Bus 100

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Bus 100

• Chapter 2
• BUSINESS ETHICS AND SOCIAL RESPONSIBILITY

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L E A R N I N G O B J E C T I V E S

• After reading this chapter, you should be able
  to
• 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 both to environmental issues and to a
  firms relationships with customers, employees,
  and investors.

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L E A R N I N G O B J E C T I V E S (contd)

• After reading this chapter, you should be able
  to
• Identify four general approaches to social
  responsibility and describe the four steps that a
  firm must take to implement a social
  responsibility program.
• Explain how issues of social responsibility and
  ethics affect small business.

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Whats in It for Me?

• By understanding the material in this chapter,
  youll 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.

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Ethics in the Workplace

• Ethics
• Beliefs about whats right and wrong or good and
  bad
• Ethical Behavior
• Behavior conforming to individual beliefs and
  social norms about whats 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
  in the context of their jobs

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Individual Values and Codes

• Sources of Personal Codes of Ethics
• Childhood responses to adult behavior
• Influence of peers
• Experiences in adulthood
• Developed morals and values

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Business and Managerial Ethics

• Managerial Ethics
• The standards of behavior that guide individual
  managers in their work
• Ethics affect a managers behavior toward
• employees
• the organization
• other economic agentscustomers, competitors,
  stockholders, suppliers, dealers, and unions
• Ethical Concerns
• Ambiguity (e.g., financial disclosure)
• Global variation in business practices (e.g.,
  bribes)

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Assessing Ethical Behavior

• Simple Steps in Applying Ethical Judgments
• Gather the relevant factual information
• Analyze the facts to determine the most
  appropriate moral values
• Make an ethical judgment based on the rightness
  or wrongness of the proposed activity or policy

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Assessing Ethical Behavior

• Ethical Norms and the Issues They Entail
• Utility Does a particular act optimize the
  benefits to those who are affected by it? Do all
  relevant parties receive fair benefits?
• Rights Does the act respect the rights of all
  individuals involved?
• Justice Is the act consistent with whats fair?
• Caring Is the act consistent with peoples
  responsibilities to each other?

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Company Practices and Business Ethics

• Encouraging Ethical Behavior Involves
• Adopting written codes of conduct and
  establishing clear ethical positions for the
  conduct of business
• Having top management demonstrate its support of
  ethical standards
• Instituting programs to provide periodic ethics
  training
• Establishing ethical hotlines for reporting and
  discussion of unethical behavior and activities

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Core Principles and Organizational Values
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Social Responsibility

• Social Responsibility
• The overall way in which a business attempts to
  balance its commitments to relevant groups and
  individuals (stakeholders) in its social
  environment
• Organizational Stakeholders
• Groups, individuals, and organizations that are
  directly affected by the practices of an
  organization and, therefore, have a stake in its
  performance

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Major Corporate Stakeholders
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The Stakeholder Model of Responsibility

• Customers
• Businesses strive to treat customers fairly and
  honestly
• Employees
• Businesses treat employees fairly, make them a
  part of the team, and respect their dignity and
  basic human needs
• Investors
• Businesses follow proper accounting procedures,
  provide information to shareholders about
  financial performance, and protect shareholder
  rights and investments
• Suppliers
• Businesses emphasize mutually beneficial
  partnership arrangements with suppliers
• Local and International Communities
• Businesses try to be socially responsible

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Contemporary Social Consciousness

• The Concept of Accountability
• The expectation of an expanded role for business
  in protecting and enhancing the general welfare
  of society

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Areas of Social Responsibility

• Responsibility Toward the Environment
• Controlling air, water, and land pollution
• Properly disposing of toxic waste
• Engaging in recycling

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Areas of Social Responsibility (contd)

• Responsibility Toward Customers
• Involves providing quality products and pricing
  products fairly
• Consumerism
• Social activism dedicated to protecting the
  rights of consumers in their dealings with
  businesses
• Basic Consumer Rights
• To possess safe products
• To be informed about all relevant aspects of a
  product
• To be heard
• To choose what to buy
• To be educated about purchases
• To courteous service

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Consumer Rights (contd)

• 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

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Areas of Social Responsibility (contd)

• Responsibility Toward Employees
• Legal and social commitments to
• not practice illegal discrimination
• provide a physically and socially safe workplace
• provide opportunities to balance work and life
• provide protection for whistleblowers (an
  employee who discovers and tries to put an end to
  a companys unethical, illegal, or socially
  irresponsible actions by publicizing them)
• Responsibility Toward Investors
• Proper financial management (no insider trading)
• Proper representation of finances

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Implementing Social Responsibility (SR) Programs

• Arguments Against SR
• The cost of SR threatens profits.
• Business have too much control over which and how
  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.

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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 also goes further in certain
  cases
• Proactive Stance
• A company actively seeks to contribute to the
  well-being of groups and individuals in its
  social environment

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Spectrum of Approaches to Corporate Social
Responsibility
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Managing Social Responsibility Programs

1. Social responsibility must start at the top and
   be considered as a factor in strategic planning.
2. A committee of top managers must develop a plan
   detailing the level of management support.
3. One executive must be put in charge of the firms
   agenda.
4. The organization must conduct occasional social
   auditssystematic analyses of its success in
   using funds earmarked for its social
   responsibility goals.

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Social Responsibility and the Small Business

• Large Business versus Small Business Responses to
  Ethical Issues
• 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 size.

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THE END!