978-0134728391 Chapter 2 Part 2

Learning Objective 2-6

Discuss how businesses manage social responsibility in terms of both formal and

informal dimensions and how organizations can evaluate their social responsibility.

Managing Social Responsibility

The demands for social responsibility placed on contemporary organizations by an increasingly

sophisticated and educated public are stronger than ever. Organizations should view social

responsibility as a major challenge that requires careful planning, decision-making,

consideration, and evaluation.

A. Formal Organizational Dimensions

1. Legal Compliance: Legal compliance is the extent to which the organization conforms to

2. Ethical Compliance: Ethical compliance is the extent to which the members of the

organization follow basic ethical (and legal) standards of behavior.

3. Philanthropic Giving: Philanthropic giving is the awarding of funds or gifts to charities or

1. Organization Leadership and Culture: Leadership practices and organizational

2. Whistle-Blowing: Whistle-blowing is the disclosure by an employee of illegal or

unethical conduct on the part of others within the organization. How an organization

responds to this practice often illustrates its stance on social responsibility.

Learning Catalytics is a “bring your own device“ student engagement, assessment,

and classroom intelligence system. It allows instructors to engage students in class

with realtime diagnostics. Students can use any modern, web-enabled device

(smartphone, tablet, or laptop) to access it. For more information on using

1. Ask students to identify examples of recent ethical business practices. Examples: Donating a

percentage of profits to charity and community causes (Ben & Jerry’s donates 7.5 percent of

2. Ask students to identify examples of recent unethical business practices. Examples:

Forwarding “marketing research” results to salespeople, marketing R-rated movies to kids,

and deliberately selling cigarettes or alcohol to minors. (10 minutes)

In-Class Activity 2: Class Discussion: Ethical Judgment Making

2. Ask students to think of an ethical situation in which these norms did or did not prevail,

sharing whatever they can with the class. (10 minutes)

3. During the spring semester, if your college/university has a Dr. Martin Luther King Jr.

Observance, you can encourage your students to attend. At the next class period, ask students

to discuss Dr. King’s civil rights activities and how it changed ethical judgment making in

the United States. The discussion can cover historical changes in norms, society’s response to

In-Class Activity 3: Up for Debate: Can Ethics Be Taught?

1. As a class, ask students to consider whether ethics can be taught. Is ethics training valuable

or does ethical behavior stem more from how we are raised?

3. For those students who believe that ethical behavior comes more from how we are raised and

that ethics training really does not affect our ethical behavior in the long run, allow 10

minutes for discussion.

2-16

ANSWERS FOR END OF CHAPTER ACTIVITIES

QUESTIONS FOR REVIEW

2-1. What factors determine an individual’s ethics? For you, which factor has been most

significant?

2-2. When making decisions, who are the stakeholders that a business should consider?

2-3. What are the major areas of social responsibility with which businesses should be

concerned?

2-4. What are the four basic approaches to social responsibility?

2-5. How does government shape the social responsibility of organizations?

2-6. In your opinion, which area of social responsibility is most important? Why? Are there areas

other than those noted in the chapter that you consider important?

attention given to each of the areas. Some companies, such as retailers, will affect the

2-7. What role should government play in social responsibility? Should government create

more regulations to encourage businesses to uphold their responsibility to stakeholders? Or,

should government take a laissez-faire approach and allow businesses to be only as socially

responsible as they choose?

2-8. The Foreign Corrupt Practices Act makes it illegal for U.S. firms to bribe government

officials in other countries. What challenges could this create for a company doing business

abroad?

2-9. Describe your personal code of ethics. Be sure to include what you think is right and wrong,

as well as your ethical framework for making decisions.

2-10. Using newspapers, magazines, and other business references, identify at least one company

that takes each of the four stances to social responsibility: obstructionist, defensive,

accommodative, and proactive. For each company, highlight its actions that support your

conclusion.

Students should remember that an obstructionist stance is one in which companies usually do

2-15. What personal, social, and cultural factors do you think contribute to lying in the

workplace?

2-16. Do you agree or disagree with the following statement: “The term business ethics is an

oxymoron”? Support your answer with examples from your own work experience or that of

2-17. If you were your company’s director of human resources, how would you ensure

compliance with your company’s code of ethics?

2-18. Choose an ethical dilemma from Step 1. How would you handle it? How far would you go

to maintain your personal ethical standards?

2-19. Putting yourself in the shoes of the financial manager, which course of action would you

recommend?

2-20. Are the short-term consequences of your decision different from the long-term

consequences? Describe the short– and long-term impacts.

2-21. How could the government encourage companies to commercialize “orphan” drugs that

treat or cure rare conditions but are not economically desirable? If you were a member of

Congress, would you support government intervention in this situation? Explain.

2-22. While Divine Chocolate has embraced the concept of fair trade, their products are not

organic. On their website, they argue that purely organic production methods could result in

greater instability in production because cocoa is very disease-prone. Do you think that

Divine has an ethical obligation to require farmers to become organic? Why or why not?

2-23. How would you describe Divine Chocolate’s approach to social responsibility? How do

they balance their responsibilities to their stakeholders?

2-24. Do you pay attention to fair-trade products in your own purchasing behavior? For what

kinds of products might you be willing to pay a premium price to help those who produce the

ingredients?

2-25. Under what circumstances might fair trade actually cause harm? To whom? At what point

would fair-trade tradeoffs no longer be acceptable?

2-21

WHEN MOTHER NATURE STORMS IN

(Learning Objective 5 – AACSB – application of knowledge, ethical understanding and

reasoning)

2-26. After Hurricane Sandy hit, Lowe’s committed to maintaining prices on emergency goods.

Do you think that other retailers acted similarly? Why or why not?

2-27. Do you think that social responsibility is good for business? What would motivate a profit–

seeking company like Whirlpool to incur the expense of donating appliances to the

rebuilding effort?

2-28. How would you characterize Home Depot’s approach to social responsibility? Be sure to

2-29. Do you think that U.S. businesses have a greater responsibility to support rebuilding in

New Jersey or Haiti? Defend your answer.

2-30. What is the appropriate role of government in the event of a natural disaster such as

Hurricane Sandy?