Business Ethics and Social Responsibility

• Good Governance and Social Responsibility are key aspects of ethics in business.
• Facilitated by Catherine B. Bolintiam, PhD, DPA.

Learning Objectives

• Students should be able to differentiate the three categories of economic activities.
• Students should be able to illustrate the important features and characteristics of business as an economic activity.
• Students should be able to demonstrate the importance of ethics in business.
• Students should be able to evaluate the relationship between ethics in business.
• Students should be able to justify morality of profit.
• Students should be able to critique ethics and morality in business.

Ethics and Business

• Creating value so that customers do not dream of looking for another supplier is the foundation of how to be successful in business.
• The idea of "value creation" builds cooperation with the buyer.
• Thomas Teal observed this in Fortune Magazine.

Definition of Terms

• Ethics refers to moral principles that govern a person's behavior.
• According to Campos and Campos (2023), ethics is a branch of philosophy dealing with right actions.
• Business is an organization engaged in lawful commercial, industrial, or professional activities, that may make, distribute or provide services in exchange for monetary compensation.
• The goal of a business to make a profit by offering products and services.
• Business Ethics refers to standards for morally right/wrong conduct in business, in the production of goods/services, in the workplace, and in relationships with stakeholders.

Nature of Business

• Man has unappeasable wants, and works to maximize the use of limited resources to satisfy those wants.
• Economic activities are undertaken to earn income, money, and wealth for his life.
• A person may pursue an activity based on interest, capacity, knowledge and training.

Business Environment Components

• Internal Environment refers to all the factors that influence its functioning within an organization.
• Internal environment factors can affect the financial, marketing, operations, personnel, & general management capabilities of an organization.
• External Environment consists of variables that provide an organization with opportunities or threats.
• Types of external environments are:
  • Micro environment contains factors with influence on an organization's business operations such as customers, products, intermediaries, competitors, and suppliers.
  • Macro environment contains uncontrollable societal factors like socio-cultural, political, economic, regulatory, technological, and demographic environments.

Classification of Economic Activities

• Profession is an occupation undertaken by doctors, engineers, lawyers, teachers.
• Employment is an occupation where a person provides physical or mental services to someone else for a salary or wage.
• Business is a lawful economic activity concerned with production and distribution of goods/services to earn profit.
• Examples of business activities: production, marketing, advertising, warehousing, insurance, banking.

Features and Characteristics of a Business

• Production and acquisition of goods.
• Generates employment.
• Continuous processes are a key aspect.
• Profit is the primary motivator.
• Risk or uncertainty of future has an impact.
• Creativity and dynamic adaptability must be present.
• Customer Satisfaction is crucial.
• Social Activity and government control must be present.
• Resources must be optimally, and efficiently utilized.

Importance of Ethics in Business

• Ethics aims to form a logic of right and wrong within organizations.
• Ethical businesses are fair, clean, and beneficial to society.
• Businesses must follow rules for the benefit of consumers, society and organization itself.
• Benefits of ethics include:
  • Providing basic needs
  • Building credibility
  • Connecting leaders and employees
  • Enhancing decision-making
  • Increasing profits/gains
  • Protecting society

Relationship between Ethics and Business

• Ethics plays a significant role in the operations of a business.
• Bad business can result from unethical practices.
• Effective business practices can come from good and valuable ethical practices.
• Ethics should be part of any management structure.
• Employers must fulfill their obligations to employees, and provide them with respect, loyalty and fair wages, as well as a good working condition
• There must always be a motive to contribute social benefits.
• Businesses must aim to satisfy wants/needs of customers.

Examples of Bad Business Practices

• Defective or faulty products.
• Invalidated firing of employees.
• Misrepresentation of a product.
• False or misleading advertising.
• False free prize or gift offers.
• Deceptive pricing.
• Non-compliance with manufacturing standards.

Key Elements for a Responsible Company

• Employees
• Good Reputation

The Morality of Profit

• Survival aims to perpetuate ones biological being and avert poverty, downfall and death.
• Flourishing aims to control and manage material reality and take advantage of opportunities.

The Morality of Profit: Ways of Generating Profit

• Take an action beneficial to oneself, but immaterial to others.
• Secure participation by teaming up with other people.

Values in Ethics

• Intellectual - gains of knowledge.
• Technical - gains of skill.
• Material - gains of property.
• Physiological - gains in health and fitness.
• Social - gains in valuable relationship.
• Monetary - gains in money.

Profit and Ethics

• The Bible is the base ethic of all Christians, and the word of God says is unethical.
• Good stewardship makes the idea of profit indispensable when it is a reward for helping other people who are in need.
• Meeting basic needs and wants motivates business people answer these needs with profit as the vital motivation.
• Profit is not bad intrinsically, but immoral profit is a sin through means of dishonesty.
• Profit is necessary to Christian stewardship.

What Makes Profit Unethical?

• Profit is indispensable for a business, but business has the option to attain profit through ethic or unethical means.
• Dishonesty may damage brand reputation/image and result in customer disloyalty.

Common Unethical Practices in Companies

• Employees: reducing benefits (salary, wages, allowances overtime pay, insurance).
• Ethical Dilemma: sometimes businesses choose the right form marketing with wrong choice to show inappropriate advertisements.
• Quality: companies make profits by offering substandard materials for the same price.
• Environmental: companies generate profits at the expense of environment.

Environmental Pollution Types

• Air alteration of physical, chemical & biological properties of atmospheric air.
• Water alteration of physical, chemical, biological & radiological properties such that impurity increases.
• Noise is excessive sounds that cause hearing loss, stress, fatigue, irritability, tension, headaches, and high blood pressure.
• Soil caused by chemicals/ pesticides killing agricultural pests like insects, and herbicides.

Business Ethics

• Ethics decides whether certain conducts and actions are right or wrong.
• Ethics creates morality.
• Morality is the standard that directs individuals and groups according to the rules, standard, and behavior in the society.

Features of Business Ethics

• Includes a code of conduct.
• Based on moral and social values.
• Gives protection to social groups.
• Provides a basic framework.
• Requires voluntary acceptance for enforcement.
• Requires education and guidance.
• It is a relative term, and not against profit making.

Sources of Business Ethics

• Religion provides the oldest foundations of ethical standards.
• Culture involves significant understandings among community members that are transferred across generations; laws, social norms, and everyday rituals differing from society.
• Law is legal code set by a state to guide human behavior to be adherent to regulations.

Explore the relationship between ethics and long-term business success. Understand how ethics extends beyond legal compliance, influencing stakeholder relationships and company reputation. Discover how social responsibility and productivity contribute to a value creation system.