Chapter 05

Discuss what it means to be socially responsible and what factors

influence that decision.
Social obligation, which reflects the classical view of social responsibility, is when a firm engages in
social actions because of its obligation to meet certain economic and legal responsibilities. Social
responsiveness is when a firm engages in social actions in response to some popular social need. Social
responsibility is a business’s intention, beyond its economic and legal obligations, to pursue long-term
goals that are good for society. Both of these reflect the socioeconomic view of social responsibility.
Determining whether organizations should be socially involved can be done by looking at arguments for
and against it. Other ways are to assess the impact of social involvement on a company’s economic
performance and evaluate the performance of SRI funds versus non-SRI funds. We can conclude that a
company’s being socially responsible doesn’t appear to hurt its economic performance

Explain green management and how organizations can go green.

Green management is when managers consider the impact of their organization on the natural
environment. Organizations can “go green” in different ways. The light green approach is doing what is
required legally, which is social obligation. Using the market approach, organizations respond to the
environmental preferences of their customers. Using the stakeholder approach, organizations respond
to the environmental demands of multiple stakeholders. Both the market and stakeholder approaches
can be viewed as social responsiveness. With an activist or dark green approach, an organization looks
for ways to respect and preserve the earth and its natural resources, which can be viewed as social
responsibility. Green actions can be evaluated by examining reports that companies compile about their
environmental performance, by looking for compliance with global standards for environmental
management (ISO 14000), and by using the Global 100 list of the most sustainable corporations in the
world.

Discuss the factors that lead to ethical and unethical behavior.

Ethics refers to the principles, values, and beliefs that define right and wrong decisions and behavior.
The factors that affect ethical and unethical behavior include an individual’s level of moral development
(preconventional, conventional, or principled), individual characteristics (values and personality
variables—ego strength and locus of control), structural variables (structural design, use of goals,
performance appraisal systems, and reward allocation procedures), organizational culture (shared
values and cultural strength), and issue intensity (greatness of harm, consensus of wrong, probability of
harm, immediacy of consequences, proximity to victims, and concentration of effect). Since ethical
standards aren’t universal, managers should know what they can and cannot do legally as defined by the
Foreign Corrupt Practices Act. It’s also important to recognize any cultural differences and to clarify
ethical guidelines for employees working in different global locations. Finally, managers should know
about the principles of the Global Compact and the Anti-Bribery Convention.

Describe management’s role in encouraging ethical behavior.

The behavior of managers is the single most important influence on an individual’s decision to act
ethically or unethically. Some specific ways managers can encourage ethical behavior include paying
attention to employee selection, having and using a code of ethics, recognizing the important ethical
leadership role they play and how what they do is far more important than what they say, making sure
that goals and the performance appraisal process don’t reward goal achievement without taking into
account how those goals were achieved, using ethics training and independent social audits, and
establishing protective mechanisms.

Discuss current social responsibility and ethics issues.

Managers can manage ethical lapses and social irresponsibility by being strong ethical leaders and by
protecting employees who raise ethical issues. The example set by managers has a strong influence on
whether employees behave ethically. Ethical leaders also are honest, share their values, stress
important shared values, and use the reward system appropriately. Managers can protect whistle-
blowers (employees who raise ethical issues or concerns) by encouraging them to come forward, by
setting up tollfree ethics hotlines, and by establishing a culture in which employees can complain and be
heard without fear of reprisal. Social entrepreneurs play an important role in solving social problems by
seeking out opportunities to improve society by using practical, innovative, and sustainable approaches.
Social entrepreneurs want to make the world a better place and have a driving passion to make that
happen. Businesses can promote positive social change through corporate philanthropy and employee
volunteering efforts.

Chapter 17

Define leader and leadership.

A leader is someone who can influence others and who has managerial authority. Leadership is a
process of leading a group and influencing that group to achieve its goals. Managers should be leaders
because leading is one of the four management functions.
Compare and contrast early theories of leadership.
Early attempts to define leader traits were unsuccessful although later attempts found seven traits
associated with leadership. The University of Iowa studies explored three leadership styles. The only
conclusion was that group members were more satisfied under a democratic leader than under an
autocratic one. The Ohio State studies identified two dimensions of leader behavior— initiating
structure and consideration. A leader high in both those dimensions at times achieved high group task
performance and high group member satisfaction, but not always. The University of Michigan studies
looked at employee-oriented leaders and production-oriented leaders. They concluded that leaders who
were employee oriented could get high group productivity and high group member satisfaction. The
Managerial Grid looked at leaders’ concern for production and concern for people and identified five
leader styles. Although it suggested that a leader who was high in concern for production and high in
concern for people was the best, there was no substantive evidence for that conclusion. As the
behavioral studies showed, a leader’s behavior has a dual nature: a focus on the task and a focus on the
people.

Describe the three major contingency theories of leadership.

Fiedler’s model attempted to define the best style to use in particular situations. He measured leader
style—relationship oriented or task oriented—using the least-preferred coworker questionnaire. Fiedler
also assumed a leader’s style was fixed. He measured three contingency dimensions: leader–member
relations, task structure, and position power. The model suggests that task-oriented leaders performed
best in very favorable and very unfavorable situations, and relationship-oriented leaders performed best
in moderately favorable situations. Hersey and Blanchard’s situational leadership theory focused on
followers’ readiness. They identified four leadership styles: telling (high task–low relationship), selling
(high task–high relationship), participating (low task–high relationship), and delegating (low task–low
relationship). They also identified four stages of readiness: unable and unwilling (use telling style),
unable but willing (use selling style), able but unwilling (use participative style), and able and willing (use
delegating style). The path-goal model developed by Robert House identified four leadership behaviors:
directive, supportive, participative, and achievement-oriented. He assumed that a leader can and should
be able to use any of these styles. The two situational contingency variables were found in the
environment and in the follower. Essentially the path-goal model says that a leader should provide
direction and support as needed; that is, structure the path so the followers can achieve goals.

Describe contemporary views of leadership.

Leader–member exchange theory (LMX) says that leaders create in-groups and outgroups and those in
the in-group will have higher performance ratings, less turnover, and greater job satisfaction A
transactional leader exchanges rewards for productivity where a transformational leader stimulates and
inspires followers to achieve goals. A charismatic leader is an enthusiastic and self-confident leader
whose personality and actions influence people to behave in certain ways. People can learn to be
charismatic. A visionary leader is able to create and articulate a realistic, credible, and attractive vision of
the future. A team leader has two priorities: manage the team’s external boundary and facilitate the
team process. Four leader roles are involved: liaison with external constituencies, troubleshooter,
conflict manager, and coach.

Discuss contemporary issues affecting leadership.

The five sources of a leader’s power are legitimate (authority or position), coercive (punish or control),
reward (give positive rewards), expert (special expertise, skills, or knowledge), and referent (desirable
resources or traits). Today’s leaders face the issues of managing power, developing trust, empowering
employees, leading across cultures, and becoming an effective leader