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Business Ethics and Corporate Social Responsibility: Principles, Models, and Leadership - , Study notes of Introduction to Business Management

Virginia Polytechnic Institute and State University (Virginia Tech)Introduction to Business Management

Prof. Christopher P. Neck

Various ethical principles in business, including universalism, egoism, relativism, and kohlberg's model of cognitive moral development. It also discusses ethical business initiatives like the caux principles and sarbanes oxley act, and the importance of ethical leadership and codes. Corporate social responsibility, including economic, ethical, and philanthropic responsibilities, and transendent education. It also touches on ecocentric management and sustainable growth.

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Ethics- the system of rules that governs the ordering of values

Recent scandels involving ethics

Temptation exists in every organization. Most people have biases that favor themselves and their own

group.

Are certain results to telling the truth or lying which include- Conflicting expectations, negotiation,

keeping a confidence and reporting you own performance within an organization- helps short run but

not long run

Ethical issue- is a situation, problem or opportunity in which an individual must choose among several

actions that must be evaluated as morally right or wrong

Business ethics comprises the moral principles and standards that guide behavior in the business world.

Moral philosophy- refers to the principles, rules, and values people use in deciding right and wrong.

Universalism- stating that society should uphold certain values that society needs to function- rules

against murder, rape, deceit

Caux Principles for business are ethical principles est by international executives in Swiss, in collab with

business leaders from japan, Europe and the US

Kyosei- living and working together for the common good

Human dignity concerns the value each person as an end, not a means to the fulfillment of others

purposes’

Egoism- maximizes consequences for the individual- do the act that promotes the greatest good for

oneself.

Utilitarianism- directly seeks the greatest good for the greatest number of people. How did everyone

benefit?

Relativism- ethical behavior is based on opinions and behaviors relevant to other people. Defines ethical

behavior according to how others behave

Virtue ethics- perspective that what is moral comes from what a mature person with good moral

character would deem right.

Kohlbergs model of cognitive moral development- classification based on their level of moral judgement

Preconventional- makes decisions based on rewards and punishments

Conventional- conform to the expectations of ethical behavior held by society

Principled- Follow self chosen ethics

Sarbanes Oxley Act 2002- reduces the risk of unethical behavior by:

Discover Study notes of Introduction to Business Management Virginia Polytechnic Institute and State University (Virginia Tech)

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Ethics- the system of rules that governs the ordering of values Recent scandels involving ethics Temptation exists in every organization. Most people have biases that favor themselves and their own group. Are certain results to telling the truth or lying which include- Conflicting expectations, negotiation, keeping a confidence and reporting you own performance within an organization- helps short run but not long run Ethical issue- is a situation, problem or opportunity in which an individual must choose among several actions that must be evaluated as morally right or wrong Business ethics comprises the moral principles and standards that guide behavior in the business world. Moral philosophy- refers to the principles, rules, and values people use in deciding right and wrong. Universalism- stating that society should uphold certain values that society needs to function- rules against murder, rape, deceit Caux Principles for business are ethical principles est by international executives in Swiss, in collab with business leaders from japan, Europe and the US Kyosei- living and working together for the common good Human dignity concerns the value each person as an end, not a means to the fulfillment of others purposes’ Egoism- maximizes consequences for the individual- do the act that promotes the greatest good for oneself. Utilitarianism- directly seeks the greatest good for the greatest number of people. How did everyone benefit? Relativism- ethical behavior is based on opinions and behaviors relevant to other people. Defines ethical behavior according to how others behave Virtue ethics- perspective that what is moral comes from what a mature person with good moral character would deem right. Kohlbergs model of cognitive moral development- classification based on their level of moral judgement  Preconventional- makes decisions based on rewards and punishments  Conventional- conform to the expectations of ethical behavior held by society  Principled- Follow self chosen ethics Sarbanes Oxley Act 2002- reduces the risk of unethical behavior by:

Have more independent board directors not just company insiders
Adhere strictly to accounting rules
Have senior managers personally sign off on financial results Ethical climate- refers to the processes by which decisions are evaluated and made on the basis of right and wrong GE values ethical behavior Danger signs:  Excessive emphasis on short-term revenues over longer-term considerations  Failure to establish a written code of ethics  Desire for simple, “quick fix” solutions to ethical problem  Consideration of ethics as a legal issue Ethical leaders are ones who are both moral and a manger influencing others to behave ethically Ethics codes must be carefully written and tailored to individuals companies philosophies  Involve those who wrote and live within the code  Focus on real life situations  Keep it short and simple Compliance based ethics- company mechanisms typically designed to prevent, detect, and punish legal violations Integrity ethics programs- to instill in people personal responsibility for ethical behavior Moral awareness- realizing the issue has ethical implications Moral judgments- knowing what actions are morally defensible Moral character- the strength and persistence to act in accordance with your ethics despite the challenges Corporate social responsibility- obligation toward a society assumed by business
Economic responsibilities- (Be profitable) of business’ to produce goods and services that society wants at a price that perpetuates the business an satisfies its obligations to investors
Legal Responsibility- (Obey the law) obey the laws
Ethical responsibility- (Be ethical) meeting other societal expectations, not written as law
Philanthropic responsibilities-(be a good global corporate citizens)- addititional behaviors and activities that society finds desirable and that values the business support Transendent educations

Strategic planning involves making decisions about the organizations long term goals and strategies- external orientation Strategic goals- are major targets or end results that relate to the long term survival, value, and growth of the organization Strategy- Plan of action to achieve goals Tactical Planning- broad goals into specific goals relevant to a particular portion of the organization- (marketing + HR) Operational planning- identifies the specific procedures and processes required at lower levels of the organization. (Front line managers) All levels of planning needs to be aligned Strategic management- involves managers from all parts of the org in the formulation and implementation of strategic goals and strategies

Establishing Mission, vision and goals
Analysis of Internal and External Opportunities and threats
SWOT analysis
Strategy implementation
Strategic control Mission- the organizations purpose (to be our customers favorite place to eat- McDonalds) Strategic vision- where the org is headed and what it can become (Dupont- to be the world’s most dynamic science company creating sustainable solutions essential to a better, safer and healthier life for people everywhere. The most effective statements inspire organization members Stakeholders are groups and individuals who affect and are affected by achievement of the organizations missions, goals, and strategies Resources are inputs to a system that can enhance performance Core competence- A unique skill and or knowledge an organization possesses that gives an edge over competitors. Something well they do compared to its competitors Benchmarking- comparing their companies practices to those of others to understand the best practices Corporate strategy- the set of business’, markets or industries in which an org competes and the distribution of resources among those entities  Concentration- operates a single business and competes in a single industry

 Vertical integration- the acquisition or development of new business’ that produce parts or components of the orgs product  Concentric diversification- add new processes that produce related products or are involved in related markets  Conglomerate diversification- add new businesses that produced unrelated goods in unrelated markets Business strategy- major actions by which an organization competes in a particular industry or market Low cost strategy- try to be efficient and offer a standard, no frills product. Competitive advantage Differntiation strategy- Builds competitive advantage in its industry or market segment along with one or more dimensions Functional strategies- implemented by each functional area to support strategy Strategic control system is designed to support managers in evaluating the orgs process Ready made solutions- ideas that have been seen or tried before Custom made solutions- new creative solutions designed specifically for the problem Maximizing- realizing the best possible outcome Satisficing- choosing an option that is acceptable although not the best Optimizing- achieving the best possible balance among several goals Illusion of control- peoples belief that they can influence events when they have no control over it Goal displacement- when a group loses sight of original goal and a new less important goal emerges Devils advocate- person who has the job of critizing so that the downsides are exploited

Entrepreneurship- The pursuit of lucrative opportunities by enterprising individuals. High Creativitity and management skills Small business’- has fewer than 100 employees, independently owned, not dominant Entrepreneurial vision- has high growth and high profitability in its primary objectives Independent entrepreneurs are individuals who establish a new org without the benefit of corporate support Intraprenuers- new venture creators working inside big companies; they are corporate entrepreneurs Peru has the most entrepreneurs

Business incubators- protected environments for new small business’- industrial parks, abandoned wharehouses. Low rents and shared costs- 87% still there in 5 years Common challenges:

Survival is difficult
Growth creates a challenge
Hard to delegate
Misuse of funds
Poor Controls
Mortality
Going public- IPO-way to raise capital- unwritten shares in stock Opportunity analysis- assessments of good, activities, industry Business plan- a formal planning step that focuses on the entire venture and describes all the elements describes in starting it
Legitamacy- peoples judgement on the companies acceptance, appropriateness, and desireability Social capital- being apart of a social network and having a good reputation helps gain trust Skunkwork- project teams designated to produce a new product- specific goal in specific time Bootlegging- informal work on projects, other than those officially assigned of employees’ own choosing and initiative Entrepreneurial Orientation- The tendency of an org to identify and capitalize on opportunities to launch new ventures by entering new or established markets with new or existing products Vision- mental image of a possible and desirable future state of the org Supervisory leadership- is behavior that provides guidance support and corrective feedback for day to day activities Strategic leadership- gives the purpose and meaning to organizations envisioning and creating a positive future Power- the ability to influence others Power can arise from 5 different sources:
Legitimate power- a leader with the right or authority to tell others what to do
Reward power- influences others because she controls valued rewards; people comply because they want awards

Coercive power- a leader has control punishments; people comply because they don’t want to be punished
Referent power- has personal characteristics appealing to others; people comply because of admiration, personal liking, and a desire to be like them
Expert power- has certain knowledge people wish to obtain Trait approach- attempts to determine the personal characteristics that great leaders share Behavioral approach- attempts to identify what leaders do—that is what behaviors they exhibit Task performance behaviors- actions taken to ensure that the work group or organization reaches goals Group Main’t behaviors- leaders take action to ensure satisfaction of group Leader member exchange- highlights the importance of leader behaviors not just toward the group as a whole but toward individuals on a personal basis Autocratic leaders- make decisions and then announces them to group Democratic leaders- solicits imput from others Laissez Faire- absence of management in decision making Situational approach- analyze the situation and then decide what to do Vroom model- participation dimension of leadership Fiedlers contingency model- personal style of leader and the degree to which the situation gives leader power, control, and influence over the situation Task motivated leadership- placing primary emphasis on completing the task and is more likely exhibited buy leaders with low LPC scores Relationship motivated- maintaining good interpersonal relationships and likes high LPC scores Hersey and Blanchards situation theory- maturity of followers Job maturity- level of the follower’s skills Psychological maturity- follower’s self-confidence and self respect Pathgoal- how leaders influence followers Charismatic leaders- dominant, self confident, strong conviction Transformational leaders0 get people to transcend their personal interests for the sake of the larger community Transactional theory- sees management as a series of transaction

Business Ethics and Corporate Social Responsibility: Principles, Models, and Leadership - , Study notes of Introduction to Business Management

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