Where are we today? What current management concepts
and practices are shaping “tomorrow’s history”?
This session establishes first a framework for understanding social
responsibility and managerial ethics.
Then, in this session, we’ll attempt to answer those above stated
questions by introducing several trends and
issues that we believe are changing the way managers do their jobs:
managing in an e-business world.
Organizational social Responsibility
WHAT IS SOCIAL RESPONSIBILITY?
Before the 1960s, few people questioned the
role of business organizations in social responsibility.
However, times have changed. Now it’s important to get an understanding
A. There are two opposing views of what social responsibility is.
1. The classical
view is the view that management’s only
social responsibility is to maximize profits.
a. Milton Friedman is the most outspoken advocate of this view.
b. He argues that managers’ primary responsibility is to operate the
business in the best interests of
the stockholders—the true owners of the organization.
2. The socioeconomic
view is the view that management’s
social responsibility goes well beyond the
making of profits to include protecting and improving society’s welfare.
a. The argument behind this view is that corporations are not
independent entities responsible only to
b. Also, modern organizations are no longer just economic institutions.
B. There are 10 major arguments
responsibility, and they include the following:
a. Public expectations
b. Long-run profits
c. Ethical obligation
d. Public image
e. Better environment
f. Discouragement of further government regulation
g. Balance of responsibility and power
h. Stockholder interests
i. Possession of resources
j. Superiority of prevention over cures
C. There are six major arguments
responsibility. These include:
a. Violation of profit maximization
b. Dilution of purpose
d. Too much power
e. Lack of skills
f. Lack of accountability
responsibility is an obligation, beyond
that required by the law and economics, for a firm
to pursue long-term goals that are good for society.
2. Social obligation
is the obligation of a business to meet
its economic and legal responsibilities.
responsiveness is the capacity of a
firm to adapt to changing societal conditions.
SOCIAL RESPONSIBILITY AND ECONOMIC PERFORMANCE.
The question of whether socially responsible
activities lower a company’s economic performance has been
addressed in numerous studies.
A. The majority of studies found a positive relationship between
corporate social involvement and
economic performance, but some caution is necessary because of
associated with trying to measure social responsibility and economic
Ethics refers to the rules and principles
that define right and wrong conduct. There are ethical
dimensions to managerial decisions and actions.
Four Views of Ethics.
1. The utilitarian
view of ethics states that ethical
decisions are made solely on the basis of their
outcomes or consequences.
2. The rights view
of ethics says that ethical decisions
are concerned with respecting and protecting
individual liberties and privileges such as the rights of privacy,
freedom of conscience, free speech,
life and safety, and due process.
3. The theory of
justice view of ethics states that
decision makers seek to impose and enforce rules
fairly and impartially.
4. Finally, the
integrative social contracts theory
proposes that ethical decisions should be based on
empirical (what is) and normative (what should be) factors. This view is
based on the integration of
two “contracts”—the general social contract and a more specific contract
among members of a
specific community that might be affected by a decision.
Toward Improving Ethical Behavior
What can be done to improve ethical behavior?
There are a number of things organizations can do to
cultivate ethical behavior among members. Eight suggestions will be
1. The selection process for bringing new employees into organizations
should be viewed as an
opportunity to learn about an individual’s level of moral development,
personal values, ego
strength, and locus of control.
2. A code of ethics
is a formal statement of an
organization’s primary values and the ethical rules it
expects employees to follow. Also, decision rules can be developed to
guide managers in handling
ethical dilemmas in decision making. Top management’s leadership and
commitment to ethical
behavior is extremely important because it’s the top managers who set
the cultural tone.
4. Employees’ job goals should be tangible and realistic, because when
goals are clear and realistic,
they reduce ambiguity and motivate rather than punish. Job goals are
usually a key issue in
5. If an organization wants it employees to uphold high ethical
standards, it must include this
dimension in its appraisal process. Performance appraisals should be
comprehensive and not just
focus on economic outcomes.
6. Ethics training should be used to help teach ethical problem solving
and to present simulations of
ethical situations that might arise. If it does nothing else, ethics
training should increase awareness
of ethical issues
7. Independent social audits evaluate decisions and management practices
in terms of the
organization’s code of ethics and can be used to deter unethical
8. Finally, organizations can provide formal protective mechanisms so
that employees with ethical
dilemmas can do something about them without fear of reprisal.
Practically everywhere you turn these days
you’ll read or hear about entrepreneurs. If you pick up a current
newspaper or general news magazine or log on to one of the Internet’s
news sites, chances are you’ll find at
least one story (and probably many more) about an entrepreneur or an
Entrepreneurship is a popular topic! But what exactly is it?
is the process whereby an individual or a
group of individuals uses organized effort and
means to pursue opportunities to create value and grow by fulfilling
wants and needs through innovation
and uniqueness, no matter what resources are currently controlled. It
involves the discovery of
opportunities and the resources to exploit them. Three important themes
stick out in this definition of
entrepreneurship. First is the pursuit of opportunities.
Entrepreneurship is about pursuing environmental
trends and changes that no one else has seen or paid attention to. For
example, Jeff Bezos, founder of
Amazon.com, was a successful programmer at an investment firm on Wall
Street in the mid-1990s.
However, statistics on the explosive growth in the use of the Internet
and World Wide Web (at that time, it
was growing about 2,300 percent a month) kept nagging at him. He decided
to quit his job and pursue what
he felt were going to be enormous retailing opportunities on the
Internet. And the rest, as they say, is
history. Today, Amazon sells books, music, home improvement products,
cameras, cars, furniture, jewelry,
and numerous other items from its popular Web site.
The second important theme in entrepreneurship is innovation.
Entrepreneurship involves changing,
revolutionizing, transforming, and introducing new approaches–that is,
new products or services or new
ways of doing business.
The final important theme in entrepreneurship is growth. Entrepreneurs
pursue growth. They are not
content to stay small or to stay the same in size. Entrepreneurs want
their business to grow and work very
hard to pursue growth as they continually look for trends and continue
to innovate new products and new
Entrepreneurship will continue to be important to societies around the
world. For-profit and even not-forprofit
organizations will need to be entrepreneurial
that is, pursuing opportunities, innovations,
growth–if they want to be successful. We think that an understanding of
entrepreneurship is so important
that at the end of each major section in this books we’ve included a
special entrepreneurship module that
looks at the topics presented in that section from the perspective of
Managing in An E-Business World
What a difference three years makes! The last
time we revised this book, the Internet and World Wide Web
were still a novelty to most managers and organizations. E-mail as a
form of communication was gaining in
popularity, and occasionally you saw Web addresses in company
advertisements. Those days are long, gone!
Now, everywhere you look, organizations (small to large, all types,
global and domestic, and in all industries)
are becoming e-businesses. Today’s managers must manage in an e-business
world! In fact, as a student,
your learning may increasingly be taking place in an electronic
environment. What do we know about this ebusiness
E-business (electronic business)
is a comprehensive term describing the way an
organization does its
work by using electronic (Internet-based) linkages with its key
constituencies (employees, managers,
customers, suppliers, and partners) in order to efficiently and
effectively achieve its goals. It’s more than ecommerce,
although e-business can include e-commerce.
E-commerce (electronic commerce)
form of business exchange or transaction in which the parties interact
electronically.6 Firms such as Dell
(computers), Varsity books ( ), and PC Flowers and Gifts
(flowers and other gifts) are engaged in
e-commerce because they sell products over the Internet. Although
e-commerce applications will continue
to grow in volume, they are only one part of an e-business.
Not every organization is or needs to
be a total e-business. There are three categories of e-business
involvement. The first type is what we’re going to call an e-business
enhanced organization, a traditional
organization that sets up e-business capabilities, usually e-commerce,
while maintaining its traditional
structure. Many Fortune 500 type organizations are evolving into
e-business using this approach. They use
the Internet to enhance (not to replace) their traditional ways of doing
business. For instance, Sears, a
traditional bricks-and-mortar retailer with thousands of physical stores
worldwide started an Internet
division whose goal is to make Sears “the definitive online source for
the home.” Although Sears Internet
division, Sears.com, represents a radical departure for an organization
founded in 1886 as a catalog-sales
company, it’s intended to expand, not replace, the company’s main source
Managing in an e-world, whether as an e-business enhanced, e-business
enabled, or total e-business
organization requires new insights and perspectives. To help you acquire
these, we’ve included “Managing
in an E-Business World” boxes in a number of chapters.
Management is no longer constrained by
national borders. BMW, a German firm, builds cars I south
Carolina. McDonald’s, a U.S. firm, sells hamburgers in China. Toyota, a
Japanese firm, makes cars in
Kentucky. Australia’s leading real estate company, Lend Lease
Corporation, built the Blue water shopping
complex in Kent, England, and has contracts with Coca-Cola to build all
the soft0drink maker’s bottling
plants in Southeast Asia. Swiss company ABB Ltd. has constructed power
generating plants in Malaysia,
South Korea, China, and Indonesia. The world has definitely become a
Managers in organizations of all sizes and types around the world are
faced with the opportunities and
challenges of operating in a global market.