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Business Ethics and Social Responsibility
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc. All rights reserved.
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Business Ethics and Social
Responsibility
• Business Ethics:
– The principles and standards that define
acceptable conduct in business
• Social Responsibility:
– A business’s obligation to maximize its
positive impact and minimize its negative
impact on society
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Recognizing an Ethical Issue
• An ethical issue is 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.
Did You Know?
The most common types of observed misconduct
are lying, withholding information, and abusive/
intimidating behavior.
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Reasons For Not Reporting
Observed Misconduct
1. Didn’t believe corrective action would be
taken
2. Feared retribution or retaliation from
supervisor or management
3. Feared they wouldn’t remain anonymous
4. Thought someone else would report the
misconduct
5. Didn’t know who to contact
Source: 2005 Ethics Resource Center- National Business Ethics Survey Report, p. 29.
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Misconduct Observed in the
Workplace
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Ethical Issue Categories
• Conflict of interest
• Fairness and
honesty
• Communications
• Business
relationships
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Conflict of Interest
• Occurs when a person must choose
whether to advance their own
personal interest or those of others
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Fairness and Honesty
• The heart of business
ethics
– General values of
decision makers
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Communications
• False and misleading
advertising and deceptive
personal-selling tactics
anger customers and may
cause a business to fail.
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Business Relationships
• Businesspeople must be ethical toward
their customers, suppliers, and others in
their workplace.
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Questions to Consider in Determining
Whether an Action is Ethical
• Are there any potential legal restrictions or
violations that could result from the action?
– Question: If I do this will it break any laws?
• Does your company have a specific code of
ethics or a policy on the action?
– Question: If I do this will I go against the
employee handbook?
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Questions to Consider in Determining
Whether an Action is Ethical
• Is this activity customary in your industry?
• Are there any industry trade groups that
provide guidelines or codes of conduct
that address this issue?
– Question: If I do this will I violate any trade
practices?
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Questions to Consider in Determining
Whether an Action is Ethical
• Would this activity be accepted by your
coworkers?
• Will your decision or action withstand open
discussion with coworkers and managers
and survive untarnished?
– Question: Will my action cause peer
acceptance or rejection, or any peer
pressure?
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Questions to Consider in Determining
Whether an Action is Ethical
• How does this activity fit with your own
beliefs and values?
– Question: Will my action violate any of my
personal ethics, religious beliefs, or social
values?
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Three Factors that Influence
Business Ethics
Individual
Standards
and
Values
Managers’
and
Coworkers’
Influence
Opportunity:
Codes and
Compliance
Requirements
Ethical/Unethical
Choices
in Business
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Codes of Ethics
• Formalized rules and standards that
describe what a company expects of its
employees
Did You Know?
Written ethics standards are more often found in
larger companies than smaller ones.
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Whistleblowing
• The act of an employee exposing the
employer’s wrongdoing to outsiders
– The media
– Government regulatory agencies
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The Facts on Business
Ethics Today
• Of employees surveyed:
– 86% reported that their organizations have
written standards of conduct
– 69% reported that their organizations offer
mandatory ethics training
– 65% reported that their organizations have a
place where they can seek ethics advice
Source: 2005 Ethics Resource Center- National Business Ethics Survey: How
Employees Perceive Ethics at Work.p.12-14.
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The Nature of Social
Responsibility
• Four Dimensions:
– Economic – earn profits
– Legal – comply with the law
– Ethical
• Not just “for profit” only
– Voluntary & Philanthropic
• Promote human welfare and goodwill
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The Pyramid of Social
Responsibility
Voluntary
Responsibilities
being a
“good corporate citizen;”
contributing to the
community and quality of life
Ethical Responsibilities
being ethical; doing what is right, just,
and fair; avoiding harm
Legal Responsibilities
obeying the law (society’s codification
of right and wrong)
Economic Responsibilities
being profitable
Source: Adapted from Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral
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Management of Organizational Stakeholders.” Business Horizons 34 (July/August 1991): 42.
Best Corporate Citizens
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Green Mountain Coffee
Hewlett-Packard
Advanced Micro Devices
Motorola
Agilent Technologies
Timberland
Salesforce.com
Cisco Systems
Dell
Texas Instruments
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Intel
Johnson and Johnson
NIKE
General Mills
Pitney Bowes
Wells Fargo
Starbucks
Wainright Bank & Trust
St. Paul Travelers
Ecolab
Source: Philip Johansson, “The Best 100 Corporate Citizens,” Business Ethics, March/April
2006, p. 22.
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Arguments for Social
Responsibility
1. Business helped to create many of the social
problems that exist today, so it should play a
significant role in solving them
2. Businesses should be more responsible
because they have the financial and technical
resources to help solve social problems
3. As members of society, businesses should do
their fair share to help others
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Arguments for Social
Responsibility
4. Socially responsible decision making by
businesses can prevent increased government
regulation
5. Social responsibility is necessary to ensure
economic survival
–
Businesses must take steps to help solve the social
and environmental problems that exist today
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Arguments Against Social
Responsibility
1. Managers are sidetracked from the primary
goal of business
– Earning profits
2. Participation in social programs gives
businesses greater power, perhaps at the
expense of particular segments of society
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Arguments Against Social
Responsibility
3. Some people question whether business has
the expertise needed to assess and make
decisions about social problems
4. Many people believe that social problems are
the responsibility of government agencies and
officials
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Social Responsibility Issues
• Organizational relationships with owners and
stockholders:
– Profit and ROI
• Employee relations:
– Providing a safe workplace, adequate pay,
information about the company, listening to
grievances, and treating employees fairly
• Consumer relations:
– Respecting the rights of customers and providing
them with safe and satisfying products
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Social Responsibility Issues
• Environmental issues:
– Animal rights
– Pollution
– Global warming
• Community relations:
– Responsibility to the general welfare of
the community
Did You Know?
In one year, Americans generated 230 million
tons of trash and recycled 23.5 percent of it.
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John F. Kennedy’s 1962
Consumer Bill of Rights
•
•
•
•
The right to safety
The right to be informed
The right to choose
The right to be heard
Did You Know?
John F. Kennedy was the 35th President of
the United States.
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Responsibility of the Ethics
Officer
• Provide advice about ethics to employees and
management
• Distribute the company’s code of ethics
• Create and maintain an anonymous, confidential
service to answer questions about ethical issues
• Take action on ethics violations
• Review and modify the code of ethics as needed
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Solve the Dilemma
1. What are some of the ethical issues involved in
giving a customer an award for consumption
behavior without notifying him/her first?
2. Do you see this as a potential violation of
privacy? Explain.
3. How would you handle the situation if you were
Barnard?
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Explore Your Career Options
• How do you explain the
emergence of career
opportunities in the field of
business ethics and social
responsibility?
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Additional Discussion Questions
and Exercises
1. What makes ethical decisions so difficult?
2. Many organizations are primarily concerned with
earning a profit or a return on their investment.
–
Does this concern for owners and investors present an ethical
dilemma for companies when weighing business decisions that
favor employees and/or the general public?
3. The right to be heard is one of the four rights in the
consumer bill of rights.
–
How are some corporations addressing this consumer
concern?
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Additional Discussion Questions
and Exercises
4.
Find examples of environmental issues in newspapers
or business journals.
–
5.
Do these issues influence businesses?
Imagine you are a salesperson. When does offering a
gift, such as basketball tickets, become a bribe rather
than just a sales practice?
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Chapter 2 Quiz
1.
Which of the following has the greatest effect on
ethical behavior in organizations?
a.
b.
c.
d.
2.
authority of an employee’s superiors
an employee’s perception of the ethics of coworkers and
managers
an employee’s personal beliefs about what is right or wrong
investors perceptions of ethics
Copying someone else’s work and presenting it as
your own is:
a.
b.
c.
d.
ethics
bribe
plagiarism
greenmail
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Chapter 2 Quiz
3.
A code of ethics is:
a.
b.
c.
d.
4.
a set of formalized rules and standards describing what the
company expects of its employees.
a government legislation enforced by government agencies.
a set of principles that describe what a person believes is
the right way to behave.
the impact of a business’s activities on society.
Which one of the following is NOT one of the four
rights provided in John F. Kennedy’s consumer bill of
rights?
a.
b.
c.
d.
right to safety
right to be inform
right to sue
right to choose
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Multiple Choice Questions
about the Video
1.
What is interesting about Greystone Bakeries?
a.
b.
c.
d.
2.
It is based in Alaska
It is a franchise
It only sells one type of cookie
It supplies Ben and Jerry’s with 11,000 pounds of
brownies per day
Which of the following is NOT provided by Eileen
Fisher?
a.
b.
c.
d.
Onsite yoga and massage
A car after one year of working for the company
$1,000 education benefit per year
After 5 years at the company $5,000 towards a vacation
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