ETHICS AND SOCIAL
RESPONSIBILITY
By: Mrs. Belen Apostol
Ethics

Ethics refers to the study of
morals and moral choices of
human being.

The behavior of individuals
and groups which are
governed by standards, rules,
and codes of conduct
consist of the subjects
covered by ethics.
What is Business Ethics?
The moral principles defining right and
wrong behavior of businesspersons and
their agents
 It implores them to adhere to certain
ethical conduct when dealing with anybody
especially those affected by their business
activities.

The Need for Ethical Behavior

Ethical behavior is needed to make the
“playing field” free and orderly. If the
business person does not adhere to
ethical principles, public opinion may
pressure the government to act. It may
turn out, later, that the business person
will be in a worse situation then when no
law is passed to force him to act ethically.
Areas of Concern for Business
Ethics
Ethics covers all areas encompassed by
business transactions. The ethical conduct of a
business person may be measured against how
the following are adhered to:
1.Laws and regulations
promulgated by the
government; and
2. Specific ethical
conduct not yet passed into law

Laws and regulations requiring
ethical behavior
Product safety and quality;
 Fair employment practices;
 Fair marketing and selling practices;
 The use of confidential information for
personal gain;
 Community involvement;
 Bribery; and
 Illegal payments to foreign governments
to obtain business.

Product safety and quality
Fair
employment
practices;
Fair marketing and selling practices;
The use of confidential information for
personal gain;
Community involvement;
Bribery
Illegal payments to foreign governments to
obtain business.
Current Issues in Ethics

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Owners of food stalls serving spoiled food to
customers;
Business owners making “fictitious insurance
claims”;
School awarding diplomas to undeserving persons;
A contractor bribing a government official to
manipulate the bidding of contracts;
A drug manufacturer making false claims regarding
the efficacy of his product; and
A television station copying the format of a rival
station’s show.
Coverage of Company
Sponsored Ethics Program
A very important listing of problem areas which
may be used as a basis for formulating company
policies on ethical conduct is as follows:
 Drug and alcohol abuse
 Employee theft
 Conflict of interest
 Quality control
 Misuse of proprietary information

Coverage of Company
Sponsored Ethics Program
Abuse of expense accounts
 Plant closings and layoffs
 Misuse of company assets
 Environmental pollution
 Methods of gathering competitor’s information
 Inaccuracy of books and records
 Receiving excessive gifts and entertainment
 False or misleading advertising

The Improvement of Ethical
Performance
1.
2.
3.
4.
Improvement in the ethical conduct of
business and those involved in it may be
made through any of the following ways:
Ethics training
Ethical advocates
Ethical codes; and
Whistle blowing.
Ethics Training
Learning takes two forms:
1.
2.
Through formal classroom instruction,
and
Through actual hands-on experience and
observation
Ethical Advocates
An ethical advocate is a person who is
knowledgeable about business ethics,
employed by the company, and acts as the
company’s conscience. He sits at the
board of directors and sees to it that
every policy adapted conforms to ethical
standards.
Ethical Codes
A code of ethics is a formal document
that provides clear direction to
management and employees in the
performance of their duties.
Whistle-Blowing
There are instances when employees
are helpless that they cannot implement the right
ethical conduct required in specific situations. When
almost everybody from top to lower management acts
outside of ethical norms, the employee who feels he
must do something that resorts to reporting the
perceived unethical practice to outsiders such as the
press, government agencies like the ombudsman and
the Presidential Anti-Graft commission, or public
interest groups.
What is Social Responsibility
Social responsibility refers to the concern of
business for the welfare of the society.
 that the firm must perform its function without
harming the community
 improve the quality of life
 produce goods or services that will not adversely
affect any component of the society
 make profits but not to the public detriment of
society.
Interested Groups

There are various groups with interests
that are different from one another. These
interests must be properly considered by
the business firm it will have to be
successful.
Owners
The interest of the owners (the sole
proprietor, the partners, or stockholders)
is expected to be of highest priority.
Consumers
Consumers, like any other group, have
rights. The basic rights of consumers
include those concerning representation,
information, a healthy environment, safety,
basic goods and services, choice, consumer
education and redress.
Employees
Among the specific points of interest in caring
about employees are:
1. Health and safety;
2. Appropriate salaries and employee benefits;
3. Right to speak out;
4. Right to privacy; and
5. Right to job security except when discipline
is concerned. (security of tenure)
Minority Groups
Management must avoid treating them
outright as inferior so as not to affect
their employment and promotion
chances.
Women

The view that management must have is
to regard women as a force with
potentials “to lead” as much as “to
follow”
Older People

Older people have distinct needs that
must be the concern of business. Many of
them are highly qualified and able to
perform special tasks which younger
persons cannot do.
The Handicapped

The firm’s management must be
responsible for removing hazards and
obstacles which prevent them from doing
their jobs effectively.
The Community at large

There are business activities that may
affect any of the widely diverse interest of
people. The modern manager must have
multiple abilities and an open mind if he
wants to succeed in his endeavor.
Benefits and costs of Social Actions
Benefits
 Improved employee satisfaction and motivation
 Company becomes more aware of changing
consumer tastes and preferences;
 Greater demand for the company’s products
or services;

Benefits and costs of Social
Actions
Preference by investors to buy the firm’s
stocks; and
 Elimination of possible legislative controls
on business activities.

Benefits and costs of Social
Actions
Costs
 The money spent in direct support of
social projects;
 Reduction of competitive power; and
 The private provision of social services
and programs may later on, be also
regulated by the government.

Social Responsibility Strategies
The approaches are expressed in four
basic social responsibility strategies as
follows:
 Reaction strategy
 Defense strategy
 Accommodation strategy, and
 Proactive strategy
Reaction Strategy

The company allows a condition or
potential problems to go unresolved until
the public finds out about it. When a
problem is brought before the company,
the firms reacts by denying responsibility,
then attempts to resolve the problem,
deal with its consequences, then continue
doing business to minimize the negative
impact.
Defense Strategy

The company tries to minimize or avoid
additional obligations. Among the tactics
used are legal maneuvering and seeking
the support of groups that prefer the
company’s way of doing business.
Accommodation Strategy

This is done when special interest groups
are taking the side of the opposition, or
when the business perceives that if it
does not react, a law will be passed by
Congress to ensure compliance. This
means that the company is forced to
accept its economic, legal, and ethical
responsibilities.
Proactive Strategy

the firm goes beyond what is legally and
ethically required. There are a number of
companies using the proactive strategy. This is
undertaken through sponsorship of cultural
shows offered free to the public, scholarship
to financially-handicapped but deserving
students, providing financial support to the
upkeep of endangered animal species, and
many other similar concerns.
Social Audits

A social audit refers to the systematic
examination of all the activities achieving
social goals such as employment of the
handicapped and those belonging to the
cultural minorities, adaption of antipollution campaign, improvement of
working conditions, community
development, donations to worthy causes,
and various consumer issues.
Social Audits
1.
2.
A social audit may be done through the
preparation of the following:
A summary of program areas, such as
consumer affairs, as well as the reasons
for undertaking certain social activities
and not others.
A report of specific programs and the
priorities for each set of activities.
Social Audits
3. A listing of objectives for each priority activity
and a description of how the organization is
striving to reach the objective.
4. A summary report of the costs of each program
area and activity to the company
5. A summary using quantitative measures,
whenever possible, of the extent of achievement
of each social objective.
Thank you for listening!