Business Ethics and Social Responsibility

Chapter Two: Business Ethics and Social Responsibility

• This chapter covers business ethics and social responsibility
• Learning objectives include explaining how individuals develop personal codes of ethics, distinguishing social responsibility from ethics, and showing how social responsibility relates to environmental issues.

Learning Objectives

• Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.
• Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.
• Show how the concept of social responsibility applies to both environmental issues and to a firm's operations.
• Identify four general approaches to social responsibility and describe the four steps a firm must take to implement a social responsibility program.
• Explain how issues of social responsibility and ethics affect small businesses.

What's in It for Me?

• Understanding the material will help assess ethical and socially responsible issues as an employee or business owner.
• It will help understand the ethical and socially responsible actions of businesses in dealings as a consumer and investor.

Ethics in the Workplace

• Ethics are beliefs about what's right and wrong.
• Ethical behavior conforms to individual and societal values.
• Unethical behavior contradicts individual and social values.
• Business ethics encompasses ethical or unethical behaviors by employees in the workplace.

Individual Ethics

• Sources of personal codes of ethics include childhood responses to adult behavior, influence of peers, life experiences, and personal morals and values.

Business and Managerial Ethics

• Managerial ethics guides managers' behaviors in their workplace interactions with: employees, the organization, and other economic agents.

Assessing Ethical Behavior

• Gathering relevant facts and analyzing them are simple steps in applying ethical judgments.
• Ethical norms include utility (benefit to all), rights (respecting rights of all), justice (fairness), and caring (consistent with everyone's responsibilities to each other).

Company Practices and Business Ethics

• Encouraging ethical behavior involves adopting written codes of conduct, top management support of ethical standards, instituting ethics programs, and establishing ethical hotlines.

Social Responsibility

• Balancing organizational responsibilities to groups and individuals (stakeholders) in society.
• Organizational stakeholders are affected by organizational practices.

The Stakeholder Model of Responsibility

• Treat customers fairly and honestly.
• Treat employees fairly, respecting their dignity and basic needs.
• Follow proper accounting procedures and share financial performance information with investors.
• Establish mutually beneficial partnerships with suppliers.
• Engage in programs and charities to support local and international communities.

Contemporary Social Consciousness

• Accountability includes increased expectations of business roles in protecting and improving societal welfare.

Areas of Social Responsibility

• Responsibility toward the environment includes proper disposal of toxic waste, recycling, control of air, water, and land pollution, and avoiding greenwashing.
• Responsibility toward consumers involves offering quality products and fair pricing, also protecting consumer rights (safe products, informed choices, and fair treatment).
• Unfair pricing practices such as collusion and price gouging are considered unethical.
• Ethics in advertising include truth in advertising and avoiding morally objectionable content.
• Responsibility toward employees includes adherence to legal and social commitments like not discriminating, creating a safe workplace, and balancing work/life considerations.
• Responsibility toward investors includes appropriate financial management and reporting (avoiding insider trading).

Implementing Social Responsibility (SR) Programs

• Arguments against SR often cite its cost effects on profit and potential overreach of business control over SR issues. Businesses may lack expertise in SR matters.
• Arguments for SR emphasize that corporations are citizens with responsibility to help others. Corporations have resources and can solve problems they create.

Approaches to Social Responsibility

• The obstructionist stance involves doing the minimum possible and covering up any violations.
• The defensive stance involves meeting legal and ethical requirements, but not going beyond them.
• The accommodative stance meets legal and ethical requirements and may expand on them.
• The proactive stance actively seeks to contribute to the well-being of people and groups.

Managing Social Responsibility Programs

• Establishing social responsibility at the top, integrating it into strategic planning, showing top management support, assigning an executive for oversight, and performing regular social audits are important management practices.

Social Responsibility and the Small Business

• Small businesses face primarily size-related distinctions from large businesses in social responsibility. Individual ethics more often drive SR decisions.

Key Terms

• A list of key terms related to business ethics and social responsibility.

This quiz covers Chapter Two on Business Ethics and Social Responsibility. It explores how individuals develop personal ethical codes, the distinction between ethics and social responsibility, and their relation to environmental issues and firm operations. Assess your understanding of the key concepts and learning objectives in this important area of study.