations can protect employees who raise ethical issues or concerns.employees who raise ethical issues or concerns. Explain what role social entrepreneurs play.Explain what role social entrepreneurs play. Describe social impact management.Describe social impact management. 2007 Prentice Hall, Inc. All rights reserved. 57 What Is Social Responsibility?What Is Social Responsibility? The Classical ViewThe Classical View Managements Managements only only social social responsibility responsibility is is to to maximize maximize profits profits (create (create a a financial financial return) return) by by operating operating the the business business in in the the best best interests interests of of the the stockholders stockholders (owners (owners of the corporation).of the corporation). Expending Expending the the firms firms resources resources on on doing doing “social “social good” good” unjustifiably unjustifiably increases increases costs costs that that lower lower profits profits to to the the owners owners and and raises prices to consumers.raises prices to consumers. 2007 Prentice Hall, Inc. All rights reserved. 58 What Is Social Responsibility? (contd)What Is Social Responsibility? (contd) The Socioeconomic ViewThe Socioeconomic View Managements Managements social social responsibility responsibility goes goes beyond beyond making making profits profits to to include include protecting protecting and and improving improving societys societys welfare.welfare. Corporations Corporations are are not not independent independent entities entities responsible only to stockholders.responsible only to stockholders. Firms Firms have have a a moral moral responsibility responsibility to to larger larger society society to to become become involved involved in in social, social, legal, legal, and political issues.and political issues. “To do the right thing”“To do the right thing” 2007 Prentice Hall, Inc. All rights reserved. 59 Exhibit 51Exhibit 51 To Whom is Management Responsible?To Whom is Management Responsible? 2007 Prentice Hall, Inc. All rights reserved. 510 Exhibit 52Exhibit 52 Arguments For and Against Social ResponsibilityArguments For and Against Social Responsibility ForFor Public expectationsPublic expectations Long-run profitsLong-run profits Ethical obligationEthical obligation Public imagePublic image Better environmentBetter environment Discouragement of Discouragement of further governmental further governmental regulationregulation Balance of responsibility Balance of responsibility and powerand power Stockholder interestsStockholder interests Possession of resourcesPossession of resources Superiority of prevention Superiority of prevention over cureover cure AgainstAgainst Violation of profit Violation of profit maximizationmaximization Dilution of purposeDilution of purpose CostsCosts Too much powerToo much power Lack of skillsLack of skills Lack of Lack of accountabilityaccountability 2007 Prentice Hall, Inc. All rights reserved. 511 From Obligation to Responsiveness From Obligation to Responsiveness to Responsibilityto Responsibility Social ObligationSocial Obligation The The obligation obligation of of a a business business to to meet meet its its economic economic and legal responsibilities and nothing more.and legal responsibilities and nothing more. Social ResponsivenessSocial Responsiveness When When a a firm firm engages engages in in social social actions actions in in response to some popular social need. response to some popular social need. Social ResponsibilitySocial Responsibility A A businesss businesss intention, intention, beyond beyond its its legal legal and and economic economic obligations, obligations, to to do do the the right right things things and and act in ways that are good for society.act in ways that are good for society. 2007 Prentice Hall, Inc. All rights reserved. 512 Exhibit 53Exhibit 53 Social Responsibility versus Social ResponsivenessSocial Responsibility versus Social Responsiveness Social Responsibility Social Responsiveness Major considerationEthical Pragmatic Focus Ends Means Emphasis Obligation Responses Decision framework Long term Medium and short term Source: Adapted from S.L. Wartick and P.L. Cochran, “The Evolution of the Corporate Social Performance Model,” Academy of Management Review, October 1985, p. 766. 2007 Prentice Hall, Inc. All rights reserved. 513 Does Social Responsibility Pay?Does Social Responsibility Pay? Studies Studies appear appear to to show show a a positive positive relationship relationship between between social social involvement involvement and and the economic performance of firms.the economic performance of firms. Difficulties Difficulties in in defining defining and and measuring measuring “social “social responsibility” responsibility” and and “economic “economic performance performance raise raise issues of validity and causation in the studies.issues of validity and causation in the studies. Mutual Mutual funds funds using using social social screening screening in in investment investment decisions decisions slightly slightly outperformed outperformed other other mutual funds.mutual funds. A A general general conclusion conclusion is is that that a a firms firms social social actions actions do do not not harm harm its its long-term long-term performance.performance. 2007 Prentice Hall, Inc. All rights reserved. 514 Exhibit 54Exhibit 54 Social InvestingSocial Investing Source: Social Investment Forum Foundation. 2007 Prentice Hall, Inc. All rights reserved. 515 The Greening of ManagementThe Greening of Management The The recognition recognition of of the the close close link link between between an an organizations organizations decision decision and and activities activities and and its its impact impact on on the the natural natural environment.environment. Global Global environmental environmental problems problems facing facing managers:managers: vvAir, water, and soil pollution from toxic wastesAir, water, and soil pollution from toxic wastes vvGlobal warming from greenhouse gas emissionsGlobal warming from greenhouse gas emissions vvNatural resource depletionNatural resource depletion 2007 Prentice Hall, Inc. All rights reserved. 516 How Organizations Go GreenHow Organizations Go Green Legal (or Light Green) ApproachLegal (or Light Green) Approach Firms Firms simply simply do do what what is is legally legally required required by by obeying obeying laws, laws, rules, rules, and and regulations regulations willingly willingly and and without legal challenge.without legal challenge. Market ApproachMarket Approach Firms Firms respond respond to to the the preferences preferences of of their their customers for environmentally friendly products.customers for environmentally friendly products. Stakeholder ApproachStakeholder Approach Firms Firms work work to to meet meet the the environmental environmental demands demands of of multiple multiple stakeholdersstakeholdersemployees, employees, suppliers, suppliers, and the community.and the community. Activist ApproachActivist Approach Firms Firms look look for for ways ways to to respect respect and and preserve preserve environment and be actively socially responsible.environment and be actively socially responsible. 2007 Prentice Hall, Inc. All rights reserved. 517 Exhibit 55Exhibit 55 Approaches to Being GreenApproaches to Being Green Source: Based on R.E. Freeman. J. Pierce, and R. Dodd. Shades of Green: Business Ethics and the Environment (New York: Oxford University Press, 1995). 2007 Prentice Hall, Inc. All rights reserved. 518 Evaluating the Greening of ManagementEvaluating the Greening of Management Organizations become “greener” byOrganizations become “greener” by Using Using the the Sustainability Sustainability Reporting Reporting Guidelines to document “green” actions.Guidelines to document “green” actions. Adopting Adopting ISO ISO 14001 14001 standards standards for for environmental managementenvironmental management Being Being named named as as one one of of the the 100 100 Most Most Sustainable Corporations in the World.Sustainable Corporations in the World. 2007 Prentice Hall, Inc. All rights reserved. 519 Values-Based ManagementValues-Based Management Values-Based ManagementValues-Based Management An An approach approach to to managing managing in in which which managers managers establish establish and and uphold uphold an an organizations organizations shared shared values.values. The Purposes of Shared ValuesThe Purposes of Shared Values Guiding managerial decisionsGuiding managerial decisions Shaping employee behaviorShaping employee behavior Influencing the direction of marketing effortsInfluencing the direction of marketing efforts Building team spiritBuilding team spirit The Bottom Line on Shared Corporate ValuesThe Bottom Line on Shared Corporate Values An An organizations organizations values values are are reflected reflected in in the the decisions and actions of its employees.decisions and actions of its employees. 2007 Prentice Hall, Inc. All rights reserved. 520 Exhibit 56Exhibit 56 Purposes of Shared ValuesPurposes of Shared Values 2007 Prentice Hall, Inc. All rights reserved. 521 Exhibit 57Exhibit 57 Survey of Stated Survey of Stated Values of Values of OrganizationsOrganizations Percentage of Core ValueRespondents Customer satisfaction 77% Ethics/integrity 76% Accountability 61% Respect for others 59% Open communication 51% Profitability 49% Teamwork 47% Innovation/change 47% Continuous learning 43% Positive work environment 42% Diversity 41% Community service 38% Trust 37% Social responsibility 33% Security/safety 33% Empowerment 32% Employee job satisfaction 31% Have fun 24% Source: “AMA Corporate Values Survey,” (), October 30, 2002. 2007 Prentice Hall, Inc. All rights reserved. 522 Managerial EthicsManagerial Ethics Ethics DefinedEthics Defined Principles, Principles, values, values, and and beliefs beliefs that that define define what what is is right right and and wrong wrong behavior.behavior. 2007 Prentice Hall, Inc. All rights reserved. 523 Exhibit 58Exhibit 58 Factors That Affect Ethical and Unethical BehaviorFactors That Affect Ethical and Unethical Behavior 2007 Prentice Hall, Inc. All rights reserved. 524 Factors That Affect Employee EthicsFactors That Affect Employee Ethics Moral DevelopmentMoral Development A A measure measure of of independence independence from from outside outside influencesinfluences vvLevels of Individual Moral DevelopmentLevels of Individual Moral Development Preconventional levelPreconventional level Conventional levelConventional level Principled levelPrincipled level Stage of moral development interacts with:Stage of moral development interacts with: vvIndividual characteristicsIndividual characteristics vvThe organizations structural designThe organizations structural design vvThe organizations cultureThe organizations culture vvThe intensity of the ethical issueThe intensity of the ethical issue 2007 Prentice Hall, Inc. All rights reserved. 525 Exhibit 59Exhibit 59 Stages of Moral DevelopmentStages of Moral Development Source: Based on L. Kohlberg, “Moral Stages and Moralization: The Cognitive- Development Approach,” in T. Lickona (ed.). Moral Development and Behavior: Theory, Research, and Social Issues (New York: Holt, Rinehart truth; dont dont hide hide or or manipulate manipulate rmation. Admitting failure and not trying to cover it up.Admitting failure and not trying to cover it up. Communicating Communicating shared shared ethical ethical values values to to employees employees through symbols, stories, and slogans.through symbols, stories, and slogans. Rewarding Rewarding employees employees who who behave behave ethically ethically and and punish those who do not.punish those who do not. Protect Protect employees employees who who raise raise ethical ethical issues issues ( (whistle-blowerswhistle-blowers) ) 2007 Prentice Hall, Inc. All rights reserved. 539 Awareness of Social IssuesAwareness of Social Issues Social EntrepreneursSocial Entrepreneurs Are Are individuals individuals or or organizations organizations who who seek seek out out opportunities opportunities to to improve improve soci
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