CHAP. 2. MANAGEMENT AND SOCIETY: THE EXTERNAL

ENVIRONMENT, SOCIAL RESPONSIBILITY, AND ETHICS

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After studying this chapter, you should understand:

1.  The nature of the pluralistic society 2. The social responsibility of managers 3. The nature and importance of ethics in

managing and ways to institutionalize and raise ethical standards.

4. That some ethical standards vary in different societies.

5. That trust is the basis for human interaction.

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Managers in the U.S. operate in a pluralistic society, in which many organized groups represent various interests

Each group has an impact on other groups, but no one group exerts an inordinate amount of power. Many groups exert some power over business

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Corporate social responsibility is “seriously considering the impact of the company's actions on society”

Social responsiveness is "the ability of a corporation to relate its operations and policies to the social environment in ways that are mutually beneficial to the company and to society”

Social audit is defined as “a commitment to systematic assessment of and reporting on some meaningful, definable domain of the company’s activities that have social impact.”

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Ecology pertains to the relationship of people and other living things and their environment such as soil, water, and air

Land may be polluted by industrial waste such as packaging

Water pollution may be caused, for example, by hazardous waste and sewer systems

Air pollution can be caused by acid rain, auto exhaust fumes, carcinogens from manufacturing processes, and other causes

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Ethics is the discipline dealing with what is good and bad and with moral duty and obligation

Business ethics is concerned with truth and justice and has a variety of aspects such as expectation of society, fair competition, advertising, public relations, social responsibilities, consumer autonomy and corporate behavior in the home country and abroad.

Personal ethics: rules by which an individual lives his or her personal life.

Accounting ethics: the code that guides the professional conduct of accountants.

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The utilitarian theory suggests that plans and actions should be evaluated by their consequences

The theory based on rights holds that all people have basic rights

The theory of justice demands that decision makers be guided by fairness and equity, as well as impartiality

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Ethical decisions making should be done by institutionalizing ethics.

Theodore Purcell and James weber suggest three ways for institutionalizing ethics

1.By establishing an appropriate company policy or a code of ethics.

2.By using a formally appointed ethics committee.

3. By teaching ethics in management development programmes.

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The publication of a code of ethics in not enough. Some companies require employees to sign the code and includes ethics criteria in the performance appraisal.

A code is a statement of policies, principles, or rules that guide behavior.

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Public disclosure and publicity The increased concern of a

well‑informed public Government regulations Education to raise the professionalism of

business managers

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Traditionally, the concept of trust is equated with integrity, loyalty, caring, and keeping promises in the relationships between and among individuals

Belardo points out that trust should go beyond individual relationships and extend to the organization by creating a culture of trust that transcends individual leadership

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