Chapter Two: Business Ethics and Social Responsibility PDF

Chapter Two Business Ethics and Social Responsibility  LL EE AA R RNN II N NGG O O BB JJ EE C C TT II VV EE SS After reading this chapter, you should be able to: 1. Explain how individuals develop their...

Chapter Two Business Ethics and Social Responsibility  LL EE AA R RNN II N NGG O O BB JJ EE C C TT II VV EE SS After reading this chapter, you should be able to: 1. Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace. 2. Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today. 3. Show how the concept of social responsibility applies both to environmental issues and to a firm’s 2-2  LL EE AA R RNN II N NGG OO BB JJ EE C C TT II VV EE SS (cont.) (cont.) After reading this chapter, you should be able to: 1. Identify four general approaches to social responsibility and describe the four steps that a firm must take to implement a social responsibility program. 2. Explain how issues of social responsibility and ethics affect small business. 2-3  What’s in It for Me? By understanding the material in this chapter, you’ll be better able to: Assess ethical and socially responsible issues facing you as an employee and as a boss or business owner. Understand the ethical and socially responsible actions of businesses you deal with as a consumer and as an investor. 2-4  Ethics in the Workplace Ethics Beliefs about what’s right and wrong or good and bad Ethical Behavior Behavior conforming to individual beliefs and social norms about what’s right and good Unethical Behavior Behavior conforming to individual beliefs and social norms about what is defined as wrong and bad Business Ethics The ethical or unethical behaviors by employees on the job 2-5  Individual Ethics Sources of Personal Codes of Ethics Childhood responses to adult behavior Influence of peers Experiences in adulthood Morals and values 2-6  Business and Managerial Ethics Managerial Ethics The standards of behavior that guide individual managers in their work with: Employees The organization Other economic agents—customers, competitors, stockholders, suppliers, dealers, and unions Ethical Concerns 2-7  Assessing Ethical Behavior Simple Steps in Applying Ethical Judgments Gather the relevant facts Analyze the facts Make an ethical judgment 2-8  Assessing Ethical Behavior (cont.) Ethical Norms Utility: Does it benefit everyone equally? Rights: Does the act respect the rights of all involved? Justice: Is it fair? Caring: Is it consistent with people’s responsibilities to each other? 2-9  Company Practices and Business Ethics Encouraging Ethical Behavior Involves: Adopting written codes of conduct Having top management support of ethical standards Instituting ethics programs Establishing ethical hotlines for reporting and discussing unethical behavior and activities 2-10  Social Responsibility Social Responsibility Balancing the organization’s commitments to groups and individuals (stakeholders) in society Organizational Stakeholders Any individual or group directly affected by the practices of an organization and, therefore, have a stake in its performance 2-11  The Stakeholder Model of Responsibility Customers Treat customers fairly and honestly Employees Treat employees fairly and respect their dignity and basic human needs Investors Follow proper accounting procedures; provide information to shareholders about financial performance Suppliers Create mutually beneficial partnership arrangements with suppliers Local and International Communities Involvement in programs and charities 2-12  Contemporary Social Consciousness The Concept of Accountability The expectation of an expanded role for business in protecting and enhancing the general welfare of society 2-13  Areas of Social Responsibility Responsibility Toward the Environment Disposal of toxic waste Recycle Control air, water, and land pollution Green Marketing Greenwashing: Using advertising to project a green image without substantially altering processes or products 2-14  Areas of Social Responsibility (cont.) Responsibility Toward Customers Involves providing quality products and pricing products fairly Consumerism Protecting the rights of consumers in their dealings with businesses Basic Consumer Bill of Rights The right to safe products; to be heard; to be informed; to be educated about purchases; to be treated courteously; to choose what to buy 2-15  Areas of Social Responsibility (cont.) Unfair Pricing Collusion: When two or more firms agree to collaborate on such wrongful acts as price fixing Price gouging: Responding to increased demand with overly steep (and often unwarranted) price increases Ethics in Advertising Truth in advertising Morally objectionable advertising 2-16  Areas of Social Responsibility (cont.) Responsibility Toward Employees Legal and social commitments to: Not discriminate A safe workplace Provide opportunities to balance work and life Provide protection for whistleblowers Responsibility Toward Investors Proper financial management (no insider trading) Proper financial reporting 2-17  Implementing Social Responsibility (SR) Programs Arguments Against SR The cost of SR threatens profits. Business has too much control over which SR issues would be addressed. Business lacks expertise in SR matters. Arguments For SR SR should take precedence over profits. Corporations as citizens should help others. Corporations have the resources to help. Corporations should solve problems they create. 2-18  Approaches to Social Responsibility Obstructionist Stance A company does as little as possible and may attempt to deny or cover up violations Defensive Stance A company does everything required of it legally but no more Accommodative Stance A company meets its legal and ethical requirements and may go further Proactive Stance A company actively seeks to contribute to the well-being of groups and individuals 2-19  FIGURE 2.4: Spectrum of Approaches to Corporate Social Responsibility 2-20  Managing Social Responsibility Programs 1. Social responsibility must start at the top and be part of strategic planning. 2. Top managers must plan for the level of management support. 3. One executive must be put in charge of the firm’s agenda. 4. The organization must conduct occasional social audits—systematic analyses of its success in using funds earmarked for its social responsibility 2-21  Social Responsibility and the Small Business Large Business versus Small Business Differences are primarily differences of scale More issues are questions of individual ethics Ethics and social responsibility are decisions faced by all managers in all organizations, regardless of rank or 2-22  Key Terms accommodative managerial ethics stance obstructionist stance business ethics organizational collusion stakeholders consumerism proactive stance defensive stance social audit ethical behavior social responsibility ethics unethical behavior insider trading whistleblower 2-23 Q&A