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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2004 H. Weihrich Chap.2. Management and Society 3
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 companys
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



2004 H. Weihrich Chap.2. Management and Society 8
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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