What is Moral intensity ? (degree to which people see an issue as an ethical one; the greater the moral intensity, the greater the sense of ethical obligation) 6 components of M.I. Magnitude of consequences: the anticipated impact resulting from an action (e.g., having to lay off 100 vs.1000 employees). Social consensus: the extent to which people agree that an act is either good or bad (e.g., speeding vs. drunk driving). Probability of effect: the likelihood that an action will result in a specific adverse consequence (e.g., cigarette ads & smoking). Temporal immediacy: a function of the interval between the time the action occurs and the onset of its consequences (e.g., industrial pollution & global warming). Proximity: the physical, psychological, and emotional closeness the decision maker feels to those affected by the decision (e.g., closing a local factory vs. one in foreign country). Concentration of effect: the extent to which consequences are focused on a few individuals or dispersed across many (e.g., laying off workers in a small town vs. a large city). Efficiency vs. Social Responsibility perspectives Efficiency Perspective - Looks to maximize profits for the owners of the business. Social Responsibility Perspective - Firms have obligations to a diverse array of stakeholders that go beyond making a profit; Companies are expected to “give back” to communities, protect the environment, and promote social justice; Divest from countries that fail to respect basic human rights. Milton Friedman – biz of biz is biz In 1970, Nobel Prize-winning economist Milton Friedman put forth the “Friedman Doctrine.” Business has only one social responsibility: to create profits. “The business of business is business.” Shareholders vs. stakeholders Primary stakeholders are people or groups formally linked to the organization (employees, customers, and suppliers). Secondary stakeholders are people or groups not formally linked to the organization, but affected by its behavior nonetheless (e.g., local communities, activist groups). How firms respond to pressures for social responsibility: (Defenders, Accommodators, Reactors, Anticipators)
Ways in which companies promote ethical conduct Codes of ethical conduct - A formal statement that outlines types of behavior that are and are not acceptable. 1-3 pages Whistleblower statutes An employee who discloses illegal or unethical conduct on the part of others in the firm. Misconduct poses a threat to the public interest and may involve fraud, health and safety violations, and corruption. Whistleblowers are typically NOT disgruntled employees or seekers of $ and notoriety. Ways governments promote ethical behavior Governments try to foster ethical behavior through anti-corruption laws and initiatives.
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- Fall '09