Chapter 3: Ethics and Social Responsibility P a g e | 12
You may wish to ask the discussion groups to record their responses to the three discussion questions
on the board, or on a flip chart. Alternatively, you might ask groups to submit a one-page summary of
their responses to the questions. In either form, bullet points should suffice.
3) What is different about acting ethically/responsibly within an organizational environment/culture like
that of the Pioneer Fund versus acting ethically/responsibly as an individual? What are the particular
challenges and dynamics associated with ethical and responsible behavior in an organization?
Organizational cultures reinforce individual behaviorsfor better or worse. How an organization doles
out rewards and punishments can also signal what is desirable behavior and what is undesirable behavior.
For example, Enron rewarded risk taking and generating high returns. It tended to sanction those who
raised concerns or expressed doubts. Also, organizations have authority structures that, at times, can move
Self-Assessment
AN ETHICAL BASELINE
This assessment is meant to show students how ethical they are using three subscales combined into one
instrument. The research from which this inventory is drawn comes from J. E. Wanek, P.R. Sackett, &
D.S. Ones, Towards an Understanding of Integrity Test Similarities and Differences: An Item-Level
Analysis of Seven Tests, Personnel Psychology 56 (2003) 873-894.
In-Class Use
Give students 5 7 minutes to complete the inventory. Remind your students that people tend to think they
are more ethical than they really are and this instrument will probably reveal areas where students can
improve their ethical outlook. Also remind them that, like the IBM example in the case, there are many
Scoring
Scoring instructions are included in the Self-Assessment at the end of the chapter. But students will want
to know what their raw score means. Heres what you can tell them:
The total inventory is comprised of three subscales that measure antisocial behavior,
orderliness/diligence, and positive outlook. The range for the antisocial scale is 1 to 65, with an
average score being 32. The range for orderliness and diligence is smaller, 1 to 20, with average
Orderliness involves planning and organization. An orderly person has a place for everything and
puts everything in its place. Diligence involves commitment and perseverance and is manifest in
activities like working long hours and finishing what you start. Students with higher scores on the
Management Workplace
Management Workplace videos can support several in-class uses. In most cases you can build an entire
50-minute class around them. Alternatively, they can provide a springboard into a group lesson plan.
VIDEO: THEO CHOCOLATE
Managing Social Ethics and Social Responsibility
Summary:
Joe Whinney exudes a sense of mission in everything he does. After a trip to cacao farms in Central
America, Whinney decided to build the first organic fair-trade chocoloate factory in the U.S. By building
the first sustainable chocolate maker in the nation, Whinney hoped to help solve social and environmental
Discussion Questions:
1. Which strategy for responding to social responsibility best reflects Theo Chocolate?
Theo Chocolates strategy for social responsibilty is best described as proactive. As defined in the
text, a company using a proactive strategy will anticipate responsibility for a problem before it
occurs, do more than expected to address the problem, and lead the industry in its approach.
Without a doubt, Theo is a leader in the industry in terms of social responsibility. It was the first
company to produce organic, fair-trade chocolate, and by doing so, sought to create a vertically
2. How do Theo Chocolates business practices reflect the stakeholder model of social
responsibility?
Chapter 3: Ethics and Social Responsibility P a g e | 14
3. What would happen if fair-trade goals conflicted with a companys primary responsibility to be
profitable?
Fair trade is a financial relationship between producers, sellers, and consumers based on the
principle of equity within the exchange of goods. Joe Whinney says that fair trade is important
since cocoa bean growers traditionally have not received adequate pay and have even been
subject to slave labor in some regions of the world. The social benefits of fair trade are far
Management Workplace Video Quiz
Students are able to take the following video quiz on CourseMate. The video is broken into segments, and
each segment has related questions to make sure students understand how the clip connects to the chapter
concepts.
Video Segment 1
Video segment title Corporate Social Responsibility
Start time (in sec) 0:00
Stop time (in sec) 2:17
Quiz Question 1 Theo Chocolates goal to operate business in a way that provides wide
ranging benefits to society is called:
a. Social responsibility
b. Code of ethics
c. Personal philanthropy
d. Entrepreneurship
Quiz Question 2 Managers at Theo Chocolate address social and environmental issues at
work using all of the following means except:
a. Sourcing organically grown cocoa beans
b. Monitoring the environmental impact of the manufacturing process
c. Making profitability the sole measure of success
d. Emphasizing conservation throughout the companys supply chain
Correct option c: Making profitability the sole measure of success
Feedback Theo Chocolate pursues a triple bottom line in which profit is just one
measure of success.
Chapter 3: Ethics and Social Responsibility P a g e | 15
Quiz Question 3 Which of the following statements represents CEO Joe Whinneys
perspective about the role of business in society?
a. Businesses always create social and environmental problems
b. Businesses always solve social and environmental problems
Video Segment 2
Video segment title Corporate Social Responsibility
Start time (in sec) 2:17
Stop time (in sec) 4:30
Quiz Question 1 Theo Chocolate measures its value to society by:
a. The efficiency of its chocolate making process
b. The companys impact on consumers, farmers, and the natural
environment
c. The ability to maximize profits
Quiz Question 2 According to CEO Joe Whinney, Theo Chocolates commitment to fair
trade is intended to offer maximum benefit to:
a. Shareholders
b. Employees
c. The natural environment
d. Cocoa farmers
Correct option d: Cocoa farmers
Feedback Theo Chocolate aims to provide benefits to the entire supply chain,
including the farmers.
Chapter 3: Ethics and Social Responsibility P a g e | 16
Video Segment 3
Video segment title Corporate Social Responsibility
Start time (in sec) 4:30
Stop time (in sec) 6:34
Quiz Question 1 Vice President Debra Music evaluates Theo Chocolates performance
based on the companys ability to meet a triple bottom line. Which of the
following is not a component of the triple bottom line?
a. Planet
Quiz Question 2 Which of the following would not likely be an example of doing well by
doing good in the eyes of Theo Chocolate managers?
a. Hold company accountable to fair-trade standards
b. Use recycled packaging
c. Promote habitat preservation and reforestation in cocoa growing regions
d. Use pesticides to protect cocoa crops
Correct option d: Use pesticides to protect cocoa crops
Feedback The use of pesticides would help increase profits, but would have little
benefit for farmers or consumers.
Quiz Question 3 What should managers at Theo Chocolate do if the companys social
objectives come into severe conflict with the companys economic
objectives?
a. Focus on meeting economic objectives to avert bankruptcy
b. Focus on meeting social objectives and risk bankruptcy
Chapter 3: Ethics and Social Responsibility P a g e | 17
Additional Assignments and Activities
Review Questions
1. How does the nature of management jobs create the possibility for ethical abuses?
Ethical behavior is behavior that conforms to a societys accepted principles of right and wrong.
Three areas in which managers may encounter ethical dilemmas are:
Authority and power: Managers can be tempted by authority and power since they control
2. What are the U.S. Sentencing Commission Guidelines? How do they punish unethical behavior?
The U.S. Sentencing Commission Guidelines are federal laws that cover areas such as invasion of
3. What influences ethical decision-making?
Ethical decisions depend on the following:
Ethical intensity, or the degree of concern people have about an ethical issue. The greater the
intensity, the more aware managers are of the impact of their decisions.
4. What steps can managers take to improve ethical decision making?
Managers can improve ethical decision making by:
Selecting and hiring ethical employees. Managers can screen for ethical employees through a
variety of tests, including overt integrity tests and personality-based integrity tests.
Chapter 3: Ethics and Social Responsibility P a g e | 18
5. What influences ethical decision-making?
Ethical decisions depend on the following:
Ethical intensity, or the degree of concern people have about an ethical issue. The greater the
intensity, the more aware managers are of the impact of their decisions.
individual rights, or distributive justice.
6. What steps can managers take to improve ethical decision making?
Managers can improve ethical decision making by:
Selecting and hiring ethical employees. Managers can screen for ethical employees through a
variety of tests, including overt integrity tests and personality-based integrity tests.
7. Outline a basic model for ethical decision making.
Even though ethical decision making includes many relativist aspects, there are some practical,
concrete steps managers can follow to maximize their decision making. There are six steps that form
a basic model of ethical decision making:
Identify the problem. What makes it an ethical problem? Think in terms of rights, obligations,
fairness, relationships, and integrity. How would you define the problem if you stood on the
other side of the fence?
Identify the constituents. Who has been hurt? Who could be hurt? Who could be helped? Are
they willing players, or are they victims? Can you negotiate with them?
Diagnose the situation. How did it happen in the first place? What could have prevented it? Is
Chapter 3: Ethics and Social Responsibility P a g e | 19
8. Contrast the two models of social responsibility.
There are two accepted models of social responsibility: the shareholder and stakeholder models. The
shareholder model of social responsibility holds that the only responsibility that businesses have is to
maximize profits. Therefore, shareholders are the only people who really matter.
9. What are a companys total social responsibilities?
A companys total social responsibilities can be subdivided into four essential components:
Economic responsibility: the expectation that a company will make a profit by producing a
valued product or service.
10. What choices does a company have when responding to demands for social responsibility?
Social responsiveness is the strategy chosen by a company to respond to stakeholders economic,
legal, ethical, or discretionary expectations concerning social responsibility. The four strategies are:
Reactive strategy: A company chooses to do less than society expects and to deny
responsibility for problems.
11. Are socially responsible companies economically successful? In other words, does it pay to be
socially responsible?
Previous research showed that sometimes it cost, and sometimes it paid. Recently, however, that has
changed. There is no trade-off between being socially responsible and economic performance. And,
Chapter 3: Ethics and Social Responsibility P a g e | 20
Develop Your Career Potential
EXAMINING NON-PROFITS
This is a good assignment for students to do in pairs or small groups. But it also works well as an
individual assignment. Alternatively, if you have a large section, this assignment is an opportunity to
invite the local leaders of charitable or non-profit groups to your class to discuss the questions in the
assignment.
In addition to inviting local leaders, this assignment can be processed by having students do brief
presentations on each organization (no more than 2 5 minutes depending on class size and the number of
organizations that students visited), or by an instructor-led discussion. Process the discussion by asking
students to report on which charitable or non-profit organizations they visited, and make a list on an
overhead or the board. Next to that, as the students report the information to the class, write data relating
to each of the questions in the assignment: the organizations mission, whom the organization serves,
percentage of funds used for administrative purposes, and so forth.
Besides these questions, its also important to engage students in a discussion about which
organization they would choose to support. So ask students, If you were the CEO of a local company
The most common source of information on charities is the Better Business Bureau
(http://www.bbb.org), which publishes a set of standards for charitable accountability. Twenty standards
are organized into these categories:
2. Measuring Effectiveness
4. Fund Raising and Informational Materials
Students can read the standards to get an idea of how to evaluate the philanthropy opportunities they
consider as part of this exercise.
Additional Activities
Out-of-Class Activity: “Ethics Game.” Assign groups of students to develop a rudimentary ethics game.
The game can take any format (board game, quiz game, video game). Depending on the time available,
you can have your students make a model of the game and give short presentations explaining their game
to the rest of the class. Class members can even vote on the games (most effective, most enjoyable, most
creative, etc.).
Out-of-Class Project: “Ethics Test.” Divide the class into small groups. Each group should create an
Out-of Class Project: “Socially Responsible Investing.” Have students research several socially
In-Class Project: “Ethics Debate.” Divide the class into thirds (or into six groups, if your class is large).
One third will represent a major tobacco company like R.J. Reynolds or Philip Morris. The second third
will represent an anti-smoking activist group. The last third will represent the U.S. government. The topic,
which will be debated, is: Should tobacco companies cease and desist all advertising in the United States?
Each group should thoroughly research the issues, write a position statement, and come prepared to
debate in class. An especially interesting way to divide students would be to include smokers in the anti-
smoking group and non-smokers in the group representing tobacco companies.
Out-of Class Project: “Corporate Social Responsibility.” Go to the website of Starbucks at