Chapter 05

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Management: Arab World Edition
Robbins, Coulter, Sidani, Jamali
Chapter 5: Social Responsibility and Managerial

Ethics
Lecturer: [Insert your name here]
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Learning Outcomes
Follow this Learning Outline as you read and study this chapter.
5.1 What Is Social Responsibility?

• Differentiate between social obligation, social responsiveness and
social responsibility.
• Discuss whether organizations should be socially involved.
• Describe what conclusion can be reached regarding social
involvement and economic performance.
5.2 Green Management

• Define green management.
• Describe how organizations can go green.
• Explain how green management can be evaluated.
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Copyright © 2011 Pearson Education
Learning Outcomes
5.3 Managers And Ethical Behavior
• Define ethics.
• Discuss the factors that influence whether a person behaves
ethically or unethically.
• Describe what managers need to know about international ethics.
5.4 Encouraging Ethical Behavior

• Describe managers’ important role in encouraging ethical
behavior.
• Discuss specific ways managers can encourage ethical behavior.

Learning Outcomes
5.5 Social Responsibility And Ethics Issues In Today’s World
• Discuss how managers can manage ethical lapses and social
irresponsibility.
• Explain the role of social entrepreneurs.
• Discuss how businesses can promote positive social change.
5.6 Ethics And CSR In The Arab Region

• Explore business ethics in the Arab world.
• Explain the concept of Wasta in the Arab region.
• Describe CSR in the Arab region and its main drivers.

What Is Social
Responsibility?
1. Differentiate between social obligation, social responsiveness

and social responsibility.
2. Discuss whether organizations should be socially involved.
3. Describe what conclusion can be reached regarding social

involvement and economic performance.
5-6 Copyright © 2011 Pearson Education

What Is Social Responsibility?
Managers regularly face decisions that have a dimension of social

responsibility, such as those involving employee relations,
philanthropy, pricing, resource conservation, product quality and
safety, and doing business in countries that devalue human rights.

What Is Social Responsibility? (cont’d)
Classical View of
Social Obligation
Social responsibility
Socioeconomic View of Social Responsiveness

Social responsibility
Social Responsibility

From Obligation to Responsiveness to
Responsibility
Social Obligation
• When a firm engages in social actions because of its obligation to
meet certain economic and legal responsibilities.
Social Responsiveness
• When a firm engages in social actions in response to some popular
social need.
Social Responsibility
• A business’s intention, beyond its legal and economic obligations,
to do the right things and act in ways that are good for society.

What Is Social Responsibility?
The Classical View

• Management’s only social responsibility is to maximize profits
(create a financial return) by operating the business in the best
interests of the stockholders (owners of the corporation).
• Expending the firm’s resources on doing “social good” unjustifiably
increases costs that lower profits to the owners and raises prices to
consumers.

What Is Social Responsibility? (cont’d)
The Socioeconomic View

• Management’s social responsibility goes beyond making profits to
include protecting and improving society’s welfare.
• Corporations are not independent entities responsible only to
stockholders.
• Firms have a moral responsibility to larger society to become
involved in social, legal, and political issues.
• “To do the right thing.”

Exhibit 5–1 Social Responsibility Versus
Social Responsiveness
Social Responsibility Social Responsiveness
Major consideration Ethical Pragmatic

Focus Ends Means
Emphasis Obligation Responses
Decision framework Long term Medium and short term
Source: Adapted from S.L. Wartick and P.L. Cochran, “The Evolution of the Corporate Social Performance Model,” Academy of Management Review,
October 1985, p. 766.

Exhibit 5–2 Arguments For and Against Social
Responsibility
• For • Against
• Public expectations  Violation of profit maximization
• Long-run profits  Dilution of purpose
• Ethical obligation  Costs
• Public image  Too much power
• Better environment  Lack of skills
• Discouragement of further  Lack of accountability
governmental regulation
• Balance of responsibility and power
• Stockholder interests
• Possession of resources
• Superiority of prevention over cures

Does Social Responsibility Pay?
Studies appear to show a positive relationship between social

involvement and the economic performance of firms.
• Difficulties in defining and measuring “social responsibility” and
“economic performance” raise issues of validity and causation in the
studies.
• Mutual funds using social screening in investment decisions slightly
outperformed other mutual funds.
A general conclusion is that a firm’s social actions do not harm
its long-term performance.

Green Management
1. Define green management.
2. Describe how organizations can go green.
3. Explain how green management can be evaluated.

The Greening of Management
The recognition of the close link between an organization’s

decision and activities and its impact on the natural
environment.
Global environmental problems facing managers:
 Air, water, and soil pollution from toxic wastes
 Global warming from greenhouse gas emissions
 Natural resource depletion

How Organizations Go Green
Legal (or Light Green) Approach

• Firms simply do what is legally required by obeying laws, rules,
and regulations willingly and without legal challenge.
Market Approach
• Firms respond to the preferences of their customers for
environmentally friendly products.

How Organizations Go Green (cont’d)
Stakeholder Approach
• Firms work to meet the environmental demands of multiple
stakeholders ‒ employees, suppliers, and the community.
Activist Approach
• Firms look for ways to respect and preserve the environment
and be actively socially responsible.

Exhibit 5–3 Green Approaches
Source: Based on R.E. Freeman. J. Pierce, and R. Dodd. Shades of Green: Business Ethics and the Environment (New York: Oxford University Press, 1995).

Evaluating the Greening of Management
Organizations become “greener” by

• Using the Sustainability Reporting Guidelines to document “green”
actions.
• Adopting ISO 14000 standards for environmental management.
• Being named as one of the 100 Most Sustainable Corporations in the
World.

Managers And Ethical
Behavior
1. Define ethics.
2. Discuss the factors that influence whether a person behaves

ethically or unethically.
3. Describe what managers need to know about international

ethics.

Managerial Ethics
Ethics Defined
• Principles, values, and beliefs that define what is right and wrong
behavior.

Exhibit 5–4 Green Factors That Determine
Ethical and Unethical Behavior

Factors That Affect Employee Ethics
Moral Development
• A measure of independence from outside influences
 Levels of Individual Moral Development
– Preconventional level
– Conventional level
– Principled level
• Stage of moral development interacts with:
 Individual characteristics
 The organization’s structural design
 The organization’s culture
 The intensity of the ethical issue

Exhibit 5–5 Stages of Moral Development
Source: Based on L. Kohlberg, “Moral Stages and Moralization: The Cognitive-Development Approach,” in T. Lickona (ed.). Moral Development
and Behavior: Theory, Research, and Social Issues (New York: Holt, Rinehart & Winston, 1976), pp. 34–35.

Factors That Affect Employee Ethics
Moral Development
• Research Conclusions:
 People proceed through the stages of moral development
sequentially.
 There is no guarantee of continued moral development.
 Most adults are in Stage 4 (“good corporate citizen”).

Factors That Affect Employee Ethics (cont’d)
Individual Characteristics
• Values
 Basic convictions about what is right or wrong.
• Personality
 Ego strength ‒ A personality measure of the strength of a person’s
convictions.
 Locus of Control
– A personality attribute that measures the degree to which people believe
they control their own life.
– Internal locus: the belief that you control your destiny.
– External locus: the belief that what happens to you is due to luck or
chance.

Structural Variables
• Organizational characteristics and mechanisms that guide and
influence individual ethics:
 Performance appraisal systems
 Reward allocation systems
 Behaviors (ethical) of managers

Organization’s Culture
• Values-Based Management
 An approach to managing in which managers establish and uphold
an organization’s shared values.
• The Purposes of Shared Values
 Guiding managerial decisions
 Shaping employee behavior
 Influencing the direction of marketing efforts
 Building team spirit

Organization’s Culture (cont’d)

• The Bottom Line on Shared Corporate Values
 An organization’s values are reflected in the decisions and
actions of its employees.
Intensity of the Ethical Issue

Exhibit 5–6 Issue Intensity

Ethics in an International Context
Ethical standards are not universal

• Social and cultural differences determine acceptable behaviors.
Implications for international managers
• It is important for individual managers working in foreign cultures to
recognize the social, cultural, and political/legal influences on what is
appropriate and acceptable behavior.
Implications for international companies
• International businesses must clarify their ethical guidelines so that
employees know what is expected of them while working in a foreign
location.

The Global Compact
Another guide to being ethical in international business

• Document created by the United Nations outlining principles for
doing business globally in the areas of human rights, labor, and
the environment and anti-corruption.
• “More than 3,000 CEOs have signed the Compact, making it the
world’s largest voluntary corporate citizenship initiative.”

Exhibit 5–7 Issue Ten Principles of the
United Nations
Human Rights
Principle 1: Support and respect the protection of international human rights within their
sphere of influence.
Principle 2: Make sure business corporations are not complicit in human rights abuses.
Labor Standards
Principle 3: Freedom of association and the effective recognition of the right to collective
bargaining.
Principle 4: The elimination of all forms of forced and compulsory labor.
Principle 5: The effective abolition of child labor.
Principle 6: The elimination of discrimination in respect of employment and occupation.
Environment
Principle 7: Support a precautionary approach to environmental challenges.
Principle 8: Undertake initiatives to promote greater environmental responsibility.
Principle 9: Encourage the development and diffusion of environmentally friendly
technologies.
Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

Exhibit 5–8 Business Participants in the Global
Compact by Region and Size
Source: “Participants and Stakeholders – Business Associations”, United Nations Global Compact,
http://www.unglobalcompact.org/ParticipantsAndStakeholders/business_associations.html.

Encouraging Ethical Behavior
1. Describe managers’ important role in encouraging ethical

behavior.
2. Discuss specific ways managers can encourage ethical

behavior.

How Managers Can Improve Ethical Behavior
in An Organization
1. Hire individuals with high ethical standards.
2. Establish codes of ethics and decision rules.
3. Lead by example.
4. Set realistic job goals and include ethics in performance
appraisals.
5. Provide ethics training.
6. Conduct independent social audits.
7. Provide support for individuals facing ethical dilemmas.

Codes of Ethics
• Is a formal statement of an organization’s values and the ethical

rules it expects employees to follow.
• What should it include?
• It should be specific enough to show employees the spirit in which
they are supposed to do things yet loose enough to allow for
freedom of judgment.
• Unfortunately, the mere presence of a code of ethics does not
guarantee that people will follow it.

Exhibit 5–9 Codes of Ethics
Cluster 1. Be a Dependable Organizational Citizen
1. Comply with safety, health, and security regulations.

2. Demonstrate courtesy, respect, honesty, and fairness.
3. Illegal drugs and alcohol at work are prohibited.
4. Manage personal finances well.
5. Exhibit good attendance and punctuality.
6. Follow directives of supervisors.
7. Do not use abusive language.
8. Dress in business attire.
9. Firearms at work are prohibited.

Exhibit 5–9 Codes of Ethics (cont’d)
Cluster 2. Do Not Do Anything Unlawful or Improper That Will

Harm the Organization
1. Conduct business in compliance with all laws.

2. Payments for unlawful purposes are prohibited.
3. Bribes are prohibited.
4. Avoid outside activities that impair duties.
5. Maintain confidentiality of records.
6. Comply with all antitrust and trade regulations.
7. Comply with all accounting rules and controls.
8. Do not use company property for personal benefit.

Exhibit 5–9 Codes of Ethics (cont’d)
Cluster 2. Do Not Do Anything Unlawful or Improper That Will

Harm the Organization (cont’d)
9. Employees are personally accountable for company funds.

10. Do not propagate false or misleading information.
11. Make decisions without regard for personal gain.
Cluster 3. Be Good to Customers

1. Convey true claims in product advertisements.
2. Perform assigned duties to the best of your ability.
3. Provide products and services of the highest quality.

Effective Use of a Code of Ethics
1. Model appropriate behavior and reward those who act ethically.

2. Communicate the code regularly to all employees.
3. Managers should continually reaffirm the importance of the ethics
code and consistently discipline those who break it.
4. The organization’s stakeholders (employees, customers, and so
forth) should be considered when an ethics code is developed or
improved.
5. Use the 12 questions approach (next slide).

Exhibit 5–10 Twelve Questions Approach
1. Have you defined the problem accurately?

2. How would you define the problem if you stood on the other side of
the fence?
3. How did this situation occur in the first place?
4. To whom and to what do you give your loyalty as a person and as a
member of the corporation?
5. What is your intention in making this decision?
6. How does this intention compare with the probable results?
7. Whom could your decision or action injure?
8. Can you discuss the problem with the affected parties before you
make the decision?

Exhibit 5–10 Twelve Questions Approach (cont’d)
9. Are you confident that your position will be as valid over a long
period of time as it seems now?
10. Could you disclose without qualm your decision or action to your
boss, your chief executive officer, the board of directors, your
family, society as a whole?
11. What is the symbolic potential of your action if understood? If
misunderstood?
12. Under what conditions would you allow exceptions to your stand?

The Value of Ethics Training
• Can make a difference in ethical behaviors.

• Increases employee awareness of ethical issues in business
decisions.
• Clarifies and reinforces the organization’s standards of conduct.
• Helps employees become more confident that they will have the
organization’s support when taking unpopular but ethically
correct stances.

Exhibit 5–11 Being an Ethical Leader
• Be a good role model by being ethical and honest.

• Tell the truth always.
• Don’t hide or manipulate information.
• Be willing to admit your failures.
• Share your personal values by regularly communicating them to
employees.
• Stress the organization’s or team’s important shared values.
• Use the reward system to hold everyone accountable to the values.

Social Responsibility And
Ethics Issues In Today’s
World
1. Discuss how managers can manage ethical lapses and social
irresponsibility.
2. Explain the role of social entrepreneurs.
3. Discuss how businesses can promote positive social change.

Managing Ethical Lapses and Social
Irresponsibility
• Provide ethical leadership
• Protect employees who raise ethical issues (whistle-blowers)

Awareness of Social Issues
Social Entrepreneurs
• Are individuals or organizations who seek out opportunities to
improve society by using practical, innovative, and sustainable
approaches.
• Want to make the world a better place and have a driving passion to
make that happen.

Businesses Promoting Positive Social Change
Corporate Philanthropy
• Campaigns
• Donations
• Funding own foundations
Employee Volunteering Efforts
• Team volunteering
• Individual volunteering during work hours

Ethics And CSR In The Arab
Region
1. Explore business ethics in the Arab world.
2. Explain the concept of Wasta in the Arab region.
3. Describe CSR in the Arab region and its main drivers.

Ethics And CSR In The Arab Region
• The Corruption Perceptions Index (CPI) table shows a country's

ranking and score. The closer it gets to 10.0, the more transparent
it is.
• Indicators for countries in the MENA region demonstrate that there
is a problem of ethics or an ethics crisis in the region.

Exhibit 5–12
The Corruption
Perceptions
Index – Scores
for Selected
Countries in
the Region

Problem of ethics?
Indicators for countries in the MENA region demonstrate that there is a

problem of ethics. Such low scores could be attributed to several
factors. Such as:
• Red-tape (rigid commitment to redundant rules)
• Stringent bureaucracy
• Mismanagement and waste
• Inefficiencies
• Nepotism (favoritism given to friends and family irrespective of
merit)
• Ineffective due process (weak laws or weak implementation of
laws)

Wasta
Means “intermediary”
• It is a feature in Arab environments that has lots of implications for
managerial practice.
• Wasta, as a social process, has played a significant role in many
Arab societies.
• Wasta sometimes could give the benefiting person a head start
over others.

CSR In The Arab World
CSR in Arab Countries

• Many managers link CSR to their religious upbringing as both
Islam and Christianity have deemed it necessary for people to help
each other.
• Zakat (the religious requirement to give a portion of one’s wealth to
the poor and needy) is often linked to CSR.
• But religious charity has a private religious meaning whereas CSR
reflects corporate initiatives which go beyond personal drivers.

CSR In The Arab World (cont’d)
CSR in Arab Countries

• A study about businesses involved in CSR activities in Dubai found
that CSR enhanced financial performance, employee commitment,
and corporate reputation.
• Many examples of CSE are present in Arab countries.
• CSR is mainly represented through philanthropy and charity, and
lacks formalization and institutionalization.
• CSR in the region seems to be driven more by rational and
political choices rather than responding to societal expectations.

Drivers of CSR in the Region
1. A desire to develop the investment climate (Turkey, Morocco, Egypt)

2. Intensity of rivalry and a desire for better efficiency and productivity
(Jordan, Turkey, Egypt)
3. A desire to emulate models by the international business
environment (all countries)
4. International codes of conducts (Morocco, Turkey)
5. Governmental regulations (Turkey, Morocco, Palestine, Jordan)
6. Activism of civil society groups such as Transparency International
and Greenpeace directly or through local chapters (Turkey, Lebanon)
7. Awards and prizes (Morocco, Turkey)
Source; M. Ararat, “Corporate Social Responsibility across Middle East and North Africa,” April 1, 2006). Available at SSRN:
http://ssrn.com/abstract=1015925

Terms to Know
classical view ethics
socioeconomic view values
social obligation ego strength
social responsiveness locus of control
social responsibility code of ethics
social screening whistle-blower
greening of management social entrepreneur
values-based management

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Chapter 5: Social Responsibility and Managerial

Lecturer: [Insert your name here]

Download from : http://www.ebook-freee.com

5.1 What Is Social Responsibility?

5.2 Green Management

5-3 Download from : http://www.ebook-freee.com

5.4 Encouraging Ethical Behavior

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5.6 Ethics And CSR In The Arab Region

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1. Differentiate between social obligation, social responsiveness

2. Discuss whether organizations should be socially involved.

3. Describe what conclusion can be reached regarding social

5-6 Copyright © 2011 Pearson Education

Managers regularly face decisions that have a dimension of social

5-7 Copyright © 2011 Pearson Education

Socioeconomic View of Social Responsiveness

5-8 Copyright © 2011 Pearson Education

5-9 Copyright © 2011 Pearson Education

The Classical View

5-10 Copyright © 2011 Pearson Education

The Socioeconomic View

5-11 Copyright © 2011 Pearson Education

Social Responsibility Social Responsiveness

Major consideration Ethical Pragmatic

5-12 Copyright © 2011 Pearson Education

5-13 Copyright © 2011 Pearson Education

Studies appear to show a positive relationship between social

5-14 Copyright © 2011 Pearson Education

1. Define green management.

2. Describe how organizations can go green.

3. Explain how green management can be evaluated.

5-15 Copyright © 2011 Pearson Education

The recognition of the close link between an organization’s

5-16 Copyright © 2011 Pearson Education

Legal (or Light Green) Approach

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5-18 Copyright © 2011 Pearson Education

5-19 Copyright © 2011 Pearson Education

Organizations become “greener” by

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2. Discuss the factors that influence whether a person behaves

3. Describe what managers need to know about international

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Organization’s Culture (cont’d)

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Ethical standards are not universal

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Another guide to being ethical in international business

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