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part 1
Chapter 4
Chapter
Demonstrating Ethical Behavior
and Social Responsibility
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Learning Objectives
1. Define ethics.
2. Understand the approaches and the process of
making an ethical decision.
3. Distinguish between compliance-based and
integrity-based ethics codes, and list the five steps
in setting up a corporate ethics code.
4. Describe the indicators of corporate social
responsibility.
5. Examine corporate responsibility to various
stakeholders.
6. Describe how social responsibility can be
measured.
7. Discuss ethics and social responsibility on a global
level.
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Ethics Defined
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Right vs. wrong
Sources – religion and culture
The Golden Rule
Legality
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Personal Ethics
• Guide to making the right decisions
• Five main approaches
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Utilitarian
Rights
Fairness or justice
Common good
Virtue
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Personal Ethics
• Center for Applied Ethics – Eight principles:
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Concern for the well-being of others.
Respect for the autonomy of others.
Trustworthiness and honesty.
Willing compliance with the law (with the exception
of civil disobedience).
Basic justice; being fair.
Refusing to take unfair advantage.
Benevolence; doing good.
Preventing harm to others and the world around
us.
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Personal Ethics
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Five step process to ethical decision making:
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Recognize an ethical issue.
Get the facts.
Evaluate alternative actions.
Act on your decision.
Reflect on your decision.
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Corporate Ethics
• Formal code of ethics:
– Compliance-based
– Integrity-based
• Five-step improvement process for America’s
business ethics
Sarbanes-Oxley
• Whistleblowers
• New penalties
• New overseeing agency
• Flaws of the act
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Corporate Social Responsibility
Defined
• Corporate philanthropy
– Charity
• Corporate responsibility
• Corporate policy
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Responsibility to Stakeholders
Customers
• Importance of pleasing customers
• 3 out of 5 businesses fail
• Payoff for socially conscious behavior
• Trust
Investors
• Insider trading
• Honest bookkeeping
• Doing the right thing
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Responsibility to Stakeholders
Employees
• Business’ responsibilities
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Create jobs
Pension
Retain employees
Diversity
Society and the Environment
• Create new wealth
• Promote social justice
• A public good
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Measuring Social Responsibility
• Profit motive
• Social audit
• 4 watchdogs:
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Socially conscious investors
Environmentalists
Union officials
Customers
• Not enough to be ethical
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Ethics and Social Responsibility
Globally
• Ethical problems are not unique to the United
States.
• Should everyone adhere to American ethical
standard?
• Common global ethic
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© 2009 The McGraw-Hill Companies, Inc. All rights reserved.