Chapter 4 of

textbook

Ethics & Social Responsibility

Week 3 Lesson Recap
 Week 3 Topics

1. Why sustainability matters to you & I?

2. The connection between sustainability and the
Green Economy.
3. The challenges faced by organisations going green.
4. The cultural dimensions of sustainability.
5. The place of innovation and creative work
environment for sustainable competitive
advantage.
 Summary of Week 3 Lesson

Why it matters?
• It is about improving the quality of human life while living within
the carrying capacity of supporting eco systems, meeting the
needs of the present without compromising the ability of future
generations to meet their own needs.
Sustainability & Green Economy
Green economy proposed as a means for catalysing renewed
national policy development and international cooperation and
support for sustainable development resulting in improved human
well-being and social equity, while significantly reducing
environmental risks and ecological scarcities. It is low carbon,
resource efficient, and socially inclusive.
 Elements/Examples of Sustainable Practices or
Green Economy Practices

Recycling, Reduce Renewable Clean transportation

Reuse energies
Resource recovery Energy Green buildings
efficiencies
Water services Clean Waste management
technologies & minimisation A green economy
adopts a more
sustainable path, by
Minimize wasteful Low carbon ecosystem increasing the share
consumption emissions services[eco- of its GDP to these
industry] practices.
Sustainable fishing & forestry
agriculture
Policies that promote low carbon economies,
dematerialization, decoupling of resource use.
Challenges in the Sustainability
of Businesses

Cost investment and know-how

Sustainable program management
Creating reports: can cause great
diversion on the company’s key strategic
focus
Mindset & Cultural Change
 Sustainability & Cultural
Differences
 How to convince employees to take on board green
efforts – mindset & cultural change takes time &
effort
 For organisations to continue to be sustainable, it is
vitally important for managers to be aware and
familiar with cultural values and differences in the
workplace.
 After becoming aware of cultural differences, the
second step is deciding how to adapt your company
to those cultural differences and in addressing
sustainability concerns
Becoming aware of
cultural differences
 Topics for Week 4

1. What is ethics and ethical dilemma?

2. Identify common kinds of workplace deviance.
3. Factors influencing ethical decision making.
4. Ethical principles & cultural dimension of ethical
decision making
5. Practical steps managers can take to improve ethical
decision making
6. What is CSR & the stakeholder model of CSR
 Subject Learning Outcomes (SLOs) and
Course Learning Outcomes (CLOs)

• SLO 2: Plan, construct and discuss solutions relevant

to business environments
• CLO 1 Demonstrate essential knowledge necessary
for a career in business related professions
• CLO 2 Synthesise underlying principles and concepts
for making business decisions
• CLO 5 Apply critical thinking to address issues in
business
Why Business Ethics and Corporate Social
Responsibility??
Why Business Ethics and Corporate Social
Responsibility??

• Social Responsibility is a crucial part of business ethics.

• They are linked to sustainability & the environment -
contributes to the sustainable development, health and
welfare of society.
• Greater public expectation and awareness of what is
right and wrong means that organisations which practice
ethical and responsible actions increase their
reputation, market share, improve staff retention and
generally, get to feel good about themselves.
• The speed & transparency of modern media are
unforgiving.
What constitutes ethical
behaviour?

What are some of the

unethical business practices?
 Activity 1

• Watch a video on The Enron Scandal - An

Animated Overview (about 2 mins) and answer
a few mcq questions.
• https://www.youtube.com/watch?v=vMj0t2Vsy
vs&t=49s
PAUSE
1. What is ethics & ethical dilemma?
 1. What is ethics & ethical dilemma?

 Ethics: a set of moral principles or values that defines right and

wrong for a person or group
 Ethical behaviour refers to behaviour that conforms to a
society’s accepted principles of right and wrong.
 An ethical dilemma is said to occur each time an
individual or team must make a decision that involves
competing values and where the individuals are required
to define right and wrong conduct
 Challenging to define in international business - different
societies in different nations may subscribe to different
principles of right and wrong
 Ethical and unethical behaviour

An ethical behaviour is one that conforms to

a society’s accepted principles of right and
wrong.
Unethical behaviour contravenes
society/group norms.
Unethical behaviour that violates
organisational norms about right & wrong in
workplaces is referred to as workplace
deviance.
2. Kinds of workplace deviance
2. Types of workplace deviance

Types of Deviance Definition

Property Deviance Unethical behavior aimed at the organization’s
property or products

Production Deviance Unethical behavior that hurts the quality &

quantity of work produced

Political Deviance Using one’s influence on harming others in the

company

Personal Aggression Hostile or aggressive behavior towards others

• PAUSE for Activity 2
 Situations of workplace deviance that
constitutes unethical behaviour

 Discrimination – where a manager denies promotion or

appointment to a job candidate because of the candidate’s race,
religion, gender or age
 Sexual harassment – where a manager makes a co-worker feel
uncomfortable because of inappropriate comments or actions
regarding sexuality
 Managers getting subordinates to support incorrect viewpoints,
signing false documents, overlooking bosses’ wrongdoing and
doing business with boss’ friends; not providing the full picture in
advertising of products
 Regulations in Australia to curb
unethical practices

 Australian Competition and Consumer Commission (ACCC)

: deals with competition matters generally at a national level
 Australian Securities and Investments Commission (ASIC)
: national regulator of corporate entities
 Australian Prudential Regulation Authority (APRA)
: national regulator of deposit takers –banks, insurance
companies and superannuation funds

Why should companies establish compliance programs

under the ACCC, ASIC and APRA guidelines?
Compliance programs under the ACCC,
ASIC and APRA guidelines

• These regulatory organisations use a ‘carrot-and-

stick’ approach to encourage ethical behaivour.
• The stick is the threat of heavy fines that can total
millions of dollars.
• The carrot is greatly reduced fines, but only if the
company has started an effective compliance
program to encourage ethical behaviour before the
illegal activity occurs.
Regulations in Singapore to curb
unethical practices
 Consumers Association of Singapore (CASE) :
a non-profit, non-governmental organisation committed towards
protecting consumers interest through information and education
and promoting an environment of fair and ethical trade practices.
 Corrupt Practices Investigation Bureau (CPIB):
• A government agency which investigates & prosecutes
corruption in the public and private sectors
• Established by British colonial government in 1952 and sited in
the Attorney-General's Chambers.
• In 1959, the nation's first prime minister Lee Kuan Yew moved
it to the Prime Minister's Office.
3. Factors that influence ethical
decision making

A. Ethical intensity of decision

Degree of concern about an ethical issue

Ethical B. Moral development of manager &

answers organization culture
Stages of moral development
depend on …
C. Ethical principles used
Use approaches that describe norms
& values that may guide ethical
decision making

D. National Culture
Shared values, beliefs & attitudes
of a particular country
 A. Ethical intensity

 The degree of concern people have about an

ethical issue

 High ethical intensity – managers are more

aware of the impact of decision on others –
hence more likely to view decision as an ethical
or moral decision

 Relatively easy for education and training to help

improve ethical decision making based upon this
dimension
 B. Moral Development of Manager
Kohlberg’s phases of moral development
– Pre-conventional
• Follows rules to avoid punishment, acts in own interests and
obedience for its own sake (selfish reason)
– Conventional
• Lives up to expectations of others, fulfils duties and obligations
of social system and upholds laws. Looks to others for guidance
on ethical issues
– Post-conventional (Principled)
• Follows self-chosen principles of justice and right, aware of
differences and balances concern for individual with concern for
common good. Use internalised ethical principles to solve
ethical dilemmas

• Those with strong ethical frameworks will be more consistent and confident in their
decision making since choices are made against a stable set of ethical standards.
• Various moral development stages in line with the leadership style
 B. Moral Development of Manager

• Evidence does show that one’s level of moral

maturity can change, depending on individual and
situational factors.
• As people age, become more educated or deal with
dilemmas high in ethical intensity, they are more
likely to make ethical decisions using a higher level of
moral maturity.
• Thus, education and training are indeed likely to have
a significant impact on this dimension.
 C. Ethical Principles
Ethical Decision-Making
Principles/Approaches

Principle of
Principle of religious government
Principle of injunctions requirements
personal virtue
: never take action that is : businesses should
: openness, honesty & unkind or harms a sense of
truthfulness operate within the
community law
 C. Ethical Principles Used

Ethical Decision-Making
Principles/Approaches

Principle of Utilitarianism: Principle of Individual Rights

decisions made on basis of (deontology:duty or obligation)
their outcomes or respecting and protecting basic rights Principle of Distributive Justice
consequences of individuals/agreed upon rights imposing and enforcing rules fairly and
(consequentialism approach): impartially; to protect the poor,
provide greatest Rights are legal, social, or ethical uneducated & unemployed
good for society /benefits to the principles of freedom or entitlement;
most people that is, rights are the fundamental
normative rules about what is allowed of
people or owed to people, according to
some legal system, social convention, or
ethical theory

There is no ideal principle!

 D. National Culture

The set of shared values and beliefs that affect the

perceptions, decisions and behaviour of people from a particular
country
 Two different views on how national culture influences ethical
behaviour:
 Cultural relativism
Ethical behaviour is always determined by cultural
context.
“ When in Rome, do as the Romans do”
 Ethical imperialism (Universalist view)
Behaviour that is unacceptable in one’s home
environment should not be acceptable anywhere else.
“ Don’t do anything you won’t do at home”
Cultural relativism vs. ethical imperialism
 Food for Thought

• Is it sometimes okay to engage in things that you

would not normally do because they are considered
normal in another situation?
– Should a Western business professional pay a
bribe to secure business if it is an accepted part of
that country’s culture?
• Should you engage in moral relativism in cultural
practices?
– When in Rome . . .
 Food for Thought
Consider the following case study and be prepared to
discuss this in the online lecture

Alex is the expatriate Sales Director for a new Chinese subsidiary of

Pharmacyl Inc., a multinational pharmaceutical company based in the U.S.
After one year in China, sales figures remain poor. Alex was frustrated with
his sales team. Finally, one of the sales reps, Anita Li speaks openly about
the cause of the company’s falling market share. In short, local competitors
are paying doctors financial kickbacks. According to Anita, this is the only
way to do business. Alex knows that the team cannot conform to the local
custom – it is against the law and against Pharmacyl’s code of conduct.

How is Alex going to convince his subordinates as well as his superiors to

do the right thing?
How should he make his decision based on the cultural consideration?
 5. Practical steps to
ethical decision making

• Select and hire ethical employees

• Establish a code of ethics
• Train employees to make ethical
decisions
• Create an ethical climate
• Protect whistleblowers
Corporate Social Responsibility

 An organisation’s responsibility to pursue

policies, make decisions and take actions that
benefit society. These obligations are often seen
as ‘over and above’ a business’s obligations to
operate within the law.
 Corporate Social Responsibility represents a shift
from a classical economic perspectives
(shareholder perspective) on organisations to a
stakeholder perspective

.
Corporate Social Responsibility

Two perspectives:
• Shareholder model: business has only one
responsibility and that is to maximise profits to
satisfy shareholders.
• Stakeholder model: businesses have multiple
stakeholders with multiple interests.
Stakeholders:
– Any group within or outside the organisation that has
a stake in the organisation’s performance.
– E.g. Suppliers, customers, competitors, labour market,
community, environment
Stakeholder model of corporate social
responsibility
 Stakeholder Model

 Firm’s long term survival is achieved by satisfying the

interests of multiple corporate stakeholders
 Primary stakeholders: those that the firm relies for
its long term survival; all of them are of equal
importance
- E.g. shareholders, employees, customers, suppliers,
governments, local communities
 Secondary stakeholders: those that can influence or
be influenced by a company & can affect public
perceptions about its socially responsible behavior
- E.g. media, special interest groups, trade associations
Corporate Social Responsibility

Central to CSR is concept of Triple Bottom Line:

 An organisation’s performance should be measured
by:
• Traditional financial/economic outcomes
• Environmental (green) outcomes
• Social/societal outcomes
 The overall fulfilment of obligations to communities,
employees, customers, suppliers and other
stakeholders should be measured, calculated,
audited and reported.
Organisation’s social responsibilities in CSR: Types of
Social Responses

Serve a social role; contribute

Discretionary
to community & quality of life

Abide by principles
of right and wrong; avoid harm Ethical
?
Obey laws and
regulations Legal

Be profitable Economic
$
Organisational Responses to Social Demands

Source: Campling et al, 2008, p.384

Look at Tutorial 4 statements based on GSK & CSR

Source: Samson, D. & Daft, R.L. 2012.
Fundamentals of Management, 4th Asia
Pacific Edition, Cengage Learning
 Types/Levels/Approaches of CSR
Organisational Responses (Strategies) to Social Demands (Issues)

1. OBSTRUCTIONIST STANCE
 Do as little as possible;
 Deny or avoid social responsibility
 Tends to occur in firms whose actions are based on economic
considerations
2. DEFENSIVE STANCE
 Do the minimum legally required but not necessarily ethical,
requirement
 Meets economic & legal considerations
 Types/Levels/Approaches of CSR
Organisational Responses (Strategies) to Social Demands (Issues)

3. ACCOMMODATIVE STANCE
 Firms exceed minimum social requirements only by special request
 Accepts social responsibility to (often under external pressure) to
comply with public interest i.e. Do minimum ethically required
 Meets economic, legal and ethical responsibilities
4. PROACTIVE STANCE:
 Highest level of CSR
Firms as citizens in society, actively seeking opportunities to
contribute to enhance community welfare
 Meets economic, legal, ethical and discretionary responsibilities
 Details of the responsibilities
Economic Responsibilities Legal Responsibilities
1. Perform in a manner consistent with 1. Perform in a manner consistent with
maximizing earnings per share. expectations of government & law.

2. Committed to being as profitable as 2. Comply with various federal, sate &

possible. local regulations.

3. Aims to maintain a strong competitive 3. Aims to be a law-abiding corporate

position. citizen.

4. Maintains a high level of operating 4. Aims to provide goods & services that
efficiency at least meet minimum legal
requirements
5. Success defines as one that is 5. Success defines as one that fulfills its
consistently profitable legal responsibilities

Source: The Pyramid of Corporate Social Responsibility by Archie B. Carroll,

Business Horizons, July-August 1991
Ethical Responsibilities Discretionary (philanthropic)
Responsibilities
1. Perform in a manner consistent with 1. Perform in a manner consistent with
expectations of societal mores & philanthropic & charitable expectations of
ethical mores society;
2. Recognize & respect new or evolving 2. Voluntarily serve a social role beyond its
ethical/moral norms adopted by economic, legal and ethical responsibilities.
society e.g. assist the fine & performing arts
3. Prevent ethical norms from being 3. Managers & employees participate in
compromised in order to achieve voluntary & charitable activities within their
corporate goals local communities
4. Good corporate citizenship defined 4. Aims to provide assistance to private &
as doing what is expected morally or public educational institutions
ethically
5. Recognize that corporate integrity & 5. Assist voluntarily with project that enhance a
ethical behavior go beyond mere community’s quality of life
compliance with laws & regulations

Source: The Pyramid of Corporate Social Responsibility by Archie B. Carroll,

Business Horizons, July-August 1991
 Attempt the mcqs in Quiz 4 to test your
knowledge and application of this week’s lecture