Business and Society

The Relationship Between Business and Society

• The Canadian business system emphasizes increasing awareness of Canadian capitalism, business's societal role, corporate responses to challenges, and managerial perspectives.
• Integrity is a corporation’s behavior appropriateness and adherence to societal moral guidelines like honesty, fairness, and justice.
• A responsible corporation is a business undertaking that addresses social, ethical, and environmental responsibilities, in addition to economic obligations.
• Business ethics provides guidance through rules, standards, codes, or principles for morally appropriate managerial decisions related to business operations.
• Corporate Social Responsibility (CSR) involves balancing economic, social, and environmental responsibilities to meet stakeholder expectations.
• Corporate Sustainability (CS) demonstrates the inclusion of social and environmental responsibilities within business operations to ensure a corporation's long-term survival.
• Triple Bottom Line evaluates a corporation's performance based on economic, social/ethical, and environmental value added or destroyed.
• Corporate Citizenship signifies a corporation’s consideration of its societal and environmental role and its economic influence.

Approaches to Ethical Thinking

• Deontological ethics is rule-based, emphasizing ethical actions done for their inherent goodness, regardless of consequences.
  • Decisions are based on duty and universal principles, like the Ten Commandments or the Charter of Rights and Freedoms.
• Teleological or consequential theories focus on the outcomes or results of actions to determine their ethical value.
  • Actions are right if consequences are good and wrong if consequences are bad, aiming for the greatest good for the most people through Utilitarianism.
• Virtue ethics highlights an individual's moral character, focusing on being a good person with moral traits.
  • It assumes a "good" person acts ethically, without applying absolute rules in every situation.

Economic Systems and Capitalism

• An economic system uses land, labor, and capital to produce, distribute, and exchange goods and services to meet society's needs and wants.
• Capitalism is an economic system based on private ownership of the means of production.
• A Free Enterprise System involves few restrictions on business activities and ownership, promoting a competitive market with limited government intervention.
• Laissez-faire Capitalism is an economic system where transactions between private parties are free from intrusive government interventions.
• A Responsible Enterprise System embodies free enterprise with accountability.
• Legitimacy is the belief in the rightness of an institution to supply goods and services wanted by society and requires businesses to adapt to changing values and expectations.
• A Social License is the privilege of operating in society with minimal formalized restrictions.

Factors Influencing Attitudes Toward Business

• Standard of living improvements correlate with positive views of business.
• Decentralized decision-making in business ensures diverse goods and services, which is viewed favorably by consumers.
• Resource allocation is based on price and availability.
• Self-interest is a key motivator in the business system, driving profit but potentially leading to greed.
• The business cycle is natural where corporate misdeeds can negatively influence societal attitudes.
• Globalization comes with both opportunities and challenges, such as job losses.
• Unemployment is associated with a country’s economic performance of which Canada currently has a 6.6% unemployment rate.
• Technological innovation entails constant change with media coverage influencing perceptions of business.
• Government maintains a mutually dependent relationship with business.

Ethics and Capitalism Theory

• The Canadian economic system consists mostly of business enterprises operating in a market system.
• The theory of Capitalism encompasses:
  • Right of Private Property like land and building.
  • Equality of Opportunity.
  • Competition in the market.
  • Individualism and Economic Freedom.
  • The goal for Profits.
  • Work Ethic.
  • Consumer Sovereignty.
  • Limited overall government intervention.
• Consumer capitalism involves limited government, open borders, and a profit mentality in countries like Canada, the US, and Australia.
• Producer capitalism emphasizes production, employment, and statist policies in places like France and Japan.
• Family capitalism has extended clans that dominate business activities and control capital flows in countries such as Thailand, Indonesia, and Taiwan.
• Frontier capitalism introduces business fundamentals in beginning-stage capitalist economies like Russia and China.
• State Capitalism sees governments manipulating market outcomes for political and social purposes.
• Capitalism’s ethics can include greed, economic downturns, business failures, inequality for both income and wealth, corporate maleficence, stagnant earnings, environmental harm and market system resilience.
• Capitalism produces wealth, promotes prosperity, and enhances well-being, fostering creativity, cooperation, and individual freedoms.

Stakeholders and Issues for Businesses

• Businesses in Canada operate within a pluralistic social system in which various groups and institutions influence particular citizenries.
• A Pluralistic Social System decentralizes power among diverse institutions.
• Civil Society includes voluntary, community, and social organizations separate from government.
• Non-Governmental Organizations (NGOs) are groups sharing values on societal issues, usually non-profit organizations who commonly focus on animal rights, technology, economics, development for society, working conditions, environment and religion.
• Successful partnerships between businesses and organizations require leadership, openness to change, commitment, and shared goals.
• Issues in the business and media relationship come down to potential libel challenges and the control of the media spin on corporate events or information.

Ethics of Business: Theoretical Basis & Influences

• A Policy Development Institution researches and interprets major social, economic, and political issues facing business and society.
• Business ethics are standards that provide guidelines for morally correct behavior and truthfulness.
• Value judgments are a subjective evaluation of importance.
• Moral standards are the benchmarks individuals use to assess their actions and the actions of others in categories.
• The five categories of influences of ethics are:
  • Individual such as family, home life, religion, and education.
  • Organizational influences such as conduct, and organization affiliations.
  • Economic efficiency influences, such as social betterment.
  • Government and legal system, like the Competition Act.
  • Social influences, like dominant culture.
• Ethical Relativism suggests ethical answers depend on the situation, lacking universal standards and often contradicting the pursuit of diverse perspectives.
• Cultural Relativism recognizes varying customs and beliefs across societies, advising caution in judging behaviors within different societies.
• Self-Interest Ethic involves acting or setting standards on solely an individual's values.
  • It is important to note that this does not include disregarding the well being of others.
• Personal Virtue Ethic says behavior is based on being a good person with courage, honesty, and generosity.
• Ethic of Caring gives attention to specific individuals or stakeholders being harmed.
• Utilitarian Ethic focuses on maximizing good and benefits for all stakeholders.
• Universal Rules Ethics suggests that managers should have the same moral obligations in all situations.
  • People should be treated as a means to their own ends.
• Individual Rights Ethic acts as the basis for deciding what is just or fair (e.g., rights to safety, information, privacy, property, freedom of speech, freedom of association, etc.).
• Ethic of Justice says moral decisions are based on a single value of justice.
  • The types of justice are procedural, compensatory, retributive justice, and distributive justice.
• Ethical Dilemmas are problems where one has to make a choice between two alternatives of equal weight.

Approaches to Ethical Dilemmas & Business Practices

• A moral reasoning process is a systematic way to think through the implications of a moral problem.
  • The process incorporates:
    • Fact determination.
    • Identification of stakeholders and viewpoints.
    • Principles of ethics to determine possible alternate solutions.
    • Practical restraints.
    • Monitoring outcomes.
• Kohlberg's Stages of Moral Development gained through socialization identifies different levels as a result of social maturity.
• Common pitfalls in ethics are a result of broad applications, complexities and seeing unethical behavior as simply the product of "bad apples".
• Ethical leadership encompasses communicating ethical standards and encouraging conduct.
• Ethical behavior considers business as stakeholders and helping those in need.
• Ethical codes of conduct describes values that guide behavior.
• They are meant to set expectations to where people should stand in the organization.
• Criticisms include unenforceable standards or that they are idealistic and written without substance.
• Ethics training teaches employees about values and policies.
• Conflicts of interest, which can be real, apparent or potential, influence the exercise of individual duties.
• Ethics Audit systematically searches for unethical behavior.
• Ethics Reporting Systems and Whistleblowing are voluntary disclosures of inappropriate behavior.
• Whistleblowing can be internal.

Corporate Social Responsibility

• Corporate Social Responsibility balances economic, social, and environmental responsibilities to meet stakeholder expectations.
• The concept includes five considerations:
  • Responsibilities go beyond profit.
  • Aiding societal issues.
  • Stakeholders beyond shareholders.
  • Market place impacts.
  • Greater human values based on economic values.
• Business and society are interwoven.
• Business is expected to act in a role that is an institution of society.
• The roles have principles from corporate social responsibility such as legitimacy, public responsibility and managerial discretion.
• CSR can be approached as reactionary, reputational, striving for sustainability, or based on engagement.
• Social Responsibility includes views as amoral, personal, or social institutions.
• Regulations can come from governmental and market forces through public service.

Regulating Business Ethics

• Deregulation reduces government control for a more efficient marketplace.
• Self-regulation is imposed directly by the corporation and its industry.
• Private regulation is set by an independent organization that approves products to ascertain specific standards.
• Market Regulation is where laws are unnecessary in competitive markets.
• Lobbying attempts to influence government.

Workplace Ethics

• Management monitors governmental environments to protect industry interests.
• Corporate agendas dominate government programs.
• Workplace ethics touches employees, consumers, competition, and suppliers.
• Workplace ethics includes working conditions, privacy and fair compensation.
• Work Ethic values hold that work is important to society.
• The workforce now participates in the short-term gig economy.
• Employee loyalty can be improved through image/loyalty promotion with a company and starting with high-level management.
• Token efforts must be avoided.
• Preferential treatment and discrimination should be avoided at all times.
• Employment equity and diversity management should be used.
• Consumer sovereignty characteristics such as making their own choices, dictates the quality, quantity, and type of goods to be provided.
• Conditions are seldom fulfilled, due to high information costs and misleading advertising.
• Ethical consumerism has led to movements to support buyers, sellers, and fair trade.

Business and the Environment

• Environmental issues concern all aspects of corporations.
• Managers must cope while planning the environment.
• Managers must cope with all aspects of the environment issue.
• The set of values that govern the business practices are their environmental ethics.
• A company has a sense of duty to express environmental obligation and moral responsibility.
• Development must ensure the environment does not impair the potential for other generations.
• Sustainability must meet the needs of the business while enhancing human and natural resources.
• Environmental impacts include acid rain, pollution, ozone depletion and others.
• Environmental non-governmental organizations try to affect change.
• Different approaches to business include token response, going by the laws/regulations, environmental management, and sustainability.
• Businesses are moving towards a circular economy by going from linear to a closed loop of production.