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© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 McGraw-Hill/ Irwin Chapter Chapter Four Four Demonstrating Demonstrating Ethical Behavior Ethical Behavior & & Social Social

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Page 1: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-1McGraw-Hill/ Irwin

Chapter Chapter FourFour

Demonstrating Demonstrating Ethical Behavior &Ethical Behavior &

Social Social ResponsibilityResponsibility

Page 2: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-2McGraw-Hill/ Irwin

Page 3: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-3McGraw-Hill/ Irwin

What Is an Ethical What Is an Ethical Dilemma?Dilemma?

Choice AAdvance one’s own

interests at the expense of others

Decision Maker is facedwith two choices

Choice BForfeit a self-serving opportunity to protect the welfare of others

Page 4: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-4McGraw-Hill/ Irwin

Classifying Classifying Business Business DecisionsDecisions

EthicalEthical

UnethicalUnethical

IllegalIllegal LegalLegal

Unethical Unethical and and

IllegalIllegal

Ethical Ethical and and

LegalLegal

Unethical Unethical but but

LegalLegal

Ethical Ethical but but

IllegalIllegal

Page 5: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-5McGraw-Hill/ Irwin

Factors That Cause Factors That Cause WorkersWorkers

To Act UnethicallyTo Act Unethically

Pressure to meet sales, Pressure to meet sales, budget or profit goalsbudget or profit goals

Lack of recognitionLack of recognition Personal financial Personal financial

worriesworries Balancing work & familyBalancing work & family Poor communicationPoor communication

Page 6: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-6McGraw-Hill/ Irwin

Top Five Top Five Unethical/IllegalUnethical/Illegal

Behaviors of WorkersBehaviors of Workers

Cut corners in quality controlCut corners in quality control Covered up incidentsCovered up incidents Abused or lied about sick daysAbused or lied about sick days Lied to or deceived customersLied to or deceived customers Put inappropriate pressure on Put inappropriate pressure on

othersothers

Page 7: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-7McGraw-Hill/ Irwin

Factors Influencing Factors Influencing

Managerial EthicsManagerial Ethics

IndividualIndividual OrganizationalOrganizational EnvironmentalEnvironmental

ValuesValuesWork Work BackgroundBackground

Family StatusFamily Status

PersonalityPersonality

Top Level Top Level Mgmt. PhilosophyMgmt. Philosophy

The Firm’s The Firm’s Reward SystemReward System

Job DimensionsJob Dimensions

CompetitionCompetition

Economic Economic ConditionsConditions

Social/Cultural Social/Cultural InstitutionsInstitutions

Page 8: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-8McGraw-Hill/ Irwin

Levels of Moral Levels of Moral DevelopmentDevelopment

PreconventionalPreconventional

Conventional Conventional

Post-conventional (principled)Post-conventional (principled)

Page 9: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-9McGraw-Hill/ Irwin

What Really Works?What Really Works?Workplace Deviance

(Counterproductive Behaviors)

Overt Integrity Tests & Workplace Deviance

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Personality-Based Integrity Tests & Workplace Deviance

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Probability of success 82%

Probability of success 68%

Page 10: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-10McGraw-Hill/ Irwin

What Really Works? What Really Works? ((Cont’d.)Cont’d.)

Job Performance

Overt Integrity Tests & Job Performance

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Personality-Based Integrity Tests & Job Performance

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Probability of success 70%

Probability of success 69%

Page 11: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-11McGraw-Hill/ Irwin

What Really Works? What Really Works? ((Cont’d.)Cont’d.)

Theft

Overt Integrity Tests & Job Performance

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Probability of success 57%

Page 12: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-12McGraw-Hill/ Irwin

Ethical Decision Ethical Decision Making ApproachesMaking Approaches

UtilitarianUtilitarian

Individual RightsIndividual Rights

Justice ApproachJustice Approach

Page 13: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-13McGraw-Hill/ Irwin

Fostering Ethical Fostering Ethical BehaviorBehavior

Leading by ExampleLeading by Example Codes of ConductCodes of Conduct

– Compliance-basedCompliance-based– Integrity-BasedIntegrity-Based

Training ProgramsTraining Programs Protecting WhistleblowersProtecting Whistleblowers

Page 14: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-14McGraw-Hill/ Irwin

Johnson & Johnson Johnson & Johnson Corporate CredoCorporate Credo

WE BELIEVE THAT THAT OUR WE BELIEVE THAT THAT OUR RESPONSIBILITY IS:RESPONSIBILITY IS:

To the health care professionals who To the health care professionals who use our products and servicesuse our products and services

To our employeesTo our employees To the communities in which we operateTo the communities in which we operate To our shareholdersTo our shareholders

Page 15: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-15McGraw-Hill/ Irwin

Corporate Social Corporate Social Responsibility: Two Responsibility: Two

PerspectivesPerspectives

Classical View (Shareholder View)Classical View (Shareholder View)

Socioeconomic View (Stakeholder Socioeconomic View (Stakeholder View)View)

Page 16: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-16McGraw-Hill/ Irwin

Three Levels of Three Levels of Social ResponsibilitySocial Responsibility

Societal ResponsibilitySocietal Responsibility

Stakeholder ResponsibilityStakeholder Responsibility

Profit ResponsibilityProfit Responsibility

Owners/StockholdersOwners/Stockholders

GeneralGeneral

PublicPublicCustomersCustomers EmployeesEmployees

Suppliers/DistributorsSuppliers/Distributors

EcologicalEcological

EnvironmentEnvironment

Public Interest GroupsPublic Interest Groups

Source: Source: MarketingMarketing, 5/E by Berkowitz, Kerin, Hartley, and Rudelius., 5/E by Berkowitz, Kerin, Hartley, and Rudelius.

Page 17: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-17McGraw-Hill/ Irwin

Contributions to Contributions to CharityCharity

(In Billions of Dollars)(In Billions of Dollars)

$9$10

$120

$12Individuals

Foundations

Bequests

Corporations

Source: Forbes Dec. 15, 1997

Page 18: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-18McGraw-Hill/ Irwin

New Economy & New Economy & New PhilanthropyNew Philanthropy

Foundation Donation

Bill & Melinda Gates Foundation $21.8*

Ford Foundation 13.1

Packard Foundation 13.0

Lilly Foundation 11.2

Robert Wood Johnson Foundation 8.3**In BillionsIn Billions

Source: Source: Business WeekBusiness Week, Mar. 13, 2000, Mar. 13, 2000

Page 19: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-19McGraw-Hill/ Irwin

Corporate Annual Corporate Annual GivingGiving

MerckMerck

Johnson & JohnsonJohnson & Johnson

PfizerPfizer

Eli LillyEli Lilly

IBMIBM

MicrosoftMicrosoft

IntelIntel

Bank of AmericaBank of America

$221.0* $221.0*

176.2176.2

123.9123.9

121.4121.4

116.1116.1

104.7104.7

101.0101.0

91.591.5Source: The Taft Group * In Millions* In Millions

Page 20: McGraw-Hill/ Irwin © 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved. 4-1 Chapter Four Demonstrating Ethical Behavior & Social Responsibility

© 2002 by The McGraw-Hill Companies, Inc. All Rights Reserved.

4-20McGraw-Hill/ Irwin

Why Do Business Firms Why Do Business Firms Support Social Causes?Support Social Causes?

Genuine altruism and social Genuine altruism and social consciousnessconsciousness

Strategic philanthropyStrategic philanthropy

Cause-related marketingCause-related marketing


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