Chapter 5
Ethics and Social
Responsibility
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McGraw-Hill Ryerson
Learning Goals
1.
2.
3.
4.
5.
Explain why legality is only the first step in
behaving ethically and ask the three questions one
should answer when faced with a potentially
unethical action.
Describe management’s role in setting ethical
standards and distinguish between compliancebased and integrity-based ethics codes.
List the six steps in setting up a corporate ethics
code.
Define corporate social responsibility and examine
corporate responsibility to various stakeholders.
Discuss the responsibility that business has to
customers, investors, employees, society and the
environment.
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Question
Can you think of an example of
business and questionable ethics?
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Ethics Check Questions
o
Is it legal?
o
Is it balanced?
o
How will it make me feel about
myself?
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Why Should Businesses be
Managed Ethically?
o
To maintain a good reputation
o
To keep existing customers
o
To attract new customers
o
To avoid lawsuits
o
To reduce employee turnover
o
To avoid government intervention
o
To please customers, employees and society
o
TO DO THE RIGHT THING!
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Codes of Ethics

Compliance-Based


Increase control and
penalize wrongdoers
Integrity-Based



Define guiding values
Support ethical
behaviour
Shared accountability
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Six Steps to Improve Ethics
1.
2.
3.
4.
5.
6.
Top management support
Expectations begin at the top
Ethics imbedded in training
Ethics office set up
External stakeholders informed
There must be enforcement
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McGraw-Hill Ryerson
Responsibility Defined

Corporate Social Responsibility (CSR)
The concern businesses have for the
welfare of society.
•
•
•
•
Corporate Philanthropy – charitable
donations to non-profit groups.
Corporate Social Initiatives - enhanced
forms of corporate philanthropy. i.e.,
Johnson & Johnson sends medical supplies to
disaster areas.
Corporate Responsibility – acting
responsibly within society
Corporate Policy – position on social and
political issues
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McGraw-Hill Ryerson
Levels of
Corporate Responsibility
Responsibility
 Responsibility
 Responsibility
 Responsibility
 Responsibility
Environment

to
to
to
to
to
Customers
Investors
Employees
Society
the
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Social Auditing

Socially conscious investors

Environmentalists

Union officials

Customers
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International Ethics and
Social Responsibility





Federal Accountability Act (Canada)
Kyoto Protocol (International)
Socially responsible expectations of
international partners, suppliers
Inter-American Convention Against
Corruption
International Standards
Organization (ISO)
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Conundrums of
Doing Business Globally

What do you do when:




You are forbidden to trade – US to
Cuba
Ethical norms of the host country
violate the laws of the home country
Social responsibility has whole new
meaning
Environmental practices differ from the
home company
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