Chapter_5_Study_Notes - Chapter 5 Ethics and Social...

Chapter 5
Ethics and Social Responsibility
Chapter Outline
I. What Is Managerial Ethics?
II. Criteria for Ethical Decision-making
A. Utilitarian Approach
B. Individualism Approach
C. Moral-Rights Approach
D. Justice Approach
III. Factors Affecting Ethical Choices
A. The Manager
B. The Organization
IV. What Is Social Responsibility?
V. Organizational Stakeholders
VI. The Ethic of Sustainability and the Natural Environment
VII. Evaluating Corporate Social Performance
A. Economic Responsibilities
B. Legal Responsibilities
C. Ethical Responsibilities
D. Discretionary Responsibilities
VIII. Managing Company Ethics and Social Responsibility
A. Ethical Individuals
B. Ethical Leadership
C. Organizational Structures and Systems
IX. Ethical Challenges in Turbulent Times
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Annotated Learning Objectives
After studying this chapter, students should be able to:
1. Define ethics and explain how ethical behavior relates to behavior governed by law and
free choice.
Ethics is difficult to define in a precise way. In a general sense, ethics is the code of moral
principles and values that govern the behaviors of a person or group with respect to what is
right or wrong. Ethics sets standards as to what is good or bad in conduct and decision-
making.
Human behavior falls into three categories. The first is codified law, in which values and
standards are written into the legal system and enforceable in the courts. The domain of free
choice is at the opposite end of the scale and pertains to behavior about which law has no
say and for which an individual or organization enjoys complete freedom. Between these
domains lies the area of ethics. This domain has no specific laws, yet it does have standards
of conduct based on shared principles and values about moral conduct that guide an
individual or company.
2. Explain the utilitarian, individualism, moral-rights, and justice approaches for evaluating
ethical behavior.
Normative ethics uses several approaches to describe values for guiding ethical decision-
making.
Utilitarian approach. Holds that moral behaviors produce the greatest good for the greatest
number. In this approach, a decision maker is expected to consider the effect of each
decision alternative on all parties and select the one that optimize the satisfaction for the
greatest number of people.
Individualism approach. Also called egoism, contends that acts are moral when they
promote the individual’s best long-term interests. Individuals calculate the best long-term
advantage to themselves as a measure of a decision’s goodness. The action that is intended
to produce a greater ratio of good to bad for the individual compared with other alternatives
is the right one to perform.
Moral-rights approach. Asserts that people have fundamental rights and liberties that cannot
be taken away by an individual’s decision. Thus, an ethically correct decision is one that
best maintains the rights of those affected by it.