Business in a
Changing World
Chapter 2
Business Ethics and Social
Responsibility
McGraw-Hill/Irwin
Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.
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Ethisphere links ethics to profits
Publication that illuminates the
relationship between ethics and
profits.
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Business Ethics & Social Responsibility
Exec who allegedly made $270M off Enron to pay SEC $31.5M
Business Ethics – principles and
standards that determine acceptable
conduct in business
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Business Ethics & Social Responsibility
A Timeline of Ethical and Socially Responsible Concerns
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Business Ethics & Social Responsibility
Social responsibility– business’s obligation to
maximize its positive impact and minimize its
negative impact on society
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Business Ethics & Social Responsibility
Laws and regulations encourage businesses to
conform to society’s standards, values, and
attitudes. Sarbanes-Oxley Act - 2002
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The Role of Ethics in Business
Concern about unethical business
practices continue –
HealthSouth’s accounting improprieties
and securities fraud
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The Role of Ethics in Business
Unethical and/or Illegal
•Accounting fraud
•Deceptive advertising
•Unfair competitive practices
•Internet theft
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The Role of Ethics in Business
Ethical Conduct
•Builds trust
•Promotes confidence
•Validates relationships
Learn how to recognize and resolve
ethical issues
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Recognizing Ethical Issues in Business
Ethical issue –
an identifiable problem,
situation, or opportunity that requires
a person to choose from among several
actions that may be evaluated as right
or wrong, ethical or unethical.
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Recognizing Ethical Issues in Business
How to judge the ethics of a
situation –
examine the situation from your
stakeholders’ position, including
customers and competitors
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Recognizing Ethical Issues in Business
Types and Incidences of Observed Misconduct
Many business issues may seem straightforward and easy to resolve on the
surface, but are in reality very complex.
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Sources of Unethical Behavior in Organizations
1. Overly aggressive financial or business
objectives
2. Abusive & intimidating behavior
3. Conflict of interest
4. Fairness & honesty
5. Communications
6. Business relationships
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Sources of Unethical Behavior
Abusive and intimidating behavior
“Bullies” behavior:
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Sources of Unethical Behavior in Organizations
Conflict of interest –
– the most common ethical issue identified
by employees.
– Advance personal interests over others’
interests
– Benefit self at the expense of the company
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Least Corrupt Countries
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Business Ethics
Fairness & honesty – the heart of
business ethics
•How employees use resources
•No harm to customers
•Accurate representations
•Disclosure
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Business Ethics
Most Popular Office Supplies Employees Pilfer
“More Employees Taking Supplies,” The News Journal
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Personal Ethics
Honesty?
25,000 high school students:
•62% cheated on exams at least once
•35% copied documents from Internet
•27% shoplifted
•23% cheated to win at sports
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Ethical Concerns
Communications
•False/misleading advertising
•Deceptive personal selling tactics
•Product safety and quality
•Unsubstantiated claims
•Product labeling
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Ethical Concerns
Business Relationships
•Relationships with customers
•Relationships with suppliers
•Relationships with co-workers
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Ethical Concerns
Plagiarism
The act of taking someone else’s work
and presenting it as your own without
mentioning the source
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Making Decisions About Ethical Issues
Questions to Consider in Determining Whether an
Action Is Ethical
Open discussion of ethical issues does not eliminate ethical
problems; it does promote trust and learning in an
organization.
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Improving Ethical Behavior in Business
Ethical decisions in an organizations are
influenced by three key factors
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Improving Ethical Behavior in Business
Codes of Ethics –
Formalized rules and standards that describe
what a company expects of its employees.
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Improving Ethical Behavior in Business
Key Things to Consider in Developing a Code of Ethics
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Codes of Ethics
National Business Ethics Survey (NBES)
According to the NBES, employees in
organizations with written standards of conduct
are more likely to report misconduct when they
observe it.
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Codes of Ethics
Whistleblowing
The act of an employee exposing an employer’s
wrongdoing to outsiders, such as the media or
government regulatory agencies.
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Business Ethics – Taking Responsibility
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Nature of Social Responsibility
4 Dimensions
1.
2.
3.
4.
Economic
Legal
Ethical
Voluntary (philanthropic)
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Pyramid of Social Responsibility
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Nature of Social Responsibility
Corporate Citizenship
The extent to which businesses meet the legal,
ethical, economic, and voluntary responsibilities
placed on them by their stakeholders.
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Nature of Social Responsibility
Best Corporate Citizens
1.
2.
3.
4.
Intel Corporation
Eaton Corporation
Nike Inc.
Deere and Co.
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Nature of Social Responsibility
Arguments For and
Against Social
Responsibility
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Social Responsibility Issues
Owners & Stockholders
•
•
•
•
Primary concern with profit or ROI
Financial community at large
Proper accounting procedures
Protecting owner’s rights and investments
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Social Responsibility Issues
Employee Relations
•
•
•
•
Provide a safe workplace
Adequate compensation
Listen to grievances
Fair treatment
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Social Responsibility Issues
Consumer Relations
Consumerism – the activities that independent
individuals, groups, and organizations
undertake to protect their rights as
consumers.
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Social Responsibility Issues
Environmental Issues
• Animal rights
• Pollution
• Going Green
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Social Responsibility Issues
Community Relations
•General community and global welfare
•Hardcore unemployed
•Charitable contributions (United Way)
•Avon’s Breast Cancer Awareness Crusade
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