MgtS 4461 – Business and Society

Lesson plan: January 29, 2008

“Why be ethical?”

Goals of today’s lesson:

Today’s class considers the motivations underlying ethical behavior. First, we will observe that many people – including the media, executives, managers, and even employees themselves – care about ethical behavior on the job. As the text says, “Reputation counts!” (page 32) We will then look at issues of Corporate Social Responsibility (CSR), and observe that there is a complex relationship between CSR and Corporate Financial Performance (CFP).

• Students will begin to understand that a wide variety of stakeholders expect them as employees and managers to be ethical.
• Students will begin to understand that a wide variety of audiences care about ethics.
• Students begin to understand that the ethics of a company may bear an important role in their job searches and begin to understand what they want in the ethics of a potential employer.
• Students will begin to understand the term “Corporate Social Responsibility” (CSR) and the relationship between CSR and Corporate Financial Performance (CFP).
• Understand some of the difficult choices business decision makers must make.

Question 1: What is an “ethical” firm?

1a. What does it mean to you for a firm – as compared to an individual – to be “ethical”? How important is working for an “ethical” company to you? Why is it important or unimportant?

1b. Now, think about this in light of your upcoming job search. Presuming that you (or someone else in your group) want to work for an “ethical” company, how would you determine whether a firm is “ethical”? Relatedly, could you work for a firm whose products you did not endorse? (Tobacco, alcohol, etc.)

1c. Would you be willing to sign a “graduation pledge” like that talked about on page 31? Why or why not?

Question 2: What is “Corporate Social Responsibility”?

2a. Define Corporate Social Responsibility. What are the components of CSR?

2b. On page 33, the text presents the concept of corporate social responsibility (CSR) in terms of a pyramid. What are the advantage and drawbacks of presenting CSR in this manner? (Begin by thinking about how you interpret the pyramid and what it means about CSR.) If you could modify this diagram, how would you change it? How would your revisions make the diagram “better”?

Question 3: What is the relationship between CSR and financial performance

3a. Based on the material contained in the text, does it “pay” businesses to be socially responsible? Why or why not?

3b. Does it make sense for investors to “screen” investments on the basis of social responsibility? Why or why not? What are the problems with adopting a CSR “screen” for investments?

3c. When and if you have money to invest, how much of a “hit” on your investments would you take to invest in a socially responsible manner?

Case discussion – “Merck and river blindness” (pages 57-58)

Please read the case and accompanying questions on page 58. Be prepared to discuss the case in class.

Conclusions:

• There are a variety of stakeholders who are concerned about the ethics of the individual and the organization.
• Different organizations have different ethical “stances” and you may want to think about these as you conduct your job search. This may limit your job search screen, but may also differentiate yourself from other job candidates.
• There is growing evidence that CSR may enhance CFP, and that the relationship may be a reciprocal one.